US-China step into a new phase

With the spotlight turning away from the unilateral US tariffs and onto the future of TikTok in America, China seems to have dominated the latest round of the ongoing trade talks with Washington.

At the conclusion of the Madrid round last week, both China and the US said they had reached a basic framework consensus on resolving the TikTok dispute, alongside commitments to reduce investment barriers and expand cooperation.

The consensus on the social app was followed by a telephone call on Friday between US President Donald Trump and Chinese President Xi Jinping. Trump described the talks as “very productive” and said progress was made on key issues, including a potential TikTok deal, though no final agreement was announced.

China offered a more cautious readout of the conversation. Beijing, according to an AFP report, described the Xi-Trump call as frank and in-depth, reiterating its stance that TikTok’s fate must be decided through market-based negotiations that comply with China’s law, while urging Washington to ensure a fair environment for Chinese firms; the US is pushing ByteDance to divest TikTok’s US arm.

The deal on the blockbuster app centres on delegated management of US user data and content security, along with licensed, rather than transferred, use of algorithms and intellectual property. This closely mirrors the earlier “Project Texas” proposal, under which Oracle would oversee TikTok’s US data servers in Texas to ensure compliance with American law.

Crucially, algorithm rights would be licensed rather than sold, preserving commercial secrecy and safeguarding Chinese user data. As officials emphasised, this represents a consensus rather than a binding agreement, with technical details still under discussion.

With only the 10pc US reciprocal tariff remaining in place and the larger 24pc now suspended, China manages to resist permanent tariff escalation

Even so, the direction is clear. An outright US ban on TikTok is no longer a realistic prospect: the technical hurdles are prohibitive, and the app’s social and political footprint in the US is too entrenched. Negotiated arrangements remain the only viable path forward.

The leaders of the world’s two largest economies are now billed to meet on the sidelines of an Asia-Pacific Economic Cooperation forum summit in South Korea starting at the end of next month. Trump said that he would travel to China next year, while Xi would also visit the US at an unspecified time.

The Madrid round of negotiations stresses how China, through countermeasures, has manamanaged to guide bilateral economic relations gradually toward a more normal track as tariffs largely faded from the spotlight while both sides placed emphasis on TikTok.

The statements from the negotiators representing the two countries show that the previously defining feature of the talks, that is, US tariffs, which dominated earlier meetings in Geneva, London and Stockholm, was almost entirely absent from the Madrid discussions and replaced with more technical, neutral and constructive terms such as removal of investment barriers and greater trade cooperation.

In roughly five months after the US had hit China — and dozens of other countries — with steep import taxes, Washington has shifted markedly from wielding tariffs for sweeping concessions from Beijing to cancelling, freezing or suspending them, setting up consultation mechanisms and holding successive rounds of talks. That trajectory has eventually culminated in the near ‘disappearance’ of tariffs from the Madrid outcome statement.

The first tangible outcome for China is its success in resisting permanent tariff escalation. The 10 per cent reciprocal tariff remains in place, while the larger 24pc has been suspended. Other proposed measures — duties on fentanyl precursors — have also faded from the agenda.

Simultaneously, Beijing has advanced its own demands, aiming not only to resist tariff pressure but also to build a more balanced, reciprocal, and stable economic relationship that signals the transition into a new stage of China-US ties.

Analysts argue that China’s new three principles — mutual respect, equality and reciprocity, and win-win cooperation — are gradually taking effect. With an updated set of bargaining strategies, Beijing is working to systematically correct the US strategic misperceptions, they say.

The shifting balance of power, now tilting more favourably toward China, provides a broader toolkit for managing the relationships. Looking ahead, leader-to-leader phone calls and summits will be the key moments to watch, as they are expected to generate greater momentum across the full spectrum of China-US issues.

The consensus framework on TikTok underscores Beijing’s longstanding position that technology issues should not be politicised or weaponised and that China will not compromise on core principles, corporate interests, or international norms.

The guiding formula is to balance national interests, company rights, and fairness. The pledge to review technology exports “in accordance with the law” offers a clear yet straightforward framework, offering room for pragmatic business cooperation to take shape.

This dynamic is set to shape a new phase in the US-China relationship. Setbacks and friction remain inevitable, but the trajectory now stands in sharp contrast to that of just a few years ago. The outcome may prove to be one of the most consequential shifts in the international order today while avoiding a full-scale rupture in the US-China ties, which the world can hardly afford.

Published in Brackly News, Young World, September 22nd, 2025