In This Week’s Edition:

• U.S.-China Trade Talks in London Produce Framework but Leave Key Issues Unresolved
• House Foreign Affairs Subcommittee Questions BIS Leader on Chips Export Controls, China Trade Talks
• China to Scrap Tariffs on African Imports, Calls for U.S. to Reconsider Trade Approach
• China Hints at Easing Rare Earth Export Bottlenecks for Europe
• House China Committee Introduces Legislation to Promote AI Security and Readiness
• China Calls for Restraint After Israeli Strikes on Iran, Warns of Escalation
• China’s Dual Carrier Operations in Pacific Raise Alarm in Japan and Taiwan
• Myanmar’s New Rare Earth Mines Taken Over by Militia with Ties to China
• Xi and Lee Seek Stability in China-South Korea Relations
• Taiwan Espionage Case Draws Focus to Political Vulnerabilities

Following 2 days of negotiations in London, U.S. and Chinese officials have announced an agreement on a framework intended to restore the fragile trade truce reached in Geneva last month. The talks were led by senior economic officials from both sides, and discussions largely centered on rare earth exports and export controls that had threatened to disrupt global supply chains. Both sides reported that the meetings were “candid and in-depth talks, and thoroughly exchanged views on economic and trade issues of mutual concern.” According to a post by Trump on Truth Social, “OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME.”

The new understanding, once implemented, will likely see China resume shipments of rare earth minerals to the United States. In exchange, controls on advanced technology exports to China are likely to be relaxed to where they were at the time of the Geneva agreement. This likely means that export controls on electronic design automation (EDA) software will be softened or removed. Moreover, restrictions on Chinese students studying in American universities are expected to be relieved, though unclear to what extent. On the other hand, tariffs will remain elevated with the U.S. maintaining a 55% rate on Chinese imports and China holding its tariffs at 10%, pending further negotiations. The deal also includes a 6-month cap on China’s rare earth export licenses, meaning that Beijing will continue to have leverage as negotiations continue.

President Trump commented on the issue of gaining access to Chinese rare earths on Truth Social, saying, “FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA. LIKEWISE, WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO, INCLUDING CHINESE STUDENTS USING OUR COLLEGES AND UNIVERSITIES (WHICH HAS ALWAYS BEEN GOOD WITH ME!).”

On Thursday, the House Foreign Affairs Subcommittee on South & Central Asia questioned Under Secretary of Commerce for Industry and Security Jeffrey Kessler about the trade negotiations being held between the U.S. and China and asked if American officials are leveraging export controls on semiconductors used for artificial intelligence (AI). Kessler refused to speak on any of the trade discussions, stating, “I’m not going to comment on the contents of […] diplomatic discussions between the United States and China, which are continuing.” House Foreign Affairs Committee Ranking Member Gregory Meeks (D-NY) expressed his concern for the potential mixing of trade and security policy, saying it could undermine the integrity of U.S. export controls. Kessler denied using export controls for leverage in trade negotiations, saying the controls were “based on an assessment of what would promote national security and foreign policy interests of the United States.” Kessler stated that his limited role in the negotiations was due to discussions on rare earths, which he said were framed as export controls.

China has announced plans to eliminate all tariffs on goods from the 53 African countries with whom it maintains diplomatic ties, amounting to all of the continent’s nations except Eswatini, the South African land-locked country. The Chinese policy expands on an effort that Beijing claims is aimed at benefiting the African continent’s least developed economies. The new initiative, unveiled during high-level meetings in Changsha, will open the Chinese market to a broader range of African exports. President Xi Jinping highlighted that “openness and cooperation are the right path forward, and mutual benefit is the shared aspiration of the people.” He continued by praising a “shared future for the new era, contributing the strength of China and Africa to the building of a community with a shared future for mankind.” This announcement comes in light of a joint statement between China and the African Union calling on the “United States in particular, to return to the right track of resolving trade disputes through consultation based on equality, respect and mutual benefit.” China maintains extensive influence in the region through its Belt and Road Initiative (BRI), which has investments in nearly all African countries.

Beijing has signaled its willingness to streamline the process for European companies seeking rare earths, a move that comes as manufacturers across the continent face ongoing supply headaches. The Chinese Ministry of Commerce stated it is prepared to expedite the examinations and approvals for EU shipments of China’s rare earths, and said it “was willing to establish a green channel for qualified applications to speed up the approval process.” As European firms continue to navigate unpredictable delays, the rare earth trade remains a strategic lever for China. China’s Commerce Ministry also stated that it will release a decision by July 5^th regarding its anti-dumping investigation into European brandy exports. Negotiations between the EU and China on Chinese electric vehicles (EVs) are still ongoing, though have reached the last stage. Last week, European Central Bank (ECB) President Christine Lagarde made a visit to Beijing to ease trade tensions, meeting with Chinese Premier Li Qiang and Governor of the People’s Bank of China (PBOC) Pan Gongsheng.

