China Softens Tone on US Ties Amid Potential Thaw In Chip War

China’s Commerce Minister Wang Wentao called for a ‘return to normal’ in trade ties with the United States on Friday amid a likely thawing of a three-year-long chip war with Washington.

“We will continue to strengthen dialogue and communication, deepen consensus, reduce misunderstandings, enhance cooperation, to jointly put China-US economic and trade relations back on track to achieve healthy, stable and sustainable development,” Wang told reporters, adding that he wanted ties with the US to return to a stable footing.

The “ups and downs” in the relationship between the US and China underscored their economic interdependence, he added.

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China’s softening tone on the trade war follows an announcement by Nvidia chief Jensen Huang earlier this week that the Donald Trump government had agreed to approve licences needed for the chipmaker to start selling its H20 artificial intelligence chips to China again.

Washington had put a halt on the exports of those chips in late April. Huang’s statements from this week point to a significant reversal in policy — a first in America’s three-year-long export control push.

While Trump or the White House are yet to make any official statement on the policy change, US Commerce Secretary Howard Lutnick has said that H20 sales were part of negotiations on China’s ongoing blockade of rare earths.

Meanwhile, China has welcomed the resumption of H20 sales, with the Commerce ministry saying on Friday that it hopes the US “can correct ‘wrong’ practices”. It also said it hoped that the US could “work with China,” so that the two countries “meet each other halfway”.

Earlier on Thursday, Commerce minister Wang also met with Nvidia’s Huang and told him that he hoped multinational companies, including Nvidia, would provide high-quality and reliable products and services to Chinese customers.

Huang said the Chinese market was very attractive, and Nvidia was willing to deepen cooperation with Chinese partners in the field of artificial intelligence, according to a Commerce ministry statement released on Friday.

‘China is open’

Wang also told Huang that China’s policy of attracting foreign investment would not change and the door to openness would only open wider.

This is Huang’s third visit to China this year, during which he has also met with the country’s Vice Premier He Lifeng and the chairman of the China Council for the Promotion of International Trade, Ren Hongbin.

Chinese officials told Huang they welcomed foreign companies to continue to invest in the country, the Nvidia CEO said at a press conference in Beijing on Wednesday.

At the event, Huang described AI models from Chinese firms DeepSeek, Alibaba and Tencent as “world class” and said AI was “revolutionising” supply chains.

China’s Commerce ministry said in a separate statement on Friday that the US had told Beijing that it would approve sales of Nvidia’s H20 AI chips to Chinese customers.

Huang said on Wednesday that Chinese customers’ demand for the H20, which was released from US export controls this week, is high, but no purchase orders have been fulfilled yet, as it awaits US government approval for export licences.

Nvidia has also announced it is developing a new chip for Chinese clients called the RTX Pro GPU, which would be compliant with US export restrictions and designed specifically for smart factories, and for robot training purposes.

‘Tariff war unnecessary’

Amid the bonhomie, however, Commerce minister Wang also made a few sharp comments on the issue of the tariff war.

Asked about the United States specifically, Wang said: “Major countries should act like major countries. They must shoulder their responsibilities,” adding that China would protect its national interests.

China is facing an August 12 deadline to reach a durable tariff agreement with the United States, after Beijing and Washington reached a preliminary deal last month to end weeks of escalating tit-for-tat tariffs.

If no deal is reached, global supply chains could face renewed turmoil from duties exceeding 100%.

Wang said negotiations in Geneva and London earlier this year demonstrated there was no need to return to a trade war.

“Practice has proven that through dialogue and consultation, with leadership and communication at the highest levels, we can properly manage contradictions and resolve our differences,” he said.

China’s rare earths exports rose 32% month-on-month in June, customs data showed on Monday, in a sign that agreements struck last month in London to free up the flow of the metals were possibly bearing fruit.

Wang said the current overall tariff level imposed by the US on China was “still high” at 53.6%. Analysts have said that additional duties exceeding 35% will probably wipe out Chinese manufacturers’ profit margins.

“Both sides have come to understand that they need each other, as lots of the goods and services that we exchange are irreplaceable, or at least difficult to exchange in the short term,” Wang said.

“China does not want a trade war, but it is not afraid of one,” he reiterated.

• Reuters, with additional editing by Vishakha Saxena

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