The U.S.-China summit is perceived as a boneless steamed bun, but if you look closely, it is not. Attention is focused on the U.S. lowering of fentanyl tariffs and China’s permission to import soybeans and export rare earths, but there was a more important issue that was not well known.

On September 29, the U.S. Department of Commerce’s Economic Security Administration (BIS) expanded the number of subsidiaries that are more than 50% owned by existing companies (institutions) subject to sanctions due to national security reasons, was withdrawn in the wake of the talks. Due to the measures to expand the number of companies subject to sanctions in China, the number of companies subject to sanctions has suddenly increased from 1,200 to 20,000, which has greatly hindered China’s external business activities.

Ten days later, on October 9, Chinese authorities announced offshore export controls to control products containing even 0.1% of Chinese rare earths because they judged that the U.S. action was excessive and that it was an attack that crossed the line on the U.S.-China agreement in April.

China’s failure to target semiconductor export regulations at the talks is due to its attitude that it is not disappointed because it aims to become technological independence, especially semiconductor independence.

In the end, the key to the deal was Xi Jinping’s concession of visible soybeans (and rare earths that have a lot to do with the political support of U.S. businesses and farmers) to Trump, along with the seemingly insignificant fentanyl tariffs (that is, a 10% drop, not a 20% drop in tariffs) and the withdrawal of expanded U.S. sanctions.

This is significant because the United States has never negotiated or withdrawn sanctions imposed on the grounds of national security. In other words, the US national security policy has become negotiable. China achieved a significant but unnoticed victory.