Easing Tensions: Trump and Xi’s Trade Thaw Sparks Hope Ahead of APEC Summit
China Trade Outlook Brightens on Trump–Xi Thaw Ahead of APEC Summit
by Bob Mason | Published: October 21, 2025, 02:22 GMT+00:00
A soft tone now shows from U.S. President Trump and Chinese President Xi. Their words link close and clear. The talk hints at a trade breakthrough before the Asia-Pacific Economic Cooperation (APEC) Summit on October 31 to November 1. A change follows weeks of high tension, and the shift lifts mood in China’s stock markets.
Easing Trade Tensions Signal Potential Deal
Global markets moved fast as trade strains grew between Washington and Beijing. China set new limits on rare earth exports, parts needed in high-tech work. The U.S. then threatened a 100% tariff on Chinese goods. In the days before APEC, both presidents spoke in a more kind tone.
President Trump said that he does not plan to harm China. He called President Xi smart and open to talk. In a meeting soon in South Korea, his words set a tone for a fair deal. News tells us that President Xi has asked Trump to come to China early next year. Both leaders now show that they want more clear dialogue. This change lifts investor hope, and U.S. markets feel it.
Rare Earth Export Restrictions Remain a Key Issue
Even with good signs, key issues stay open. China now tightens its rules for rare earth magnet exports, especially to the United States. In September, China’s exports grew by 8.3% over last year. In August, the growth was 4.4%. Yet, rare earth magnet exports to the U.S. dropped nearly 29% from the previous month and fell 27% from the prior year.
The rare earth matter now sits at the heart of the trade fight. New bans work as a tool in talks. The rules affect trade between the two countries and touch the world economy. Rare earth elements play a part in electronics, defense, and renewable energy. IMF head Kristalina Georgieva asked the two sides to fix the matter soon. She warned that cuts in rare earth supplies may add more strain to the slowing global economy.
Soybeans and Tariffs Also in Focus
Another area that draws note is agricultural trade. In September, China did not import U.S. soybeans—a first since November 2018. This fact makes traders worry about another rise in trade tension. President Trump lists as goals for a deal that China buys soybeans at former levels, stops fentanyl flows tied to China, and fixes the rare earth tie-up.
While buying soybeans again and stopping fentanyl seem within reach, ending the rare earth ban looks hard. This fact sets a tough scene for the coming talks.
Positive Market Reactions in Mainland China
A calm in trade talks and good economic numbers help mainland China markets. On October 21, the CSI 300 Index went up 0.39%, the Shanghai Composite Index rose 0.18%, and the Hang Seng Index increased 1.47%. These numbers build on recent gains. Still, the indices remain below their 2025 peaks as traders keep a close watch ahead of APEC.
Investor hope grows with news that Beijing may add policy support. Such support may lift manufacturing, job conditions, and daily spending.
Looking Ahead: Critical Economic Events and APEC Summit
The coming weeks shape market mood in China and Hong Kong. The Fourth Plenum ends on October 23. Industrial profit figures come on October 27. The National Bureau of Statistics will release the private sector Purchasing Managers’ Index on October 31. Moves by the central bank add more to watch.
The APEC Summit stands as the key event. A trade deal with lower U.S. tariffs on Chinese goods could push mainland markets to new peaks. A pause in talks may slow the strong 2025 rally, during which the CSI 300 and Shanghai Composite have grown about 15.7% and 15.5% year-to-date and the Hang Seng Index has advanced 30.7%.
Traders and investors now track every word. The summit result will shape U.S.-China trade ties and affect global economic balance in the coming months.
About the Author:
Bob Mason brings more than 28 years of work in finance. He has served in global rating agencies and banks in many countries. He writes on money matters, metals and energy, alternative assets, and stocks, with a close focus on European and Asian markets.
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