WASHINGTON/BEIJING: As the U.S. readies itself for its fifth round of trade discussions with China in Kuala Lumpur, Washington is purportedly contemplating employing its technological upper hand as an “edge” resulting from Beijing’s current boundaries on rare earth exports. Analysts, however, caution that while some progress might be made on issues like soybeans or fentanyl, major concessions from China seem unlikely.
According to the latest report from Yahoo, the U.S. is weighing restrictions on a wide range of software-driven exports to China, from laptops to jet engines. This comes after President Donald Trump threatened earlier this month to impose controls on “any and all critical software” by Nov 1, signalling a more aggressive stance in the ongoing trade conflict.
Jayant Menon, a visiting senior fellow at the ISEAS – Yusof Ishak Institute, described the potential move as a calculated pressure tactic. “At one level, it can be viewed as simply part of an aggressive negotiation strategy, designed to intimidate in order to secure the best deal possible,” he said. “It also indirectly reflects how concerned the US is about the recent controls on exports of rare earths.”
Yet experts remain sceptical about the effectiveness of such tech leverage. Nick Marro, principal economist for Asia at the Economist Intelligence Unit, pointed out that Beijing is unlikely to be easily coerced. “If the US does put strong controls over the export of software, this could have significant midstream and downstream implications, given that US software goes into everything,” he said. “For China, we’re not expecting it to significantly dismantle its rare earth export control regime, given that Beijing is increasingly comfortable with exerting its dominance over this part of global industry.”
Trade tensions have ramped up in recent weeks, with both nations targeting strategic industries—including rare earths, shipping, and technology—with sanctions. U.S. Treasury Secretary Scott Bessent emphasised on Wednesday that “everything is on the table” regarding potential software restrictions and that any measures would be coordinated with G7 allies.
Calling China’s rare earth licensing requirements “unworkable and unacceptable,” Bessent expressed hope that the upcoming talks could pave the way for a more constructive dialogue between President Trump and President Xi Jinping, potentially during the Asia-Pacific Economic Cooperation forum in South Korea next week.
China’s Ministry of Commerce confirmed that Vice-Premier He Lifeng will lead the Chinese delegation to Malaysia from Friday through Monday for the negotiations. Analysts suggest that while a comprehensive resolution is unlikely, targeted agreements—such as on soybean purchases or fentanyl control—could help set the stage for a potential Xi-Trump meeting.
“The best we’d really hope for is a de-escalation from the current tensions that we’re seeing,” Marro said, noting that minor agreements could signal progress even as structural disputes remain unresolved. Lynn Song, chief economist for Greater China at ING Bank, echoed this view, emphasising that both sides are treading carefully to avoid jeopardising the presidential talks. “I expect that a consensus will need to be more or less set for [the Xi and Trump meeting] to go ahead, and would expect a neutral or positive outcome if the meeting does take place, such as a further extension or expansion of the current trade truce,” she said. “If the talks are cancelled, we would see a high possibility for another round of escalations.”
As the world watches, the stakes are high. The upcoming negotiations could either produce meaningful progress or deepen an already tense standoff between the two economic superpowers.
