(The Lion) — China’s slowdown in growth and deep structural economic problems are shaping the restart of U.S.-China trade talks as President Donald Trump prepares for an Asian trip next week.

Washington is signaling a tougher trade policy as Trump and China’s Communist Party Secretary Chairman Xi Jinping prepare to meet in South Korea.

Also on the background agenda is the looming threat China poses to an independent Taiwan, as China struggles to regain its economic status.

China’s economy grew 4.8% in the third quarter, down from 5.2% growth in the third quarter 2024, its weakest pace in a year, reported Bloomberg

September data underscored the core imbalance making China vulnerable to a Trump trade war: dependence on exports.

Factory output accelerated 6.5% year over year, but much of that is for export trade. Domestic retail sales cooled to a 10-month low of 3.0%, making China highly dependent on foreign sales for economic growth, noted Reuters.

New home prices fell at their fastest pace in 11 months. Property investment also dropped 13.9% in the first three quarters. These drops show persistent weakness in the domestic real estate market, which was once a strength of the Chinese economy.

“China’s growth is becoming increasingly dependent on exports, which are offsetting a slowdown in domestic demand,” Capital Economics Analyst Julian Evans-Pritchard told Reuters.

“This pattern of development is not sustainable, and so growth is at risk of slowing further over the medium-term unless the authorities take much more proactive steps to support consumer spending.”

The increasing dependence on foreign sales makes China even more vulnerable to Trump tariffs.

Against that backstory, Trump said he expects to reach a trade agreement with Xi and downplayed the risk that Taiwan could derail the talks.

“I think we’ll be just fine with China. China doesn’t want to do that,” Trump said when asked about the possibility of a Chinese invasion of Taiwan.

“We have the best of everything and nobody’s going to mess with that. And I don’t see that at all with President Xi,” Trump told reporters. “I think we’re going to get along very well as it pertains to Taiwan and others.”

Trump spoke as the U.S. and Australia signed agreement to deepen cooperation on critical minerals and defense supply chains in a meeting with the Prime Minister of Australia Anthony Albanese.

The president has simultaneously framed tariffs and critical-minerals policy as leverage in negotiations with China, which has threatened to embargo the U.S. from purchases of such minerals critical for building high-tech applications.

“I think we’ll make a deal,” Trump told reporters. “They threatened us with rare earths and I threatened them with tariffs.”

The president said the threats were helpful in negotiations.

“They’re treating us with great respect,” Trump said of China, hopeful he can strike a deal.

U.S. officials are also warning Beijing not to retaliate against companies that invest in America’s strategic industries.

“China’s recent retaliatory actions against private companies across the globe is part of a broader pattern of economic coercion to influence American politics and control global supply,” said a statement by US Trade Representative Jamieson Greer.

The warning followed Chinese sanctions on U.S. units of a South Korean shipbuilder tied to investments in the American maritime sector, according to Bloomberg.

For Beijing, the timing of the Trump-Xi meeting couldn’t be worse given China’s third quarter slowdown, including the falling home prices and weak retail demand.

But communist policymakers are leery of promoting consumerism to boost the economy, instead focusing on technological progress to best the U.S. in artificial intelligence and quantum computing.

“We must remain true to our original [communist] aspiration and take promoting the people’s well-being as our fundamental value,” Xi has said of the latest five-year plan just hammered out in Beijing.

An editorial in Xinhua, the official Chinese communist news agency, warned of risks which may portend trouble for the Chinese consumer.

“Our path forward will inevitably be filled with difficulties and obstacles, and we may encounter major tests of high winds, rough seas, and even turbulent waves,” wrote the editor. “We must be prepared to respond to a series of new risks and challenges. We must strengthen bottom-line thinking, give equal importance to development and security, and integrate national security with economic and social development in planning and deployment.”

The U.S., meanwhile, is using tariffs combined with a minerals and manufacturing strategy to reduce supply chain dependence on China and increase farm exports.