On Thursday, Members of the House Select Committee on the Chinese Communist Party (CCP) introduced a new bipartisan bill that would help strengthen U.S. national security surrounding artificial intelligence. “The Advanced AI Security Readiness Act” would direct the National Security Agency (NSA) to create an “AI Security Playbook” that would help in identifying weaknesses in U.S. artificial intelligence systems and defend against cyberattacks. The bill comes amid increased tensions and speculation that China is taking advantage of weaknesses in America’s AI infrastructure. Committee leaders highlighted the importance of AI in the United States’ future not as simply a tech trend, but as a vital strategic asset. The legislation also underlines cybersecurity standards and details U.S. plans for secure government-supported AI systems.

China has voiced deep concern following Israel’s large-scale airstrikes on Iranian nuclear and military sites, urging all parties to avoid actions that could further destabilize the region. Foreign Ministry spokesperson Lin Jian stated on Friday, “China is closely following Israel’s attacks on Iran and is deeply concerned about the potential grave consequences of the operations. China opposes actions that violate Iran’s sovereignty, security and territorial integrity, and opposes moves that escalate tensions and enlarge conflicts. The abrupt heating up of the region serves no one’s interests.” Lin called on all sides to “choose the course of action that is conducive to the region’s peace and stability, and avoid further escalation of the tensions,” adding that China stands ready to play a constructive role in helping ease the situation.

On Wednesday, the Chinese Ambassador to Iran Cong Peiwu spoke with Iranian Foreign Minister Dr. Araghchi. In a press release it was revealed that “the two sides exchanged views on bilateral relations, emphasized the importance of promoting the healthy and stable development of China-Iran relations, and expressed that China and Iran are willing to continue to maintain close communication and cooperation, in order to continuously deepen the comprehensive strategic partnership between the two countries.”

Japan has confirmed that 2 Chinese aircraft carriers, the Liaoning and Shandong, operated simultaneously in the western Pacific earlier this month. This is the 1^st time such operations have taken place east of Iwo Jima. The Japanese Ministry of Defense also emphasized its serious concern after Chinese J-15 fighter jets from the Shandong carrier flew as close as 45 meters to Japanese P-3C patrol planes over international waters. Japan’s Defense Ministry concluded that “such unusual approaches by Chinese military aircraft could lead to an accidental collision.” Japan lodged a formal protest and released images of the encounters, which lasted approximately 80 minutes.

Taiwan’s Defense Minister Wellington Koo called the dual carrier deployment “evidence of China’s expansionist aims,” as operations pushed beyond the Second Island Chain. China described the maneuvers as “routine training” and accused Japanese surveillance flights of raising tensions, with Chinese Foreign Ministry spokesperson Lin Jian insisting the activities “are consistent with international law and international practices.”

According to a Reuters exclusive, the United Wa State Army (UWSA)—a militia supported by China which represents the interests of the Wa ethnic group in Myanmar—has taken control of newly established rare earth mines in eastern Myanmar. This strengthening of Beijing’s grip on critical minerals comes on the heels of tense trade discussions with the United States. The UWSA is now protecting the mining sites where Chinese workers are excavating the rare earths. Chinese customs data show that China’s near monopoly on rare earth processing depends heavily on imports from Myanmar, which supplied nearly half of China’s rare earth needs in the first 4 months of this year.

In their 1^st official call since South Korea’s presidential transition, Xi Jinping and Lee Jae-myung exchanged pledges to keep bilateral ties on a steady course. Both leaders underscored the value of their countries’ longstanding economic and cultural links, the need to “respect each other’s core interests and major concerns,” and to ensure the “relationship always moves forward on the right track.” The conversation also touched on regional cooperation, with Seoul extending an invitation to Beijing for the upcoming Asia-Pacific Economic Cooperation (APEC) summit and both sides expressing an interest in “strengthen[ing] exchanges at all levels” to “jointly safeguard multilateralism and free trade and ensure the stable and smooth functioning of global and regional industrial and supply chains.”

Taiwanese prosecutors have charged 4 former members of the Democratic Progressive Party (DPP) with espionage, alleging the group passed sensitive information to Beijing over an extended period. The case, which involves individuals with experience in government and security roles, has prompted calls for tougher safeguards against infiltration. Authorities in Taipei have emphasized that breaches of national trust will be met with severe penalties, as the island faces persistent efforts by China to access confidential state information and undermine its institutions. Earlier this year, Taiwanese President Lai Ching-te issued statements regarding the topic of espionage, saying that “the government will not stop its efforts to ensure that national sovereignty is not violated, and hopes that all citizens will unite to resist division.”

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