Xi-Trump Trade Over TikTok, China Advances Global Governance Initiative

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The latest round of negotiations in Madrid, conducted in mid-September between United States (US) Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, has resulted in an agreement over the future of popular social media app TikTok. Reports in Chinese media suggest that the US and China have reached a “basic framework consensus” on resolving issues related to TikTok’s future operations in America. China’s position posits that the sale of app’s US operations to an American company is essentially Beijing licensing/transferring the license to the “right to use algorithms” and “intellectual property” to the US, reinforcing the narrative that it is promoting the export of China’s advanced technology abroad.  Additionally, both sides plan to reduce barriers to investment to promote economic and trade cooperation. Soon after the Marid talks, US President Donald Trump extended TikTok’s divestiture deadline in the US till 16 December 2025. Trump and Chinese President Xi Jinping also had a call on 19 September 2025, discussing trade issues, including the TikTok agreement. The Chinese readout of the Xi-Trump call stressed ‘mutual benefit’. Trump and Xi will also be meeting on the sidelines of the forthcoming Asia-Pacific Economic Cooperation Forum in South Korea, and the former has also indicated that he may travel to Beijing in 2026. Trump has a large fan base on the app, and he seems keen to keep it in circulation.  The tussle over TikTok shows the transactional nature of Trump 2.0, which the Communist Party of China has leveraged through a social media app.

The latest round of talks in Madrid is the fourth in a series, following discussions held in Sweden in July. Meanwhile, negotiations on more complex issues, such as tariffs, have been postponed to the next round of talks.

There is also no good news from the real estate market that contributed around 30% of China’s economic growth. The slump in the realty business is despite cities like Beijing, Shanghai, and Shenzhen relaxing restrictions, and allowing those without a local residential registration to purchase property.

 A shaky armistice exists between the US and China after Trump extended a tariff truce in mid-August for another 90 days, which expires on 10 November 2025. This understanding is accompanied by an additional 30 percent tariff on some Chinese goods; in turn, Beijing imposed a 10 percent levy on US products. Amidst the uncertainty, Beijing’s exports to Washington have slowed; in August 2025, they fell for the fifth consecutive month, registering a 33.1 percent year-on-year decline. China is thus exploring new markets to offset its losses by exporting to the Association of Southeast Asian Nations (ASEAN) economies and the European Union (EU), with exports increasing by 22.5 percent and 10.4 percent, respectively.

There is also no good news from the real estate market, which constitutes nearly 30 percent of China’s economic growth. The slump in the real estate business persists despite cities such as Beijing, Shanghai, and Shenzhen relaxing restrictions and allowing those without a local residential registration to purchase property. China’s official statistics reveal that the unemployment rate in the 16–24 age bracket is 18.9 percent, at a time when around 12.22 million graduates will be hunting for new jobs. Statistics obtained from a job-recruitment portal showed that vacancies for new college graduates declined by 22 percent between January and June 2025 compared with 2024, despite the number of job seekers rising by 8 percent compared to the previous year. Traditionally, financial services, technology, real estate, and coaching sectors were major employers, but they have scaled back hiring. Thus, there will be tough competition for the drying pool of lucrative positions. This is also a pointer to the larger structural problem of the Chinese economy, considering on average, 10 million will be graduating annually for the next 15 years. The failure of the Chinese economy to create enough jobs may result in vast numbers of Chinese talent on the fringes.

China is pledging more reforms to stem the tide. In September, nine government agencies, including China's commerce ministry, finance ministry, and the People's Bank of China, announced measures to boost consumption in services. China wants to host more international sporting events. Under the plan, greater support will be provided to local governments in organising sports activities, and nurturing professional leagues and sports brands. Beijing will also kickstart the opening of sectors such as internet, culture, telecom, healthcare, and education. China also seeks to attract foreign tourists by expanding visa-free entry and improving visa procedures. Financial institutions will also be nudged to extend credit to drive up service consumption. A sum of 231 billion yuan in special treasury bonds has been earmarked for a trade-in programme for consumer goods, including domestic appliances, cellphones, and tablets.

The escalating tussle with the US over tariffs and the consequent economic deceleration have resuscitated the formulation of a ‘unified domestic market’ that ties production to the use of production factors, such as land, human capital, financial capital, technology, data, and energy. Under guidelines issued in April 2022, the plan stated common basic rules and systems for property rights, market access, and fair competition. The strategy aimed to promote more efficient production, distribution, circulation, and consumption within China. An essay by the National Development and Reform Commission in the Communist Party of China’s journal, Qiushi, suggests advancing the construction of a unified national market as a “strategic measure” to respond to “external risks” and “uncertainty over trade” due to Trump’s tariffs. The article argues that with China being the world’s largest centre for physical consumption, a common national market will fully tap domestic demand, while relying on the advantages of scale. Thus, while internal balancing and enhancing state capacity define Xi’s strategic response to Trump’s tariff war, China’s external outlook will be shaped by Xi’s latest Global Governance Initiative (GGI) unveiled during the Shanghai Cooperation Organisation (SCO) summit in September 2025. The core themes of Xi’s masterplan for global governance include ‘inclusive multilateralism’, ‘autonomy in development’. Through Xi’s emphasis on creating a more equitable international governance system, Beijing is attempting to shape the international order, contrasting it with Trump’s transactional approach to diplomacy and his unilateral tariffs.

China is pledging more reform to stem the tide. In September, as many as nine government agencies, including China’s commerce ministry, finance ministry and the People’s Bank of China, announced measures to boost consumption in services.

A commentary in Qiushi authored by Pan Gongsheng, head of China’s central bank, provides GGI’s immediate agenda in this context. First, he argues that dominant international currencies possess the attributes of global public goods, but a sovereign currency assuming this function presents the possibility of instability. In the eventuality of conflict or national security interests, dominant international currencies are susceptible to weaponisation. Thus, he recommends incorporating measures to mitigate over-reliance on a single currency and encourages competition among some sovereign currencies to enhance their resilience. Second, a cross-border payments system is the foundation of the international monetary system and a pipeline for facilitating trade and investment. Pan posits that with sovereign currencies coexisting in the international monetary system and the development of digital technology will lead to diversification of the cross-border payments architecture. Lastly, China’s central banker also backs improving the governance system in the International Monetary Fund and the World Bank. Thus, Xi’s GGI comes at a time of conflicts in West Asia and Europe, amid doubts over multilateralism led by the US under Trump, and nations worldwide, including US allies, facing its sanctions or diplomatic pressure. While prioritising economic initiatives under GGI even as Beijing negotiates trade issues with Washington, Xi seeks to project China as a stabilising force and expand China’s influence at the West’s expense amid the churn in the multipolar system.

Kalpit A. Mankikar is a Fellow with the Strategic Studies Programme, Observer Research Foundation

• International Affairs
• China
• India
• USA and Canada
• us china framework agreement
• us china framework deal
• us china tiktok deal
• us china trade relations
• us china trade war

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