Executive Summary
On May 13 US President Donald Trump traveled to Beijing for a two-day state visit. Trump and China’s leader Xi Jinping are expected to discuss the Iran war and the closure of the Strait of Hormuz, bilateral trade and investment, the US-Taiwan relationship, and AI safety. Trump will be accompanied by key US officials and a small group of business executives. Both sides are seeking stability in the bilateral relationship, and both sides — but especially China — are confident that they have substantial leverage going into the summit. Analysts do not expect any breakthroughs or lasting policy shifts; the summit is instead an opportunity for the US and China to walk away with symbolic wins and, potentially, start to develop stabilizing mechanisms in their relationship.
Key Points
- Both the US and China want the Strait of Hormuz reopened, but Xi might be disinclined to put substantial pressure on Iran to help Trump cleanly exit a war of choice
- The US and China both want to reduce their mutual economic interdependence, but the US leverage on semiconductors has eroded as China’s leverage over rare earths has grown.
- Major breakthroughs from the summit are unlikely, the announcement of big-ticket commercial deals notwithstanding. Instead, the summit is an opportunity for the U.S. and China to maintain a stable bilateral relationship to buy time as both pursue their decoupling projects in sensitive sectors
- US Trade Representative (USTR) Jamieson Greer, US Treasury Secretary Scott Bessent, and Secretary of State Marco Rubio will accompany Trump and continue talks with their Chinese counterparts, including Vice Premier He Lifeng, Foreign Minister Wang Yi, Premier Li Qiang, and potentially Chinese economy and trade officials Wang Wentao and Li Chenggang.
- The US proposal for a “Board of Trade” to manage US-China trade in nonsensitive goods is a major shift from previous US policy — including under Trump I — to seek further liberalization of China’s economic system.
- Rubio’s presence is likely to keep Trump on script on Taiwan and other sensitive foreign policy issues. Trump has shown an uncharacteristic sensitivity in his language on Taiwan since the start of his second term.
Analysis
Although President Xi is giving Trump a ‘royal welcome’ — including a private tour of the 15th century Temple of Heaven near the Forbidden City — the summit is not as extravagant as Trump’s 2017 visit to Beijing. Nor is Trump in as strong a position now as he was then. Trump only has around two and half years left in office, and his policymaking ability potentially constrained much sooner should Democrats win the House of Representatives or Senate in the midterm elections. China’s leaders are patient. Even more importantly, Xi is heading into the summit with confidence that China has found an economic weapon that has effectively deterred the US: critical mineral export controls. Since China’s export controls were announced last year, the US has not blacklisted a substantial number of Chinese firms or imposed new semiconductor export restrictions. While Xi wants Trump to commit to a stable business environment for Chinese firms in the US and worldwide, China is also far less dependent on the US market now than it was during Trump’s first term. Xi may also push Trump on Taiwan in an attempt to get the US President to make a subtle but important shift in US posture towards the island, such as saying “the US opposes Taiwan independence” versus the current formulation, “the US does not support Taiwan independence.”
As for Trump, he will likely press Xi on China’s failure to fulfill its purchase commitments from the “Phase 1” trade deal agreed in early 2020 and urge Xi to assist him in putting pressure on Iran to reopen Hormuz. Medium-term objectives include getting Xi to commit to backing off of rare earth export controls; President Trump previously showed willingness to give ground on U.S. semiconductor export controls in return. The US will also seek China’s cooperation on a bilateral mechanism — the “Board of Trade” — to manage the US-China trade deficit for non-sensitive goods, and may raise the issue of high-profile Hong Kong and Uyghur dissidents currently imprisoned in China.
Policy Implications
- Trump will seek renewed large-dollar Chinese purchase commitments to take home as wins, and China is most interested in buying U.S. beef, soybeans, and aircraft (both Boeing aircraft and GE Aerospace-made engines used by China’s own COMAC C919 commercial airliner.)
- USTR Greer will seek the formalization of a “Board of Trade” working mechanism, which Greer hopes will oversee bilateral trade in nonsensitive goods and will gradually reduce the bilateral trade deficit to zero. The Chinese side seems to see this as more of a mechanism to avoid future trade disputes, so the Board’s future operability remains an open question.
- Xi may pledge to work towards the reopening of the Strait of Hormuz but is unlikely to put substantial pressure on Iran without US concessions elsewhere.
- China and the US are unlikely to dismantle their export control regimes for rare earths and semiconductors, respectively, but may agree not to add further restrictions for now.
- China is unlikely to successfully induce Trump to shift US Taiwan policy, and any seeming change may be walked back by Trump’s staff as Biden’s statements contradicting strategic ambiguity were discounted during his presidency.
References
Foreign Policy: What Five Decades of Summits Reveal About U.S.-China Relations
CNBC: Trump puts Taiwan arms sales, Hong Kong jailed activist Lai on agenda ahead of meeting with Xi
CNBC: Trump invites Elon Musk, Tim Cook, Larry Fink and other CEOs to join China trip for Xi summit
The Wire China: Trump’s Board of Trade Move Signals the U.S. has Given Up on Changing China
CFR: At the Trump-Xi Summit, China Will Have the Upper Hand
CFR: What to Expect Ahead of Next Week’s Trump-Xi Summit
Politico: ‘The biggest China dove in the administration’: Trump to test limits of dealmaking in Beijing
Atlantic Council: Five outcomes that would make Trump’s trip to China a success
Reuters: Trump will pursue stability with China’s Xi in May meeting, USTR Greer says
Reuters: China, US economic chiefs raise complaints in ‘candid’ call ahead of Trump-Xi summit
Reuters: At Temple of Heaven summit, Trump and Xi will seek a good harvest
The New York Times: Trump’s Nvidia Chip Deal Reverses Decades of Technology Restrictions
The New York Times: Xi Is Poised to Press Trump on Arms Sales to Taiwan
The Washington Post: Confident in China’s power, Xi is ready to host an unpredictable Trump
PIIE: US-China trade update: Imports, exports, fentanyl flows, and beyond
CSIS: Trump-Xi Summit in Beijing: Managing the World’s Most Important Relationship
Aerospace Global News: US lifts ban on GE engines for COMAC’s C919, but China eyes faster push for homegrown alternatives