China signals rare earths will flow, US trade truce 'further confirmed'
WATARU SUZUKI and STELLA YIFAN XIE
SHANGHAI/HONG KONG -- China's Ministry of Commerce on Friday said it will process export applications for "controlled items," echoing U.S. officials' comments that they have reached a deal with Beijing to resume exports of rare earths.
An unnamed spokesperson said the two sides have maintained close communication since meeting in London earlier this month, where they restored a trade truce reached in Geneva in May. The countries have "further confirmed the details of the framework," according to a Q&A published on the ministry's website.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Nikkei Asia
2 hours ago
- Nikkei Asia
Dollar advances on stronger-than-expected US jobs data
NEW YORK (Reuters) -- The U.S. dollar rose against major currencies including the yen, euro and Swiss franc on Thursday after data showed that the U.S. economy created more jobs than analysts estimated, signaling the Federal Reserve might take longer to cut interest rates. The dollar strengthened 0.70% to 144.705 versus the Japanese yen and was up 0.40% to 0.79510 against the Swiss franc. The U.S. currency is on track to notch a second consecutive session of gains against both safe-haven currencies. The euro was 0.26% weaker at $1.1769. It is on track for the second straight day of losses. U.S. Labor Department data on Thursday showed that nonfarm payrolls increased by 147,000 jobs in June. Economists polled by Reuters had forecast a rise of 110,000. The report was published a day early because of the July 4 U.S. Independence Day holiday. "It will be very difficult for the Fed to cut rates in this environment, with the labor market so strong," said Axel Merk, president and chief investment officer at Merk Hard Currency Fund in California. "The argument that Jerome Powell has made for the Fed to stay on the sidelines continues to hold." The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.27% to 97.01, on track for two straight sessions of gains, although it is still near multi-year lows. The rise in the dollar following the data was accompanied by an increase in U.S. Treasury yields. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 9.1 basis points to 3.88%. The yield on benchmark U.S. 10-year notes rose 4.1 basis points to 4.344%. Wall Street stock indexes including Dow Jones Industrial Average, the benchmark S&P 500 and the Nasdaq Composite were all up on the session. Republicans in the U.S. House of Representatives advanced President Donald Trump's massive tax-cut and spending bill toward a final yes-or-no vote early on Thursday. The U.S. has lifted restrictions on exports to China for chip design software developers and ethane producers, a sign of easing trade tensions between the countries. The dollar strengthened 0.06% to 7.164 versus the offshore Chinese yuan. The British pound rose after losing ground in the previous session following a selloff in gilts. British Prime Minister Keir Starmer's office backed finance minister Rachel Reeves, easing concerns over her future. The pound strengthened 0.15% to $1.3656.
The Diplomat
2 hours ago
- The Diplomat
China's Accelerating Efforts to Internationalize the Renminbi
In recent weeks, a cluster of news reports and commentary has drawn attention to China's accelerating efforts to internationalize the renminbi (RMB). At the Lujiazui Forum in Shanghai, The New York Times reported that People's Bank of China governor Pan Gongsheng delivered a pointed critique of global dependence on a single national currency, warning that financial risks stemming from the dominant issuer could spill over internationally and trigger crises. Without naming the United States, Pan called for a more diversified global monetary system and promoted China's digital RMB as part of the solution. According to this framing, China's current push to expand the RMB's global role is a strategic response to the vulnerabilities of dollar dependence, rather than a direct challenge to dollar hegemony. In the Financial Times, economist Gerard Lyons argued that Beijing should consider allowing a gradual appreciation of the RMB to support its international ambitions. Meanwhile, The Straits Times reported that Chinese authorities have launched a sweeping campaign to elevate the currency's role in global finance, including the expansion of China's Cross-Border Interbank Payment System (CIPS) to offshore RMB centers in Africa, the Middle East, and Central Asia, and plans to establish a digital RMB international operations center in Shanghai. This renewed focus on the global role of RMB – by both Beijing and international observers – is propelled by rising geopolitical volatility and waning confidence in U.S. monetary stewardship. These shifting conditions have not altered the direction of policy, but have reinforced and accelerated Beijing's broader, long-term strategy to reduce its reliance on the dollar and institutionalize an alternative ecosystem of trade, payments, and finance – one designed to operate alongside, rather than displace, the dominant dollar-based order. Beijing's goal is to carve out strategic space