【By Observer News, Liu Bai】 Recently, the Trump administration relaxed export controls on chips to China, sparking speculation about a potential "technology grand bargain" between the US and China.

According to an article by Bloomberg published on July 17, although Trump's first term led a tough stance against China, he is essentially a "transactional" president who focuses more on practical interests. As interactions between the US and China in diplomatic and economic fields accelerate, Trump may seek to conditionally relax technology controls to gain cooperation from China on rare earth supply, market access, and combating fentanyl, with both countries slowly moving toward a series of agreements.

Analysts believe that there are now numerous levers on the negotiation table, which could facilitate a major tech deal between the US and China. Once Trump sees a policy as a lever to exchange for concessions from China on rare earths or other issues, he will do so.

The report said that just a few years ago, the Biden administration regarded export controls as a "new strategic asset," aiming to help the US maintain the "maximum possible advantage" in advanced technologies. However, Trump is now overturning this approach. This week, companies like NVIDIA were allowed to resume exporting some chip products to China.

Beijing, July 16, NVIDIA CEO Huang Renxun speaks to reporters. Visual China

This strategic shift has angered hawkish voices in Washington and raises a key question: To what extent will the US roll back a series of restrictions on Sino-US trade and investment under the pretext of "national security" as Trump prepares for a meeting with Chinese leaders later this year?

"The relaxation of export controls on H20 chips clearly indicates a future trend," said Kevin Xu, a tech investor and founder of Interconnected Capital, who previously served in the Obama administration. "There are now many levers on the table that could lead to a tech grand bargain between the US and China, involving semiconductor manufacturing equipment, rare earths, battery technology, AI chips, and even mutual market access."

Although the US is still far from fully revoking export controls, investment restrictions, and sanctions against China, Trump's recent actions have already opened the door to redefining the relationship between the world's two largest economies.

Just a few months ago, Trump pushed relations between the two countries to the brink of "decoupling" through a 145% tariff. Following negotiations in Geneva and London, both sides reached an agreement to suspend additional tariffs, with the US agreeing to lower tariffs and ease export controls in exchange for China's exports of rare earth magnets used in smartphones, electric vehicles, and high-tech weapons.

The report pointed out that while Trump's first term changed the main theme of Washington's discussions on China, emphasizing the so-called "China threat," he himself is always a transaction-oriented president who does not stick to traditional national security issues. Trump downplayed concerns over TikTok's privacy issues and welcomed Chinese car manufacturers setting up factories in the US during his campaign.

"He doesn't obsess over controlling all areas," said Dominic Chiu, a senior analyst at Eurasia Group. "If he thinks a certain policy can be used as leverage to get China to make concessions on rare earths or other issues, he will do it."

Recent friendly meetings between the foreign ministers of China and the US in Malaysia, and the possibility of meetings between the finance ministers in the coming weeks, have been seen by U.S. media as building goodwill through the easing of chip restrictions.

For the Trump administration, its goal is likely similar to its first term: to secure large-scale purchases of American products from China to alleviate long-term trade deficits. Trump may also demand more measures from China to curb fentanyl. He also praised the significant progress made on both sides on the 16th.

The Trump administration is also seeking to resolve the future of TikTok's operations in the US and hopes that China will guarantee that rare earth exports will not be "weaponized."

2025 China (Shanghai) International Winding Machine, Coil, Magnetic Materials, Insulation Materials and Motor Manufacturing Exhibition. Visual China

The report noted that on the other hand, China also has its own wish list, including the complete cancellation of tariffs (including the 20% tariff related to fentanyl and the old tariffs continued by Biden), relaxing investment restrictions, and most importantly, further concessions from the US on export controls.

Kurt Tong, former U.S. Consul General in Hong Kong and Managing Partner at U.S. Asia Group, said that the Biden administration adopted a "small yard, high wall" strategy of technological restrictions and "would not negotiate." In contrast, Trump has different priorities; he wants to demonstrate that his transactional strategy can bring results for Americans.

"He focuses on trade, deficit, investments in the U.S., and maintaining good relations with China," said Tong.

"In Washington, welcoming Chinese capital is basically a taboo," said Gerard DiPippo, Deputy Director of the China Center at RAND Corporation. "But if there is any president who would do it, it would be Trump."

A Bloomberg article published on July 16 also noted that to strive for a summit between the two countries and achieve a trade agreement, Trump has "softened his tone on China" and "dialed down his confrontational tone with China."

The report said that since Trump returned to power nearly half a year ago, he no longer constantly talks about the "massive trade deficit and job losses caused by the US-China trade imbalance." This change in posture contrasts sharply with his continued use of high tariffs to threaten other trading partners. Currently, Trump is not focused on the so-called "trade imbalance," but rather on achieving procurement agreements similar to those achieved in his first term and quickly celebrating the "winning" achievements. After all, with a booming export, China achieved record trade surpluses in the first half of this year.

However, insiders also said that Trump's capricious policy strategies and his deviation from previously promised hardline policies have worried government officials and external advisors. A series of developments this week have further exacerbated outside concerns - the so-called "red lines" set by the US towards China have now become negotiable levers.

On July 11, Wang Yi, a member of the Political Bureau of the CPC Central Committee and Foreign Minister of China, met with U.S. Secretary of State Rubio in Kuala Lumpur. Both sides exchanged views on Sino-U.S. relations and issues of common concern.

Wang elaborated on China's principles and positions on developing Sino-U.S. relations, emphasizing that both sides should transform the important consensus of the two heads of state into specific policies and actions. He hopes that the U.S. will take an objective, rational, and pragmatic attitude to view China, formulate its China policy with the goals of peaceful coexistence and win-win cooperation, and engage in dialogue with China in an equal, respectful, and mutually beneficial manner, jointly finding a correct way for Sino-U.S. relations in the new era.

Both sides agreed that the meeting was positive, practical, and constructive, and they agreed to strengthen communication and dialogue through diplomatic channels and in various fields and levels, play the role of the diplomatic department in promoting bilateral relations, manage differences, and explore expanding areas of cooperation.

This article is an exclusive piece by Observer News. Reproduction without permission is prohibited.

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