One state-owned enterprise has erected 110 vast hangars, computerized design studios and other buildings on the outskirts of Shanghai to build commercial aircraft in competition with Boeing. Dozens of Chinese cities are erecting subsidized factories to churn out semiconductors in competition with American giants, as well as with companies in Taiwan and South Korea.

Trump administration trade hawks and American business groups say state-subsidized Chinese companies could wipe out international competitors. They point to the solar panel industry, which boomed in China thanks in part to almost unlimited financing from state-owned banks. Factory closings in the United States and Europe have left China in almost total command of that industry.

But Mr. Xi and his backers argue that China needs those subsidized industries. Mr. Trump's moves this year to deprive Chinese companies of American-made chips, software and other essential goods of the modern age, after allegations that the companies were linked to human rights violations or intelligence-gathering activities, underscored for many in Beijing that China depends too much on the United States.

The Trump administration had a two-prong strategy for dealing with China’s industrial policy. Its first choice was for China to agree to tight limits on subsidies. The second was to leave steep tariffs in place across a wide range of goods as a kind of informal anti-subsidy measure, offsetting China’s support for its homegrown companies and giving American and other companies room to invest and compete in the United States.

The administration has now stepped back from the first position. And by cutting tariffs at all, the administration has shown a new willingness to retreat — although the products covered by the halving of tariffs on Friday were fairly low tech.

The issue of China’s state subsidies was more prominent in earlier talks. In April, Mr. Xi’s market-oriented team of trade negotiators accepted preliminary compromises in Washington that would have left a lot of tariffs in place and rolled back some Chinese laws that the White House said favored Chinese companies unfairly.

But Mr. Xi sided with hard-liners who demanded that the deal be torn up and renegotiated, because the deal did not include a broad reversal of tariffs that had already been imposed and because it demanded detailed changes in laws that were seen as violations of national sovereignty.