Tactical truce or strategic realignment? | the weekly recap

With each passing day, the trade truce struck by Xi Jinping and Donald Trump in Busan looks more durable.

In the month since the two leaders met, Beijing and Washington have both taken significant steps to show good faith by rolling back countermeasures, lifting sanctions, pausing trade investigations, and reopening communication channels between military and security authorities.

This week was no exception, with two specific developments showcasing both sides’ commitment to holding the line:

• Washington updated its timeline for China to purchase American soybeans, scrapping an unrealistic end-December deadline.
• Beijing all but confirmed it is issuing general licenses covering export-controlled rare earth products.

Both measures have major implications for US-China relations and global markets. Let’s take them in turn.

First, on Wednesday, US Treasury Secretary Scott Bessent said that China now has until end-February to purchase 12 million metric tons of US soybeans, and is on track to do so.

• Bessent downplayed the doubling of the original two-month timeline announced by the White House on November 1, stressing that Chinese buyers are “in a perfect cadence” to hit the new deadline.

Practically, the additional flexibility is a huge gift to Chinese buyers. Because the deal is structured around volume rather than value, China is on the hook to buy US beans even if they’re uncompetitive – and right now, they are.

• US soybeans have been more expensive than Brazil’s since late October, when markets began pricing in a deal.
• Chinese state-owned buyers are only purchasing out of political obligation – and commercial buyers have no reason to bother.

Here’s the kicker: Brazil’s harvest season is now beginning, with a record crop of soybeans expected. As fresh supply hits the market in January, the glut of Brazilian beans should drag down global oilseed prices.

• US soybean prices will almost certainly follow, saving Chinese buyers some serious dough.

Second, on Thursday, commerce ministry (MofCom) spokesperson He Yadong essentially confirmed an earlier Reuters scoop that Beijing is now issuing streamlined “general licenses” to facilitate exports of rare earth products – a core element of the Xi-Trump trade truce.

In classic MofCom fashion, He kept things vague: We still don’t know how many exporters have secured general licenses, or exactly which export controlled products are covered.

 Still, the new licenses are welcome news for companies that need critical minerals from China.

• First, this development indicates that MofCom has worked out the overall process for issuing general licenses for rare earths and related products.
• This should subsequently reopen the rare earths tap for major Chinese exporters and their largest (non-military) customers overseas – with US and EU firms at the front of the queue.

It’s also encouraging for anyone hoping the US-China trade truce will hold.

• Beijing’s critical mineral export controls have proven to be perhaps the most contentious trade war tool, and a major factor pushing Washington to negotiate.
• That makes reaching a mutually agreeable compromise whereby Beijing restores US access to these materials absolutely central to sustaining the agreement in the medium term.

That said, there’s still plenty of room for misunderstandings around sensitive issues – like whether companies that serve both large commercial markets and defense clients (think Boeing, Honeywell, and SpaceX) will be included in the scope of general licenses.

But this is key: So far, both Beijing and Washington have shown a great deal of flexibility and patience as they translate their leaders’ agreement in principle into a framework for moving forward in practice.

Putting it all together: The training wheels are off, and the US-China deal looks poised to go the distance in 2026.

• That’s great news for businesses on both sides of the Pacific, with firms already reaping the benefits of lower tariffs, fewer sanctions, smoother supply chains, and reduced uncertainty.

With most provisions now in place, the big question around the Trivium water cooler is, “What next?”

• Is this simply a tactical truce to buy time for Beijing and Washington to reposition for a much longer geopolitical tussle?
• Or could we be edging toward a strategic realignment, where “the G2” reconcile key differences and lean into their vast economic synergies, ultimately reshaping the global order?

I’ll admit the past decade of US-China relations, and most of the recent policy signals, support the tactical truce hypothesis – but it’s worth contemplating whether a larger realignment is still on the table.

For one, Trump clearly wants to secure his place in the history books.

• As his lame duck era approaches, and his window to win a Nobel Peace Prize closes, he’s undoubtedly thinking about other ways to ensure his legacy.
• His anti-trade, anti-globalist reputation shields him from accusations of “selling out” to China – just as staunch anti-Communist Richard Nixon was able to pursue rapprochement with Mao Zedong.