for the RMB within an increasingly fractured global system. In this emerging configuration, the RMB assumes a more prominent, though still bounded, role. A State-led Strategy of Internationalization While China is attempting to seize a strategic opening to accelerate the internationalization of the RMB, it is important to note that Beijing is not pursuing a zero-sum game against the greenback. The more revealing metric is not whether the RMB overtakes the dollar, but how successfully China is building functional alternatives, particularly in trade, finance, energy, infrastructure, and digital payments, that reduce its systemic exposure to dollar-based risks. Judging RMB progress solely by global reserve status or through the lens of dollar hegemony obscures the pragmatic, domain-specific architecture now taking shape. Since the late 2000s, Beijing has pursued a cautious, state-managed campaign to expand the RMB's role in global trade and finance. These efforts gained traction in the aftermath of the 2008 Global Financial Crisis and again during the China-U.S. trade war. Key milestones include the establishment of CIPS, the introduction of yuan-denominated oil futures ('petroyuan'), and the inclusion of the RMB in the International Monetary Fund's Special Drawing Rights basket. However, China's RMB internationalization strategy is not a direct progression toward achieving significant global reserve currency status (currently the RMB accounts for only 2-3 percent of global reserves), as this would entail extensive financial liberalization. China has avoided liberalizing its capital account or floating its exchange rate. RMB internationalization remained a means to an end – a way to hedge against geopolitical risk and strengthen China's global economic position without exposing itself to the volatility of open financial markets. What has changed in 2025 is not China's strategy per se, but the context in which it operates. With U.S. economic policy increasingly erratic, and dollar-based systems increasingly seen as instruments of geopolitical coercion – frequently deployed to sanction adversaries – Beijing perceives a window of opportunity. Recent developments – including new cross-border infrastructure, digital currency pilots, and offshore RMB market instruments – signal a potential turning point. Together, these measures lay the groundwork for broader RMB adoption by strengthening the institutional infrastructure underpinning its international use. At the same time, some observers have suggested that currency appreciation would be a more direct route to enhancing the RMB's credibility and global uptake. Lyons argued that a stronger RMB, supported by domestic policy reforms, could help anchor China's long-term ambitions for a more prominent international role. But such a move would risk undermining export competitiveness and exacerbating deflationary pressures at home, potentially harming economic growth. Rather than pursuing exchange-rate adjustments to boost the RMB's global standing, Beijing continues to prioritize institutional mechanisms that preserve domestic stability and policy autonomy. Selective Integration Over Liberalization A key feature of China's approach is its continued refusal to pursue full capital account liberalization. While some incremental easing of capital controls has occurred in recent years – notably through expanded investment quotas and a broader array of offshore RMB product offerings – the underlying architecture remains tightly managed. Instead of opening up, Beijing is cultivating a system of selective internationalization: integrating into global financial markets on its own terms, in a way that preserves domestic stability and control. Hong Kong remains the linchpin of this strategy. Its semi-autonomous status under the 'one country, two systems' framework allows for controlled experimentation in cross-border financial innovation. The city's introduction of RMB-denominated stock trading counters and its growing role in digital e-CNY ('digital yuan') initiatives that enhance connectivity between the mainland and international payments infrastructure underscore its centrality. Yet even here, China is carefully calibrating exposure to risk. This strategy reflects a broader understanding of global economic fragmentation. Rather than chasing global dominance, China is building a network of bilateral and regional arrangements that reduce dependence on dollar-based systems. From the Belt and Road Initiative to BRICS+ and currency swaps, China is embedding the RMB in a growing network of cross-border arrangements – facilitating trade and investment while maintaining control over capital flows. Building Systemic Resilience The unifying logic to this evolving strategy is building systemic resilience. For China, being able to settle critical transactions in its own currency is not just economically advantageous, but strategically necessary. As the global economic order becomes more contested and less rules-based, the ability to operate outside Western-controlled systems becomes a matter of national security. This logic also appeals to China's partners. In a world of growing financial