U.S. and China Hold High-Level Calls Ahead of Potential Trump-Xi Summit

Ahead of the potential Trump-Xi summit on May 14–15, senior U.S. and Chinese officials held a new round of calls — most likely the final round before the summit.

Chinese Vice Premier He Lifeng held a video call with U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

Almost at the same time, Wang Yi, Member of the Political Bureau of the CPC Central Committee and Foreign Minister, also spoke by phone with U.S. Secretary of State Marco Rubio.

One line in the Chinese readout is particularly noteworthy:

“China expressed serious concerns over recent U.S. economic and trade restrictions against China.”

I took stock of what these “economic and trade restrictions” likely refer to. They should include the following:

First, semiconductor equipment controls are continuing to tighten. According to foreign media reports, the U.S. Commerce Department has used “is-informed letters” to ask U.S. chip equipment makers including Applied Materials, Lam Research, and KLA to stop shipping certain equipment to some Hua Hong facilities. Hua Hong is China’s second-largest foundry and has been trying in recent years to move toward more advanced nodes. BIS’s intention is clear: to keep Hua Hong’s capacity expansion within the mature-node range and prevent a second advanced-node breakthrough point from emerging beyond SMIC. The impact is not limited to new equipment deliveries. It could also drag servicing, maintenance, and spare-parts supply for existing equipment into significant uncertainty, thereby lengthening construction and yield-ramp timelines for relevant fabs.

Second, the U.S. Congress is pushing the MATCH Act, or the Multilateral Alignment of Technology Controls on Hardware Act. The core purpose of this bill is to close cross-border loopholes in semiconductor equipment controls. Through a very strict “0% de minimis” rule, it seeks to require the U.S. government, within 150 days, to push allies such as the Netherlands and Japan to align their policies, limiting China’s access to critical semiconductor manufacturing equipment controlled by the United States and its allies that China cannot indigenously substitute in the short term — especially so-called chokepoint SME. The text names or covers entities including Huawei, Hua Hong, SMIC, YMTC, and CXMT, and also focuses on DUV immersion lithography tools, etching, deposition, servicing and maintenance, and remote technical support.

Third, on April 22, the House Foreign Affairs Committee advanced a package of export control-related bills. These include measures to extend the statute of limitations for export control violations, increase civil penalties under ECRA, add BIS export control officers overseas, establish a whistleblower incentive mechanism, accelerate Entity List updates, restrict semiconductor manufacturing equipment exports, and counter the extraction of AI model capabilities. The Remote Access Security Act, or RASA, is especially worth watching. The bill passed the House in January 2026 and would amend the Export Control Reform Act of 2018 to extend export controls to foreign persons’ remote access, through the internet or cloud services, to U.S. items, software, or technology subject to the EAR. Its aim is to close the channel through which Chinese companies could access controlled chip computing power via remote cloud services.

Fourth, the United States is beginning to fold AI model capabilities themselves into its national security narrative on China. The White House has issued a memorandum characterizing industrial-scale model distillation as a national security threat. Congress has simultaneously introduced the Deterring American AI Model Theft Act, H.R. 8283, which defines so-called “model distillation attacks” and calls for the creation of an attackers list. The State Department has also reportedly sent diplomatic cables to embassies and consulates around the world, instructing U.S. diplomats to warn foreign governments about Chinese AI companies allegedly using and distilling U.S. closed-source models without authorization. On April 29, the Republican chairs of the House Homeland Security Committee and the Select Committee on China also announced a joint investigation into model distillation, specifically naming DeepSeek, Alibaba, Moonshot AI, and MiniMax.

Fifth, energy and financial sanctions are also escalating. In late April, OFAC added Henglida Petrochemical Dalian Refinery Co., Ltd., a core refining entity under Hengli Petrochemical, to the SDN List on grounds of alleged involvement in the transport and trade of Iranian crude oil. This is not only about Iran. It shows that the United States is willing to put a large Chinese private refining company on the SDN List and use pressure through the financial system, insurance, shipping, and settlement channels to affect China’s energy import chain from Iran. Hengli Dalian Refining is one of China’s important private refining players. The sanctions may not only affect the petrochemical industry, but also spill over through the chemical fiber, textile, and apparel supply chains, forcing relevant multinational brands, oil companies, and traders to launch look-through KYC reviews and increasing foreign trade compliance costs for China’s textile and chemical supply chains.

