China would only agree to this trade if it was feeling extremely generous. The thing is, China can survive and even thrive with the ban on Huawei, the block on semiconductors and EUV machines, and all of the other sanctions imposed by the US. China is able to build new markets and develop similar technologies on its own. In fact, the semiconductor ban can even be seen as a favor because China is now a leading power in the industry where once it was content being just a consumer.
On the other hand, The US is dead China's rare earths. A complete ban on them kills fighter planes, warships, the auto industry, and just about any high tech device that's worth making. China has an effective monopoly for much of this, and while it's possible for the US and its allies to build a rare earth industry, this will take a long time; probably in the neighborhood of 10-20 years. Can you imagine no new American fighter planes for the next 20 years?
In terms of dollar value, the rare earths trade is insignificant. But in terms of importance to global industry, it's more valuable than oil because at least with oil, it's possible to find alternate producers. If China wanted to play hardball, it can get the sun and the moon from the US. I suspect that they will settle for something of far less value, but they will maintain the restrictions on military usage. I also think that these talks will drag on forever, and they'll probably break down a few times.