polarization, the RMB is gaining traction not because it offers a superior alternative to the dollar, but because it offers a means of reducing exposure to U.S. policy volatility. For countries under financial sanctions, or those wary of dollar dependence, access to RMB-denominated channels offers a vital hedge. While China has been pursuing trade-based RMB internationalization – using bilateral settlements, currency swap agreements, energy transactions, and strategic partnerships to reduce reliance on the dollar without liberalizing its capital account – recent developments mark a turn toward financial market infrastructure. This shift reflects a strategy to embed the RMB more deeply in the global financial system, not merely as a medium for trade, but as part of a broader institutional architecture. Among the key measures are the establishment of a digital RMB international operations center in Shanghai, designed to promote cross-border adoption of China's central bank digital currency by streamlining transactions and reducing dependence on dollar-based systems. The rollout of a fast payment system linking Hong Kong and the mainland facilitates real-time RMB transfers for trade and services, increasing usability in cross-border commerce. In May 2025, the Shanghai Futures Exchange proposed opening domestic currency futures to overseas investors and brokers, offering onshore tools to hedge RMB exposure and supporting further financial liberalization. Meanwhile, the expansion of CIPS to offshore centers in Africa, the Middle East, and Central Asia reinforces China's push to build an alternative to SWIFT and extend the RMB's reach across emerging financial corridors in the Global South. In June 2025, CIPS also launched a pilot service for processing international letters of credit, expanding its functionality in trade finance and further reducing reliance on Western-dominated financial intermediaries. Taken together, these initiatives point to a more finance-oriented phase of RMB internationalization – less about transactional trade flows, and more about embedding the RMB in the architecture of a parallel monetary order. Toward a Multipolar Currency Order What we are witnessing in 2025 is not a radical challenge to the prevailing currency system, but the construction of a parallel one – intended not to displace the dollar, but to reduce exposure to it. China is leveraging global uncertainty to accelerate a model of selective internationalization it has long been developing. This model does not aim to overturn the existing monetary order, but to insulate China and its partners from its volatility and to expand China's influence in targeted domains. It does not seek to replace one global financial hegemon with another, but to mitigate the risks of reliance on the existing one. Rather, RMB internationalization is incremental but accelerating – a recalibration of risk, reach, and the rules of global finance. This work has received funding from the European Union's Horizon Europe coordination and support action 101079069 — EUVIP — HORIZON-WIDERA-2021-ACCESS-03. Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Research Executive Agency (REA). Neither the European Union nor the granting authority can be held responsible for them.
The Diplomat
2 hours ago
- The Diplomat
The Embarrassing Reason Xi Talks about ‘Great Changes Unseen in a Century'
Haven't you heard? The world is undergoing great changes unseen in a century. And Chinese leader Xi Jinping is doing his level best to make sure everyone knows. In front of the cameras – and microphones – of the Western media in 2023, he told his Russian counterpart Vladimir Putin: 'Now is the moment of change unseen in a century. We are jointly driving it forward.' Of course, Putin could only agree. But agree with what, exactly? The formulation clearly means something important. Xi enshrined it at the 19th National Congress of the Chinese Communist Party in October 2017, and has used it many times in other key speeches and documents. The phrase is even used to describe Xi's approach since taking charge at the 18th National Party Congress in 2012. But what does it mean? Maybe Wikipedia can help. The dedicated page on the topic relies on a 2024 European Council on Foreign Relations e-book. The authors trace the origin to Yuan Peng and his 2009 article 'The Financial Crisis and U.S. Economic Hegemony' in the Chinese academic journal Contemporary International Relations. Wikipedia and the ECFR authors also cite the dedicated entry in the Center for Strategic Translation's glossary, which tells us the phrase was: … first used by Chinese academics following the Great Recession. The phrase is associated with the dangers and opportunities posed by American decline, and has been adopted by THE CENTER as a programmatic assessment of the trajectory of the current world order. The trends which can be feasibly linked to this trajectory are diverse. The source for this is Rush Doshi's 2021 book, 'The Long Game.' Doshi writes, in turn: The concept first emerged from conversations about Western decline after the Global Financial Crisis. One of its first usages was in a 2009 essay titled 'The Financial