Donald Trump began his trip to Asia this weekend aiming for a “complete deal” with Xi Jinping. American and Chinese negotiating teams wrapped up talks in Kuala Lumpur today, with Washington describing the discussions as “very constructive” and Treasury Secretary Scott Bessent mentioning a “substantial framework” to manage tariffs and rare earths.

All this progress will be well-received by markets, but this is the language of de-escalation — not the foundations for a lasting deal. The Kuala Lumpur talks were explicitly designed to avoid escalation and pave the way for some constructive announcements as a result of Trump and Xi’s face-to-face talks. Both sides have tactical reasons to calm the immediate storm.

Washington wants to stabilise the relationship ahead of the summit between the leaders and downgrade China’s leverage on rare earths and permanent magnets. Beijing, for its part, wants tariff relief, advanced microchips access, and breathing room for its exports without giving up its trade surplus. Neither side can operate with 100% tariffs on each other’s goods, and both want to reassure markets and international partners that they are climbing down from fever pitch.

In this push to find common ground — even if not on major structural issues — both sides have settled on a convenient narrative around recent oil sanctions. After the US targeted Russian companies Rosneft and Lukoil, Chinese state oil majors paused some seaborne purchases of Russian crude. This gives Washington a positive story to tell markets and allies, while Beijing gains a reason to stabilise the broader agenda without appearing to capitulate. Trump can claim he forced China to reduce its support for Moscow, and the Chinese side can frame it as a gesture of goodwill. Neither claim is wrong, but Russian oil exports have nothing to do with the underlying causes of Sino-American rivalry.

Both the US and China are trying to get what they need in the short term while preserving their long-term self-sufficient strategies. Any agreement will be symbolic and likely short-lived. We can expect a pause in new tariffs and the relaxation of mutual export controls in vital supply chain choke points. There may even be announcements of Chinese investment in the US and purchases of American agricultural goods, but how much of this will really come to pass is uncertain.

The reality is that, despite the negotiations, the deeper trend towards decoupling will continue. Washington is accelerating the refining of rare earths at home, with the Pentagon announcing fresh investment in response to Beijing’s export controls. China is doubling down on semiconductor independence, pushing its local industries to close the gap with Western technology despite export restrictions. The CCP’s five-year plan stresses tech self-reliance in key strategic sectors. A trade truce won’t reverse these dynamics, but will buy both sides time to become less dependent on each other.

The best insight will come next Thursday when the two leaders meet. Even if an agreement is announced, it will not be a comprehensive reset. Less interdependence could make room for mutual coexistence rather than confrontation. But that confrontation will likely only be postponed — not cancelled.

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Miquel Vila is a political consultant specialising in international affairs. He is also the executive director of the Catalonia Global Institute.

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