Sixth, port and shipping issues are becoming further geopoliticalized. On April 28, the United States, together with Bolivia, Costa Rica, Guyana, Paraguay, and Trinidad and Tobago, issued a joint statement supporting Panama’s sovereignty and criticizing China for allegedly pressuring Panama by increasing detentions and inspections of Panama-flagged vessels. The statement directly described China’s economic activities around Panamanian ports and terminals as “politicizing maritime trade.” Although the statement is not legally binding, it provides political groundwork for possible future U.S. investment reviews, shipping compliance restrictions, or even sanctions targeting Chinese port operators.

However, China’s warning does not seem to have had much effect. On the same day, the U.S. Federal Communications Commission unanimously approved a proposal to ban all Chinese laboratories from testing electronic devices such as smartphones, cameras, and computers for use in the United States.

The practical impact could be significant:

1. For Chinese companies exporting smartphones, IoT devices, PCs, base stations, and other equipment to the U.S. market, devices developed in China may in future have to be shipped across borders as prototypes to third-party trusted countries, such as Japan, South Korea, Southeast Asia, or Europe, for testing and certification. This will lengthen turnaround time, and the higher cost premium of overseas testing will directly hurt product iteration agility.

2. Chinese domestic testing institutions, including China-based subsidiaries of multinational testing giants, will lose the ability to serve the U.S., the world’s largest single consumer market.

On the same day, the FCC also advanced another proposal to further restrict the operations of China’s three major telecom carriers in the United States. They had already been barred from providing traditional telecom services in the U.S.; this time, Washington wants to expand the restrictions from “telephone and communications services” to “data centers and cloud infrastructure,” blocking their ability to continue participating in U.S. network infrastructure through data centers, internet exchange points, and cloud service nodes.

At the same time, after the video meeting, Bessent posted on X summarizing the call. In it, he emphasized that:

“China’s recent provocative extraterritorial regulations have a chilling effect on global supply chains.”

This clearly refers to China’s April 7 issuance of the State Council Regulations on the Security of Industrial and Supply Chains — State Council Order No. 834 — and the April 13 issuance of the Regulations on Countering Foreign Improper Extraterritorial Application of Laws and Measures — State Council Order No. 835. For detailed analysis of the two orders, please see here and here.

Under Order No. 834, if a foreign government takes discriminatory measures against China, China may initiate an investigation. If it determines that such measures have had a substantive impact on China’s industrial or supply chains, China may impose restrictions on trade, services, and other areas. In addition, individuals — for example politicians, legislators, or think tank figures — who directly participate in promoting such measures may also be placed on countermeasure lists. Another scenario is that if a company, in order to comply with foreign policies, suddenly interrupts normal commercial cooperation with China, that too may trigger an investigation. If the behavior is deemed improper, China may take countermeasures. This logic is broadly similar to the Anti-Foreign Sanctions Law and the Unreliable Entity List.

Order No. 835 usefully supplements China’s MOFCOM blocking rules, Anti-Foreign Sanctions Law, Export Control Law, and other instruments by covering gray areas not fully addressed by those laws. Examples include cases where the United States requires Chinese companies to provide supply chain information or undergo additional compliance reviews; where the U.S. Congress subpoenas executives of Chinese companies to testify at hearings; or where U.S. courts seek access to data or evidence located inside China.

Overall, these two State Council orders make it very easy for U.S. companies that need to do business with China to become trapped in legal conflicts between the United States and China, while facing the threat of severe penalties from the Chinese government.

In the Chinese readout of Wang Yi’s call with Rubio, there is also a very interesting sentence.

