Bessent Hails “Very Successful” China Talks As Trump-Xi Summit Puts AI, Rare Earths And Energy On The Table

Treasury Secretary Scott Bessent emerged from roughly eight hours of talks with Chinese Vice Premier He Lifeng in New York on Sunday calling the meeting “very successful,” with Washington and Beijing agreeing to new mechanisms covering trade and artificial intelligence just days before President Donald Trump hosts Chinese leader Xi Jinping in Washington.

The talks, held at JPMorgan Chase headquarters, were intended to lay the groundwork for the Trump-Xi summit later this week. Working-level discussions are continuing as the two sides try to lock down whatever can be agreed before the leaders meet.

On paper, the immediate deliverables were relatively modest. In practice, the timing is anything but.

The two sides agreed to establish a U.S.-China AI dialogue, with Washington proposing a notification mechanism for AI incidents serious enough to reach the national-security level. Bessent framed the concept as an effort to move the world’s two leading AI powers from opacity toward greater transparency and establish some common understanding of threats.

As we noted Friday, artificial intelligence was already emerging as one of the summit’s most consequential issues, sitting alongside trade, semiconductors, Taiwan and rare earths. The two governments also moved to operationalize the previously proposed Board of Trade. U.S. Trade Representative Jamieson Greer said negotiators are looking for baskets of “non-sensitive” goods that could potentially be treated separately from future trade restrictions. Washington is considering lower-tech Chinese consumer goods, while Beijing is looking at U.S. energy, agricultural products and potentially medical devices.

There was no announced breakthrough, however, on some of the much larger outstanding disputes, including Chinese rare-earth flows, additional purchases of U.S. agricultural goods or Boeing aircraft. Advanced AI-chip export restrictions were also not part of Sunday’s AI discussion.

Perhaps more revealing was how little Beijing itself said about AI. Xinhua described the talks as “candid, in-depth and constructive” before relegating the subject to the final sentence of its brief readout: “They also held dialogues on AI-related issues.”

Chinese state media Xinhua has a very brief report on the Bessent and He Lifeng meeting in New York.

AI only mentioned in last line: “They also held dialogues on AI-related issues.” pic.twitter.com/HsUQmdujJ3

— Kyle Chan (@kyleichan) September 21, 2026

But Xi is also heading to Washington against a considerably different geopolitical backdrop than the one surrounding Trump’s May visit to Beijing.

For starters, two of China’s most attractive sources of discounted crude have been sharply constrained. Venezuela had become an important supplier of cheap heavy crude to Chinese refiners, but those flows fell dramatically after Washington’s intervention in the country’s oil trade earlier this year. As we noted at the time, Chinese refiners initially compensated by increasing purchases of heavily discounted Iranian barrels.

Meanwhile, the renewed U.S. campaign against Iran’s oil exports disrupted shipments to Asia and left tens of millions of barrels in transit or floating storage. As we reported in July, roughly 63 million barrels of Iranian crude were at one point either moving or idling aboard tankers as sanctions pressure intensified. That does not mean China is running out of oil. Beijing accumulated large inventories and can source replacement barrels elsewhere, but the combination of reduced Venezuelan flows and disrupted Iranian supply has diminished some of the cheap-energy advantage Chinese refiners previously enjoyed.

Russia can fill part of that gap, but its own energy infrastructure remains under pressure from Ukrainian long-range attacks on refineries, export terminals and storage facilities. Earlier this month, Goldman estimated that the attacks had taken roughly 300,000 barrels per day of Russian refining capacity offline during August and early September. China has also encountered setbacks around another strategic chokepoint. Panama’s Supreme Court voided Hong Kong-based CK Hutchison’s concessions to operate the Balboa and Cristobal ports at opposite ends of the Panama Canal. As we noted in January, the ruling stripped the legal basis from a China-linked operator at two port facilities adjoining one of the world’s most important shipping routes.

Then there is Greenland. Washington announced Friday that it had reached a security agreement intended to guarantee a long-term U.S. role on the island while preventing Russia, China and other non-NATO countries from establishing military bases there. The arrangement would strengthen the U.S. position in an Arctic region that both Washington and Beijing increasingly view as strategically important. On Monday, Denmark confirmed that the Trump-Greenland deal would boost arctic security. 

The political landscape across parts of Latin America has shifted as well. Reuters described Colombia’s June election of Abelardo De La Espriella as part of a broader regional movement to the right that has also included Argentina, Chile, Ecuador, Bolivia, Panama and Peru.

Brazil is now the major unresolved contest. As we noted last week, Polymarket pricing recently moved in favor of Senator Flavio Bolsonaro over President Luiz Inacio Lula da Silva. Prediction-market prices are not opinion polls, however, and Monday’s BTG Pactual/Nexus survey showed Lula at 46% and Bolsonaro at 45% in a hypothetical runoff, within the survey’s margin of error.

Markets, meanwhile, entered the weekend already showing signs of pressure. According to Newsquawk, the U.S. 10-year Treasury yield closed Friday 6.5bps higher at 5.004%, while the two-year rose 7.5bps to 4.745%, producing a modest bear flattening of the curve.

Yet Xi is hardly arriving in Washington without leverage of his own.

China still controls roughly 70% of global rare-earth mining and more than 85% of refining capacity, leaving Beijing with substantial influence over supply chains critical to U.S. autos, semiconductors, aerospace and defense. As we noted this weekend, disrupted Chinese yttrium shipments alone have already forced Western aerospace, energy and semiconductor companies to scramble for alternatives. Beijing also retains enormous manufacturing capacity, large accumulated energy inventories and considerable purchasing power over everything from American agricultural commodities to aircraft.

In other words, Thursday’s summit is taking shape less as a grand reconciliation than an attempt by two heavily intertwined rivals to fence off portions of the relationship before the next confrontation.

Washington arrives with greater influence over Venezuelan oil flows, intensified pressure on Iran’s exports, a strengthened strategic position around Greenland and reduced China-linked influence around the Panama Canal, while the political map across portions of Latin America has changed considerably.

Beijing arrives with its own formidable counters: dominant critical-mineral supply chains, a resilient manufacturing and export base, substantial energy reserves and enormous leverage as a buyer of U.S. goods. Oh, and let’s not forget – open-weight AI models that have completely upended the frontier AI model.