Dear Focus Reader,

This week, China and the United States agreed to establish a new trade council intended to maintain economic dialogue and manage ongoing frictions over tariffs and market access. According to China's Ministry of Commerce, the mechanism will bring together both countries' economic and trade teams for continued consultations, including discussions on reciprocal tariff reductions and cooperation in specific sectors.

The new initiative builds on agreements reached during the May Xi-Trump summit in Beijing, where both sides committed to establishing new trade and investment councils as part of a broader effort to stabilize economic relations. Its launch marks a concrete step toward institutionalizing the dialogue begun at the summit.

Even so, both governments have also continued to expand targeted trade and technology measures tied to national security. In recent weeks, Washington has tightened export controls on advanced AI chips, and on Monday, Beijing broadened export restrictions on a variety of U.S. firms and barred government procurement of products from 46 U.S. companies, including major defense contractors.

Meanwhile, global leaders gathered this week at the World Economic Forum in Dalian, where discussions reflected growing concern that emerging technologies, including artificial intelligence, are adding new layers of risk to an already competitive U.S.-China relationship. At the Forum, Harvard University Professor Graham Allison, known for his "Thucydides Trap" framework, warned that intensifying U.S.-China rivalry increases the risk of miscalculation, even as interdependence and communication channels continue to provide space for stability.

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