US-China Negotiators Work to Finalize Deals Ahead of Shenzhen APEC Summit

The US and China are racing to secure investment deals before their leaders meet in Shenzhen next month, while competing for leverage over extending their broad trade agreement. Multiple anonymous sources said intense negotiations would continue in coming weeks amid hurdles to finalising institutional frameworks and economic agreements. The sources said negotiators had made considerable progress on Board of Investment discussions since President Xi Jinping and US President Donald Trump met last month in Washington. The leaders will meet on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in November, their second meeting in two months and third this year.

The investment board, announced at the leaders' May summit in Beijing, stalled because of US political opposition to potential Chinese investment, particularly in car manufacturing. The two sides discussed the investment board during Xi's state visit last month but failed to reach agreement. However, the two sides institutionalised the similar Board of Trade after the Washington talks. One source said negotiators were using the recently launched trade forum as a model for defining the investment forum's structure and mandate. The trade board has a specific mandate, a defined leadership structure and a meeting schedule. US Treasury Secretary Scott Bessent, US Trade Representative Jamieson Greer and Chinese Vice-Premier He Lifeng lead the trade board. The Chinese embassy in Washington said last week that the investment board would provide an institutionalised communication platform. The embassy said economic and trade teams were conducting regular dialogue on potential investment opportunities and barriers.

A similar process is identifying investment opportunities in both countries, but the focus remains on US deals given political sensitivities surrounding Chinese investment. Multiple sources said negotiators were discussing potential Chinese investment in non-sensitive US sectors, including electric vehicles, battery storage and power equipment infrastructure. Two sources said those sectors could still pose political sensitivities and commercial risks for Chinese companies, potentially leading negotiators to choose consumer goods investments instead. Another source said US business leaders continued to oppose the investment board because of concerns about greater competition from Chinese firms. The source said most easily achievable agreements had already been reached and the remaining issues were difficult, with major gaps. Differences over potential investment announcements contributed to Chinese business leaders being excluded from the White House state dinner and meetings in September.

Trump has repeatedly proposed allowing Chinese companies to establish US operations despite opposition from US car manufacturers and lawmakers. Trump told Fox News last month that Trump would accept China opening a plant to build cars in the US. Two sources said large-scale, long-term Chinese investment in the US was unlikely in any sector because of bilateral political realities and uncertainty over Washington's policymaking.

The broad trade agreement signed in Busan, South Korea, last year was extended by just two months, to January 2027, during Xi's September visit. Three sources said China was seeking leverage through rare earths and the US through jet engines and aircraft parts to maximise gains from another extension. The original agreement reduced US tariffs on some Chinese goods. The agreement put additional US restrictions on Chinese-affiliated companies on hold. The agreement also suspended certain Chinese rare earth export controls. The agreement reversed the suspension of US export licences for jet engines and other aircraft components supplied to China. One source said neither side was currently threatening to restrict rare earths or aircraft components, but each wanted to remind the other of that leverage.

Two sources said China was dismayed by the two-month extension but saw an opportunity to strengthen China's bargaining position on purchase commitments, particularly Boeing aircraft. The same sources said Washington saw an opportunity to press Beijing for greater rare earth flows and increased purchases of agricultural products. Beijing agreed during Trump's May visit to China to buy 200 Boeing aircraft, but the deal has yet to materialise. One source said discussions were moving in a positive direction, but an APEC announcement appeared less likely. Another source said Beijing was using the Boeing order as a bargaining instrument in trade truce talks. Another source said Beijing was reluctant to increase critical mineral supplies because Beijing viewed those supplies as China's most effective economic weapon.

However, three sources said both sides recognised there was no alternative to extending the trade agreement. The sources said negotiations might not conclude in time for an APEC announcement and could continue into the G20 summit in December. The Chinese embassy said last week that the temporary extension gave both sides room to assess implementation of the joint arrangements. The embassy expressed the belief that both sides would seek a positive solution on a further extension through high-level economic and trade interactions before year-end.