U.S.-China Trade Framework Lacks Details as Two Sides Struggle to Show

Li Chen
11 Jun, 2025
Hong Kong

Stock market indexes in China and Hong Kong advanced as the U.S. and China wrapped up two-day trade talks in London. 

The Hang Seng index increased 0.5%, and the CSI 300 index edged up 0.8% after trade negotiators said they have agreed "in principle to a framework" that needs approvals by respective leaders of the U.S. and China. 

The 2-day trade meeting ended without a breakthrough as both sides signaled the need for additional talks in the month ahead. 

The current pause in sky-high tariffs is set to expire on August 12, and the meeting in London came days after Xi Jinping and Donald Trump held a 90-minute phone call on June 5.

A trade agreement between the U.S. and China is likely to fall short of market expectations, as structural impediments are likely to hamper progress. 

China has lowered its reliance on direct exports to the U.S. over the last six years, and Chinese companies have diversified their manufacturing bases to Mexico, Vietnam, Indonesia, and Malaysia. 

Moreover, China has used as leverage its export of rare earth minerals to the U.S., critical elements needed for the manufacturing of advanced electronics systems. 

The U.S. has also flipped the tariff negotiations to ban exports of advanced semiconductor chips needed for the development of China's artificial intelligence-driven products.

U.S.-China trade tensions are likely to persist in the years ahead, as China sources more agricultural products from South America and the U.S. keeps export bans on sensitive advanced technology.

While the Trump administration publicly states that the fundamental goal of tariffs is to decrease U.S. trade deficits, high tariffs on all key trade partners have never succeeded in reducing structural goods trade deficits. 

Privately, U.S. lawmakers admit that tariffs, import taxes paid by U.S. consumers, are expected to play a key role in increasing federal government revenue. 

 

China Indexes and Stocks 

The Hang Seng Index gained 0.5% to 24,383.98, and the mainland-focused CSI 300 index added 0.8% to 3,897.35. 

Baidu Inc. increased 1.8% to HK $87.20, Xiaomi Corp. added 2.2% to HK $54.65, and BYD Electronic International added 1.9% to HK $32.55. 

Domestic consumer-focused companies traded down amid worries about the ongoing weakness in consumer demand growth.

Tingyi (Cayman Islands) Holding Corp. declined 2.4% to $12.04, Nongfu Spring dropped 1.9% to HK $38.55, and Mixue Group added 0.2% to HK $531.50.