For his part, Xi may view a grand bargain with Washington as the only viable path to a multipolar world order that doesn’t risk conflict.

• For more on why, check out our two-part deep dive on Chinese diplomatic theory from 2022.

There have also been other small but notable signs that a deeper realignment isn’t off the table, including:

• Xi seeking Trump’s support in responding to Japanese PM Sanae Takaichi’s unprecedented comments about mobilizing defense forces in the event of a “Taiwan contingency.”
• Trump’s glowing assessment of Sino-US relations since October, and his obvious enthusiasm for his planned April 2026 state visit to China.
• Treasury Secretary Bessent characterizing China as “an ally” at an event in New York this week.

As we pore over the read-out of the Central Economic Work Conference next week, we’ll be keeping an eye out for any indication as to whether Beijing views this truce as a waypoint – or the start of something bigger.

Even Rogers Pay, Head of Agriculture and Trade Research, Trivium China

What you missed

Econ and finance

China’s consumer goods trade-in program is running out of steam. Per data released by the Commerce Ministry on Wednesday:

• Over the past month, the trade-in program has supported just RMB 100 billion in retail sales.
• By comparison, the program stimulated sales of RMB 400 billion over the two months prior. Meanwhile, the initiative supported a whopping RMB 500 billion over a seven-week period from May to July.

On November 30, Bloomberg reported that the housing bureau (MoHURD) has ordered two real estate data providers to suspend data publication until further notice.

• The two private data providers – China Real Estate Information Corp. (CRIC) and China Index Academy – publish early monthly data on home sales. The figures give an early read on monthly housing-market dynamics – weeks before official stats drop.
• Sources said institutions with paid access can still obtain the figures, but must keep the data confidential. Still, with the property sector in freefall and Beijing exhausting its policy options, authorities are instead trying to control the narrative and paint a more positive picture.

Tech

On Monday, AI firm DeepSeek dropped its new model V3.2, pushing closer to US frontier models like OpenAI’s GPT-5 and Google’s Gemini-3.

• Per DeepSeek’s technical paper: “DeepSeek-V3.2 performs comparably to GPT-5. Notably, our high-compute variant, DeepSeek-V3.2-Speciale, surpasses GPT-5 and exhibits reasoning proficiency on par with Gemini-3.0-Pro.”
• However, the paper also indicated that for complex and agentic tasks, closed source US models have been pulling further ahead.

At the November Politburo Study Session, chaired by Xi Jinping on November 28, officials discussed the never-ending challenge of “internet ecosystem governance.”

• Xi noted that China should not only continue to plug holes in its online regulation and censorship apparatus, but also find and eliminate root causes of “online chaos.”
• He also noted that regulators should continue to lean on licensing systems to police cyberspace, which could mean, among other things, the expansion or refinement of credential requirements for online personalities or AI systems. Finally, Xi noted that artificial intelligence presents new cybersecurity threats and encouraged more R&D into new technologies designed to defend against them.

Foreign affairs

On Wednesday, the Financial Times reported that the EU’s Industrial Accelerator Act (IAA) will likely contain provisions to aggressively reduce EU reliance on foreign (read: Chinese) supply chains.

• Months of fruitless consultation and the collateral damage caused by China’s rare earth export controls have heightened Europe’s sense of urgency to remake economic relations with China.
• The IAA will seek to address EU concerns with China-style industrial policy: “Brussels is considering setting ‘made in Europe’ targets of up to 70 percent for the content of certain products such as cars.”

As its spat with Tokyo drags on, Beijing is trying to reassure Japanese businesses.

• China-Japan relations have nosedived following Japanese Prime Minister Sanae Takaichi’s suggestion that Japan could mobilize defense forces in the event of a “Taiwan contingency” last month.
• In response, Liu Jinsong, director-general of the Foreign Ministry’s Asian Affairs Department recently paid a visit to an unnamed Dalian-based Japanese manufacturer. Liu “asked company officials about the status of operations in China” and the two sides “reportedly hugged at the end of the visit.”

As always, it was a busy week in China.

• Thank goodness Trivium China is here to make sure you don’t miss any of the developments that matter.