How is the China camp painting the trade deal situation back home?

While China is also acknowledging the positive steps taken in seeking a trade deal, the nuance in how either the US or China is selling the narrative is also something important to be wary about. On paper, sure there are things to be optimistic as both sides seek de-escalation. However, the undertone is what will set the stage for further discussions and how fruitful that can be.

The US so far have pushed the narrative that both sides managed to see eye to eye in talks over the weekend. And that China has finally understood the US’ position on fentanyl and will do something about that. In the meantime, Bessent has been harping on the supposed mechanism for both sides to continue discussions moving forward. And he made sure markets know that with such a mechanism, retaliatory tariffs of the kind we saw last month will be avoided.

But how is China viewing all this instead?

China’s commerce ministry dubbed the deal as an “important step” in resolving the differences between the two countries via dialogue and consultation. Adding that it lays the groundwork for further cooperation. Note, there’s no mention of fentanyl talks whatsoever here.

And hours later, the message from the state media is making it clear how they see the situation as being.

“This shows that China’s firm countermeasures and resolute stance have been very effective. The countermeasures have had a material impact on the US and the US administration have reduced tariffs to the base level i.e. 10% after the talks.”

Besides that, the commerce ministry also made sure to note that its restriction on rare earth exports will still be in place regardless of the agreement today. In case you missed it, this is related to the announcement last month here.

All this is not to say that there’s two sides to the story though. At least this time around, the narratives from both sides are lining up much, much closer together than before.

However, it is evident that China is more reserved and cautiously optimistic. That said, optimistic is still optimistic especially after the height of tensions last month. And the joint statement today, which is a rarity on its own, reflects that as both sides are putting on a show to seek de-escalation.

For just choosing to sit down and talk, China has definitely gotten a major concession from Trump. So, it’s arguably clear who blinked first in this scenario. But at this point, it doesn’t really matter who did. Egos aside, the development is a positive for markets and the global economy.

But in the bigger picture, can this be followed up by more positive correspondence and eventually an actual trade deal down the road? Or is this going to be the new normal with the US seeking sectoral tariffs/decoupling from China? We’ll see in time.