Beijing is readying an opening bid to try to head off greater tariff increases and technology restrictions from the Trump administration—a sign that China is eager to get trade talks going.
However, what it is prepared to offer, according to people in both capitals familiar with Beijing’s thinking—chiefly focused on going back to a previous trade deal that didn’t work out—is likely to intensify debates in Washington over how to negotiate with China.
Even though the White House hit China with 10% tariffs starting Tuesday for its failure to crack down on chemicals used to make fentanyl, neither side appears ready to launch a full-on trade war. China, in particular, is in weak economic shape, and Chinese leader Xi Jinping has signaled his interest in engaging in negotiations with President Trump, who has also suggested he is open to dialogue by deferring most of his promised tariffs on China.
Beijing saw the 10% tariffs as Trump’s way of exerting pressure, the people familiar said, but also noted his first tariff move wasn’t the kind of “maximum pressure” the leadership would find intolerable. Trump has threatened tariffs of as high as 60%.
In an initial response without much bite, China’s Ministry of Commerce said it would challenge the tariffs at the World Trade Organization, whose mechanism for resolving trade disputes has been disabled since Trump’s first term. The ministry also urged “frank dialogue” between both sides. In a statement, the Chinese Embassy in Washington called on the U.S. to “correct its wrongdoings.”
As part of its effort to prepare for negotiations, according to the people, China’s initial proposal will center on restoring a trade agreement Beijing signed in early 2020 with the first Trump administration but didn’t implement.
The so-called Phase One deal required China to increase purchases of American goods and services by $200 billion over a two-year period. While Trump himself has described Phase One as the “greatest deal” ever made, many trade experts and business executives called it unrealistic to begin with.
Having failed to deliver on its pledge under the deal to increase U.S. purchases, Beijing now is preparing to talk to the Trump administration about areas where China can buy more from the U.S., the people said.
Other parts of China’s plan, the people said, include an offer to make more investments in the U.S.—in sectors such as batteries for electric cars, a renewed pledge by Beijing not to devalue the yuan to gain competitive advantage, and a commitment to reduce exports of fentanyl precursors.
Hoping to set a positive tone, Beijing also plans to treat TikTok largely as a “commercial matter,” the people said, in response to Trump’s remarks that he wanted U.S. and Chinese interests to split control of the app 50-50. That means the government intends to stay out of the way and let investors in TikTok’s Chinese parent company, ByteDance, negotiate a deal with interested American bidders, the people said.
However, it is unclear if Beijing would be willing to give up control over whether TikTok’s algorithm, the app’s secret formula for steering content to users that Beijing has added to its export-control list, could be part of any deal.
China’s opening bid reflects Xi’s interest in getting Trump in a dealmaking mood at a time of increased economic stress in China. At the same time, the Chinese leader is digging in on central control to gird China for prolonged competition with the U.S., especially in areas involving technology. Beijing also is putting in place a retaliatory tool kit to build up its own leverage for negotiations.
“The Chinese would be very happy to get into deal negotiation,” said Arthur Kroeber, founding partner and head of research at Gavekal Dragonomics, a China-focused economic consulting firm. “The objective would basically be to blunt the U.S. attack rather than gain anything material.”
Since coming to office, Trump has shown that he would be willing to use tariffs as leverage over China, on issues both economic and geopolitical.
He has taken aim at China’s massive trade surplus with the U.S., often in hundreds of billions of dollars annually, indicating he wants Beijing to buy more from America to narrow that gap. Trump has also said he wants Xi’s help to end Russia’s war in Ukraine, while signaling he is willing to use tariffs as a potential bargain chip.
Xi has reasons to try to placate Trump before any planned summit between the two leaders takes place.
Trump has directed federal agencies to review the bilateral economic relations with China and given them until early April to make recommendations on what course of action the U.S. should take on China.
Given the many China critics on Trump’s team as well as the bipartisan support for a continued tough-on-China stance in Washington, those recommendations could lead to an overall package aimed at moving the U.S. economy further away from China’s, including higher tariffs on not only Chinese goods but also products containing China-made components, and expanded restrictions on the sale of American tech to China.
Xi’s envoy to Trump’s Jan. 20 inauguration, Vice President Han Zheng, told the new Trump team about Beijing’s willingness to discuss a range of topics including TikTok, fentanyl and trade, the people familiar with the matter said.
“Beijing is eager to see the asking price from the Trump team and explore room for negotiations, especially on tariff and tech,” said Yun Sun, director of the China program at the Stimson Center, a Washington think tank.
Trade talks centered on Phase One are likely to expose divisions within the Trump administration, renewing questions about the value of a deal based on pledges nearly impossible for Beijing to fulfill even when it was signed.
To hit the targets of increasing its purchases of U.S. products by $200 billion from the $186 billion China imported in 2017, before the trade war, U.S. exports to China would have had to jump by an average of 33% annually, about three times as fast as they had grown annually since China joined the World Trade Organization in 2001.
In the end, according to estimates by the Peterson Institute for International Economics, China bought only 58% of the U.S. goods it had committed to purchase, not even enough to reach 2017 levels. Put differently, analysts at the think tank noted, China bought none of the additional U.S. exports it had promised.
This time, Beijing is planning on again offering more purchases of U.S. farm, energy and industrial products, the people familiar with Beijing’s thinking said. But China will also make a case that it should be allowed to buy goods it really needs, such as American chips and other tech products that are now subject to export controls.
Within the new Trump administration, Treasury Secretary Scott Bessent said during his confirmation hearings that he would be receptive to talks to enforce Phase One purchase guarantees “and perhaps to push the Chinese for a catch-up provision” to make up for the past four years.
Other Trump advisers, including those on the national-security team and Peter Navarro, Trump’s senior adviser for trade and manufacturing, are expected to argue for the need to focus beyond just trade and address broader security threats from Beijing.
Trump’s pick for commerce secretary, Howard Lutnick, also appeared to be advocating stronger action, including preventing American tech from helping China’s industries.
At last week’s confirmation hearing, Lutnick suggested that DeepSeek, the Chinese artificial-intelligence startup, had evaded some U.S. export controls on chips to produce a chatbot rivaling U.S. ones. “It’s got to end,” he told senators, vowing a “very strong” response if he is confirmed.
For now, Trump himself appears to be Xi’s best hope for a deal to stave off a trade war.
“Trump doesn’t see China as a military existential threat to the U.S. as many of his advisers do, and he should be open to a deal,” said Bob Davis, a former Wall Street Journal reporter who has written about the U.S.’s trade policy toward China and is co-author with this reporter of “Superpower Showdown.” “But it will be a big fight domestically.”
