Analysts expect ‘stability’ in US-China relations from Trump-Xi meeting

As the world watches the historic summit of US President Donald Trump and Chinese leader Xi Jinping, analysts suggest it could mark a reset in relations between the world’s top two economies.

The two leaders are expected to discuss a range of thorny issues, including Chinese purchases of US agricultural and industrial goods, tariffs, Taiwan and rare earths against the backdrop of the war in Iran.

HSBC Asia economist Justin Feng said that after nine turbulent years, the summit could mark a “decisive test” for the world’s G2 power dynamics, pointing out that the US, China and the EU now account for 60% of global GDP.

The summit builds on Trump and Xi’s meeting in South Korea late last year, which led to an easing of the trade war between the two countries, with Trump referring to them as the G2, raising hopes of an extended truce. “It makes no sense for both countries to engage in a trade war or tit-for-tat,” said James Zimmerman, chairman of AmCham China.

The Trump administration signaled ahead of the visit that it planned to press for more Chinese purchases of U.S. soybeans, Boeing aircraft and other goods, while Beijing has made it clear that the Taiwan issue will remain front and center on the meeting’s agenda.

“The big word will be stabilization. The ceasefire that the two sides negotiated … I suspect, will become a formal agreement,” Graham Ellison, a Harvard professor and former assistant defense secretary, said on CNBC’s “The China Connection” on Thursday.

Referring to the idea that tensions between a rising and ruling power often result in war, Xi asked whether the US and China could escape the “Thucydides Trap” – a phrase popularized by Allison, who is also the author of “Destinations for War: Can America and China Escape the Thucydides Trap?”

Trump’s entourage, consisting of more than a dozen executives from some of the largest US companies, has raised hopes for a more favorable business environment. Tesla’s Elon Musk, Apple’s Tim Cook, BlackRock’s Larry Fink and Boeing CEO Kelly Ortberg are among those accompanying Trump on the trip.

Ellison said, “I wouldn’t be surprised if – as President Trump loves big headline announcements – that he could announce that China is going to buy an additional $1 trillion of American goods,” including “big purchases” of Boeing aircraft, soybeans, beef as well as more advanced semiconductors, in which Beijing is interested.

Nvidia CEO Jensen Huang also joined the China trip in what appears to be a last-minute trip to put the artificial intelligence and technology sector in the spotlight.

Washington on Thursday approved about 10 Chinese companies to buy Nvidia’s second-most powerful AI chips, the H200, even though the company’s most advanced chips face tough US sanctions, Reuters reported.

“It gives us a sense of confidence and optimism that both (the US and China) can continue to negotiate to resolve some of the challenges in relations between the two countries,” Zimmerman said. “We are generally optimistic that the two will have a good dialogue … (and) develop a roadmap for continued engagement and dialogue throughout the year.”

Against the backdrop of conflicts and trade-related tensions globally, analysts suggest the Trump-Xi meeting will accelerate a multipolar world.

“The world is clearly moving from the post-Cold War unipolar period to a more unstable and competitive multipolar system,” Feng said.

Echoing that view, Dong Chen, chief investment officer at Bank J Safra Sarasin, suggested that the G2 framework would see China and the US “as equal partners at the table, not one party dominating the other.”

According to Beijing’s official English readout, on the first day of the summit the US and China agreed to build a more cooperative relationship while striving to build a “constructive China-US relationship of strategic stability” that will serve as the guiding framework for the next three years and beyond.

The summit comes as the US is embroiled in a war against Tehran and is trying to pressure Beijing to help end the conflict, but analysts say the Beijing talks are unlikely to yield a breakthrough.

While Beijing has repeatedly played up its role as a global mediator, it has avoided making concerted efforts to end the war.

“Benign neglect or distraction because you are often in another quagmire – from the perspective of a rational national actor in China – may seem like a very good option,” said Allison, who compared Beijing’s inaction to Russia’s war against Ukraine: “President Xi has smiled but not done much (to end the war).”

Trump has expressed disappointment over Tehran’s proposals to shut down its nuclear program as part of a peace deal, as hostilities continue in the region, threatening a currently fragile ceasefire agreement.

Gautam Bambawale, India’s former ambassador to China, who does not expect any breakthrough from the Beijing summit, said, “The Chinese will agree to help to the extent that they can. (But) the United States must realize that China can only do so much, and no more.”