Wang Yi stressed that:

“The Taiwan question concerns China’s core interests and is the biggest risk point in China-U.S. relations. The U.S. side should honor its commitments, make the right choice, open up new space for China-U.S. cooperation, and make due efforts for world peace.”

The phrase “open up new space for China-U.S. cooperation” appears to be a relatively new formulation. In the traditional language of China’s diplomatic system, especially Wang Yi’s own usual phrasing, references to the Taiwan issue are almost always defensive and red-line-oriented — for example, “the first red line that must not be crossed in China-U.S. relations” or “there is no room for compromise or concession.”

If, in this latest formulation, the handling of the Taiwan issue is directly linked syntactically to “opening up new space for China-U.S. cooperation” — a positive incentive or transactional formulation — that is an extremely rare positive conditional phrase in diplomatic language. It suggests that Beijing may be signaling to Washington, especially to a Trump team with a strongly transactional style, a more direct framework of a possible “Grand Bargain” on Taiwan.

Reuters’ reporting today also seems to support this interpretation:

When U.S. President Donald Trump travels to Beijing next month, his Chinese counterpart Xi Jinping has made clear that Taiwan will sit at the top of his agenda, a stark departure from their South Korea meeting last year, where he deliberately set the issue aside.

People involved in the preparations for Trump’s trip say privately that China has been constantly sending similar signals at a working level ahead of the summit, but declined to discuss the details, citing confidentiality of the talks.

Chinese readout

He Lifeng Holds Video Call with U.S. Treasury Secretary Bessent and U.S. Trade Representative Greer

On the evening of April 30, He Lifeng, Chinese lead for China-U.S. economic and trade affairs and Vice Premier of the State Council, held a video call with U.S. leads, Treasury Secretary Bessent and Trade Representative Greer. The two sides, focusing on implementing the important consensus reached by the two heads of state at their Busan meeting and in their previous phone calls, had candid, in-depth, and constructive exchanges on further properly resolving each side’s economic and trade concerns and expanding practical cooperation. China expressed serious concerns over recent U.S. economic and trade restrictions against China. The two sides agreed to continue making good use of the China-U.S. economic and trade consultation mechanism, continuously enhance consensus, manage differences, strengthen cooperation, and promote the healthy, stable, and sustainable development of China-U.S. economic and trade relations.

U.S. readout

This morning, I convened talks with Vice Premier He Lifeng to discuss President Trump’s upcoming travel to China.

Our meeting was both candid and comprehensive, and I stressed that China’s recent provocative extraterritorial regulations have a chilling effect on global supply chains.

I look forward to a productive summit between President Trump and President Xi in Beijing.

Chinese readout

Wang Yi Speaks by Phone with U.S. Secretary of State Rubio

On April 30, Wang Yi, Member of the Political Bureau of the CPC Central Committee and Foreign Minister, spoke by phone with U.S. Secretary of State Rubio.

Wang Yi said that head-of-state diplomacy has always been the “anchor” of China-U.S. relations. Under the strategic guidance of President Xi Jinping and President Trump, China-U.S. relations have generally remained stable. This serves the fundamental interests of the two peoples and meets the broad expectations of the international community. The two sides should preserve the hard-won stability, properly prepare for important high-level interactions, expand areas of cooperation, manage points of difference, and explore the building of a strategic, constructive, and stable China-U.S. relationship, achieving mutual respect, peaceful coexistence, and win-win cooperation.

Wang Yi emphasized that the Taiwan question concerns China’s core interests and is the biggest risk point in China-U.S. relations. The U.S. side should honor its commitments, make the right choice, open up new space for China-U.S. cooperation, and make due efforts for world peace.

Rubio said that the U.S.-China relationship is the most important bilateral relationship in the world, and head-of-state diplomacy is at the core of U.S.-China relations. The two sides should maintain communication and coordination, respect each other, properly manage differences, accumulate outcomes for high-level U.S.-China interactions, and seek strategic stability in U.S.-China relations.

The two sides also exchanged views on the situation in the Middle East and other issues.