Trade War Monitor, July 28: China, U.S. Resumes Trade Talks in Sweden

The article summarizes recent developments in global economic relations, with a focus on U.S.-China trade talks, China-EU supply chain cooperation, and Brazil’s pivot towards deeper commercial ties with China amidst tensions with the United States.

U.S. and Chinese economic officials have resumed trade talks in Sweden as the deadline for a tariff truce approaches on August 12. China's Vice Premier He Lifeng will meet with U.S. representatives from July 27 to 30, and both sides are considering an extension to the truce, which would allow more time to negotiate a broader deal. This comes shortly after the United States and the European Union reached a trade agreement, instituting a 15% rate on most EU products and the EU’s commitment to purchase $750 billion worth of American energy[para. 1]. Progress has also been made between China and the EU, who recently agreed to a supply chain pact aimed at improving the management of export control disputes—issues that have previously delayed delivery of vital raw materials from China[para. 1][para. 3]. The article notes that such economic maneuvers are closely watched, given their potential impacts on global markets[para. 4].

A key domestic challenge for China is boosting consumption. In the first half of the year, final consumption expenditure contributed 52% of China’s GDP growth, reflecting a push from policymakers to stimulate spending. While total retail sales of consumer goods rose 5% year-over-year in this period—an improvement over the previous year—the share of GDP growth attributed to consumption fell compared to last year’s figure of 60.5%. This suggests ongoing difficulties in transforming China’s consumption dynamics, despite expanded trade-in policies and other incentives by the Ministry of Commerce[para. 5][para. 6][para. 7].

On the industrial front, profits among major Chinese industrial companies fell 4.3% in June year-on-year. However, this marks a turnaround from May’s sharper 9.1% decline. The improvement is credited to the equipment manufacturing sector, especially automakers, where profits nearly doubled due to successful promotions and higher investment returns. The cumulative profit decline for January to June, however, widened to 1.8%, indicating that recovery remains uneven across sectors[para. 8][para. 9].

On the international stage, China and the EU reached a new mechanism to resolve export control disputes at the 25th China-EU Summit in Beijing. The “upgraded version” of this mechanism, backed by Chinese Premier Li Qiang and praised by European Commission President Ursula von der Leyen, is expected to stabilize crucial supply chains and address longstanding concerns over delayed approvals for essential raw materials[para. 10][para. 11]. At the summit, President Xi Jinping met with top EU officials—including António Costa and Ursula von der Leyen—calling for collaboration and cautioning against economic decoupling. Both sides reaffirmed their commitment to multilateralism and open markets, pledging to tackle global challenges together such as climate change[para. 13][para. 14].

In light of deteriorating U.S.-Brazil relations—exacerbated by the 50% tariffs imposed by President Donald Trump—Brazil plans to open a tax and customs attaché office in China. This strategic move aims to facilitate customs processes and broaden Brazil’s exports to China, reflecting an ongoing realignment of Brazil’s international trade partnerships under President Luiz Inácio Lula da Silva[para. 16][para. 17][para. 18]. The office is expected to expedite customs clearance and help Brazilian products gain faster entry into the Chinese market by navigating regulatory hurdles more effectively[para. 19].

The article concludes with a note that Trade War Monitor is a weekly newsletter compiled by Lu Zhenhua[para. 21].