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Inside the report

01 General knowledge

A Long-Running Rivalry

The meeting between Treasury Secretary Scott Bessent and Vice Premier He Lifeng is the latest step in a decades-long effort by the world's two largest economies to manage their rivalry. For years, the United States and China have clashed over trade, technology, and regional influence, with each side using tariffs, export controls, and diplomatic pressure to protect its interests. This competition has deep roots, including a history of U.S. presidents visiting Beijing to ease tensions, such as Donald Trump's 2017 trip that was seen as a softer approach to China. More recently, the relationship has been marked by a trade war, with both nations imposing high tariffs on each other's goods and seeking to reduce their economic dependence on the other.

A key part of this larger story is the competition over critical minerals and advanced technology. China has long dominated the global supply of rare earths, which are essential for making smartphones, electric vehicles, and defense systems, and it has used this dominance as leverage in trade disputes. The United States has responded by trying to build its own supply chains, investing billions of dollars in domestic mining and processing projects. At the same time, both countries are racing to lead in artificial intelligence, a technology that could shape economic and military power for decades. These overlapping rivalries have made every high-level meeting between the two governments a high-stakes effort to prevent tensions from spiraling into open conflict.

02 The subject

The Treasury Secretary's Role

Scott Bessent, the U.S. Treasury Secretary, is the chief economic diplomat for the United States, responsible for managing the country's financial and economic relationships with other nations. In this role, he leads negotiations on trade, sanctions, and financial stability, and he often represents the U.S. in international forums like the G20. Bessent's position is crucial in the current talks because he is the main U.S. official tasked with finding common ground with China on issues like tariffs and rare earths, while also addressing concerns about AI and energy disruptions. His counterpart, He Lifeng, is a Chinese Vice Premier who oversees economic and financial affairs, making him the natural partner for these discussions.

03 Explained

How Tariffs and Rare Earths Work

Tariffs are taxes that a government places on imported goods, making them more expensive and less competitive compared to domestic products. They are often used as a tool in trade disputes to pressure other countries to change their policies, but they can also raise costs for businesses and consumers. In the U.S.-China context, tariffs have been a central point of contention, with both sides imposing them on billions of dollars worth of goods. The current tariff truce, which caps tariffs at about 20 percent, is set to expire in November, and its extension is a key topic in the New York talks.

Rare earths are a group of 17 chemical elements that are vital for modern technology, including magnets used in electric vehicles, wind turbines, and military equipment. China has a near-monopoly on the processing of these materials, controlling over 90% of global refining capacity. This dominance gives China significant leverage, as it can restrict exports to disrupt supply chains in other countries. The U.S. has been trying to reduce its reliance on Chinese rare earths by investing in domestic production and stockpiling critical minerals, but these efforts are still in their early stages.

04 Previous developments

From Beijing to New York

The current talks follow a series of high-level meetings between the two countries. In May 2026, President Trump visited Beijing for a summit with President Xi Jinping, their first face-to-face meeting in over six months, where they discussed trade, Iran, and Taiwan. That summit led to the creation of a U.S.-China Board of Trade, which was meant to manage bilateral trade in non-sensitive goods. In the months since, both sides have been working on the details, including a proposed reduction of tariffs on about $30 billion worth of goods from each side.

The path to the New York meeting has also been shaped by legal and political challenges. The U.S. Supreme Court struck down tariffs that were imposed under a national emergencies law, forcing the administration to rebuild its tariff regime under new authorities. This has led to a more complex and slower process, with the administration launching investigations into forced labor as a way to justify new tariffs. Meanwhile, China has severely curtailed exports of rare-earth magnets and critical minerals since April 2025, adding urgency to the discussions. The upcoming summit between Trump and Xi on September 24 is the next major milestone, and the New York talks are seen as a crucial preparatory step.

05 The environment

A Tense Global Backdrop

The New York talks are taking place against a backdrop of multiple global crises. The ongoing war with Iran has disrupted energy markets, and both the U.S. and China are concerned about potential economic shocks. The U.S. has been trying to rally international support for isolating Iran financially, but China, a major buyer of Iranian oil, has been a key obstacle. This has created a delicate balancing act for the U.S., which needs China's cooperation on some issues while pressuring it on others.

Domestically, the U.S. is facing political pressures that add urgency to the talks. With midterm elections scheduled for November 3, the administration is keen to address inflation concerns, which are partly linked to trade policies. At the same time, there is a debate within the U.S. about how to handle Chinese AI, with some officials calling for guardrails to prevent powerful models from falling into the wrong hands. The meeting between Bessent and He is an attempt to manage these competing pressures and keep the relationship stable, even as both sides continue to pursue their own strategic interests.

06 Why this happened

Why These Talks Are Happening

The immediate reason for the Bessent-He meeting is to prepare for the upcoming Trump-Xi summit, but the deeper cause is the need to manage a relationship that is both competitive and interdependent. The two countries are locked in a trade war, but they also rely on each other for goods, technology, and financial stability. This creates a strong incentive to avoid escalation, as a full-blown economic conflict would be costly for both sides. The tariff truce, which expires in November, is a key mechanism for maintaining this stability, and both sides are eager to extend it.

Another factor is the changing nature of the competition. The U.S. is concerned about China's rapid advances in AI, which could threaten its technological lead, while China is worried about U.S. efforts to restrict its access to advanced chips and other technology. At the same time, both countries are dealing with the fallout from the Iran war, which has disrupted global energy supplies. These overlapping issues make it necessary for the two governments to communicate regularly, even as they continue to compete. The talks are a way to manage these tensions and find areas of common ground, such as maintaining the flow of rare-earth magnets and increasing Chinese purchases of U.S. goods.

07 Facts and events

What's at Stake

The outcome of these talks could have significant consequences for global trade and technology. A failure to extend the tariff truce could lead to a new round of tariffs, raising costs for businesses and consumers in both countries. On the other hand, a successful agreement on rare earths could help stabilize supply chains for critical technologies, benefiting industries worldwide. The talks also have implications for the U.S. midterm elections, as the administration is under pressure to show progress on economic issues.

The meeting is also notable for its timing, coming just days before the first state visit by a Chinese leader to the U.S. in over a decade. This visit is a symbol of the importance both sides place on the relationship, despite their many disagreements. The fact that the U.S. is willing to engage in such high-level talks, even as it continues to pressure China on issues like AI and rare earths, shows that both countries recognize the need for dialogue. The challenge will be to translate this dialogue into concrete agreements that can withstand the pressures of their ongoing rivalry.

08 Questions answered

Frequently Asked Questions

What is the U.S.-China Board of Trade?

The U.S.-China Board of Trade is a framework agreed upon during the May 2026 summit to manage bilateral trade in non-sensitive goods, but its effectiveness remains uncertain.

Why is the U.S. concerned about Chinese AI models?

Chinese AI models are approaching the capabilities of top U.S. models and are often cheaper, which has raised concerns about market dominance and security risks.

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