Crisis and American Economic Hegemony' written by Yuan Peng… Yuan Peng observed that the United States 'for the first time in the history of its hegemony' was suffering from a series of grave challenges, that these were producing 'great changes unseen in a century' Yuan's article has an original Chinese version and a translation. Doshi's quotes are his own translation. As it turns out, both versions mistranslate Yuan. The original Chinese refers to: 'The 'eastward shift of global power' and the rise of emerging powers have brought about changes not seen in centuries.' (emphasis mine) Earlier in the article, Yuan referred to Henry Kissinger's 'theory' of 'great changes unseen in 400 years' and how Kissinger saw the ''eastward shift of power'' as 'an inevitable trend.' So is Xi's catchy phrase just one more thing Kissinger gave China, along with decades of what the Chinese call 'strategic opportunity'? Maybe. But why 'centuries' not 'a century'? Why did Yuan write about '400 years' not '100 years'? In trying to glean the origins of the phrase, we shouldn't be too influenced by the specific Chinese character formulation. Yes, Yuan's quote is exactly the same as Beijing's official phrase with the addition of a shu to specify several centuries and the subtraction of the da that indicates the changes are great. But both follow the famous line (at least in Chinese histro-literary culture) from late Qing Dynasty statesman Li Hongzhang, about 'great changes unseen in thousands of years.' And others have used the same formulation before it became an official slogan, such as a literature professor in 1993. To establish descent, we want both the focus on great hegemonic changes and a single century. Funnily enough, this brings us back to Kissinger. The first line of the first chapter of his 1994 book 'Diplomacy' stated: 'Almost as if according to some natural law, in every century there seems to emerge a country with the power, the will, and the intellectual and moral impetus to shape the entire international system in accordance with its own values.' One Chinese paying attention was Liu Mingfu, author of the bestselling book 'China Dream' published in January 2010. With that quote from Kissinger and references to some other Western scholars as support, Liu asserted something much like an actual natural law. According to Liu, there is a hundred-year cycle of new 'champion countries' rising up to transform the world as they transform themselves, driving historical progress forward for the benefit of humankind. China's dream is its destiny, Liu proclaimed, and it will replace the U.S. as the champion country. Unlike hegemonic Uncle Sam, the People's Republic of China will be a leader, drawing on the Chinese distinction between a bullying hegemon and those who lead the 'Kingly Way.' But military strength is key – the only way to righteously push a selfish U.S. into doing what's best for itself and humanity as whole, starting with stepping aside as Taiwan gets 'unified.' Strong circumstantial evidence points to Liu as the source of the phrase about 'great changes unseen in a century.' Xi's signature 'China Dream' is the very title of Liu's book. As Xi ascended to power he ordered the creation of a website to educate cadres, which recommended Liu's book in 2013. In his first 2012 meeting with the new military leadership, he pointed to 'great changes unseen before.' Most if not all of the ideas in the book have prominent analogues in Xi's policies. The 2019 'China and the World in the New Era' white paper contained thinly disguised Liu Mingfu. Explainers for internal consumption on 'great changes unseen in a century' and the 'Great Rejuvenation of the Chinese Nation' recapitulate the themes of Liu's book. And in a dog-that-didn't-bark way, they do so without mentioning Liu. Liu, no fool, understands that it's embarrassing that Xi Jinping Thought is derivative of a popular nonfiction book. Interviewed by the foreign media when Xi unveiled the 'China Dream' slogan, Liu was triumphant (As the BBC put it: 'Colonel Liu Mingfu seems to think that he has more capital than most to tell Xi Jinping his dreams') but careful not to stick his neck out too far: The world today is undergoing a major change unseen in a century, but this also means we have the opportunity to make major changes. China's national goal is nothing less than to realize the 'Chinese Dream', the great rejuvenation of the Chinese people. Its core strategy is the 'Belt and Road' initiative to connect the world and bring happiness through cooperation. The ultimate goal will be to build a community with a shared future for mankind. And he needs to be careful. The better connected and more powerful Liu Yazhou, who provided the foreword to Liu Mingfu's book, is reportedly in prison on a commuted death sentence. No wonder Liu wanted a photo showing him smiling as he holds up books on Xi Jinping Thought next to a plate with Xi on it. But still, he must be satisfied with how his decision to read Kissinger's book turned out. While Xi is driving great changes unseen in a century with Putin and others, Liu knows that he was the first mover in driving great changes in Xi's head.
