China Trade Outlook Brightens on Trump–Xi Thaw Ahead of APEC Summit

Rare Earth Exports Plunge as Trade Talks Loom Chinese exports rebounded at the end of the third quarter, challenging Washington’s efforts to curb reliance on Chinese goods. Exports soared 8.3% year-on-year in September, up sharply from 4.4% in August. Imports also rebounded, signaling robust demand.

However, rare earth magnet exports to the US did not contribute to September’s export surge. According to CN Wire:

“China’s September rare earth magnet exports to the United States fell 28.7% from August, customs data shows. Germany, South Korea, Vietnam, the United States, and Mexico are China’s top five export destinations for rare earth magnets by volume in September.”

Notably, Chinese exports to the US were down 27% year-on-year in September.

Rare earths have become a central topic in the trade debate after Beijing’s new export restrictions. President Xi could use rare earth magnets as a bargaining chip. The restrictions not only affect the US but also the global economy.

International Monetary Fund Managing Director Kristalina Georgieva called on the US and China to reach an agreement to avoid disruptions to rare earth exports. She warned that restrictions could further affect a weakening global economy.

While curbing rare earth exports, China imported no US soybeans in September, the first time since November 2018, raising concerns of a renewed escalation.

Trump’s Wish List and APEC Countdown Jennifer Jacobs, CBS News senior White House reporter, commented on Trump’s potential wish list for entering talks with President Xi, stating:

“Trump on what he wants from China: for them to restart buying soybeans, at least in the amount they were buying before; to stop with the fentanyl; I don’t want them to play the rare earth game with us.”

The consensus was that #3 was highly improbable, setting the stage for tense talks. The APEC Summit runs from October 31 to November 1. Ahead of the APEC Summit, US Treasury Secretary Scott Bessent will meet with China’s vice premier He Lifeng in Malaysia.

The US administration has indicated a willingness to lower tariffs on Chinese shipments. Lower levers could be crucial for China’s manufacturers, labor market, and private consumption.

Mainland Markets Gain on Easing Tensions Mainland equity markets advanced on Tuesday, October 21, extending their gains from the previous session. The third quarter’s better-than-expected economic indicators, easing trade tensions, and hopes for a deal have lifted sentiment.

Despite the gains, the indices continue trading below their 2025 highs, reflecting a degree of caution in the run-up to the APEC Summit.

The CSI 300 climbed 0.39% in early trading on Tuesday, October 21, while the Shanghai Composite Index rose 0.18%. Meanwhile, the Hang Seng Index continued to lead the gains, climbing 1.47%.

China CSI 300 – Daily Chart – 211025 As focus begins to turn to the APEC Summit, markets are also betting on further policy support from Beijing.

What’s Next: Fourth Plenum, Data, and APEC The final two weeks of October could be pivotal for Hong Kong and Mainland equity markets. Announcements from the Fourth Plenum, ending on Thursday, October 23, industrial profit numbers (October 27), NBS private sector PMIs (October 31), and the PBoC influence sentiment.

Further pledges for policy support and upbeat Chinese data could raise expectations that Beijing will achieve its 5% GDP growth target.

However, the APEC Summit will be the main event. A trade deal with lower US tariffs on Chinese goods could send Mainland Indices towards record highs. Conversely, stalled talks could derail the 2025 rally. The CSI 300 and the Shanghai Composite have gained 15.7% and 15.5%, respectively, year-to-date. For context, the Hang Seng Index has rallied 30.7% to lead the way.

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