Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
China has confirmed that President Xi Jinping will meet U.S. President Donald Trump in South Korea on Thursday, setting the stage for a highly anticipated encounter aimed at de-escalating months of trade tensions. The bilateral meeting is expected to address strategic and long-term issues between the world’s two largest economies, a development closely watched by global financial markets.
Addressing Trade Tensions
The upcoming meeting follows a period of renewed strain in U.S.-China relations, marked by a tariff war that has disrupted global supply chains. Washington has attributed the escalation to Beijing’s imposition of new rare earth export controls, while China maintains that U.S. restrictions on Chinese firms’ ability to invest in America are the root cause.
Expectations of a direct meeting between President Trump and President Xi have contributed to a stabilization in markets over the past month. Investors and traders on both sides of the Pacific are hopeful that the talks will yield progress towards resolving the ongoing trade disputes.
Leaders’ Outlook
A Chinese foreign ministry spokesperson stated on Wednesday that the two heads of state “will have in-depth communications on strategic and long-term issues.” The spokesperson, Guo Jiakun, added, “We are willing to make joint efforts with the United States to promote the positive results of this meeting and provide new guidance and impetus for the stable development of China-U.S. relations.”
Earlier on Wednesday, President Trump expressed optimism aboard Air Force One en route to South Korea, saying he and President Xi were going to achieve “a good deal” for both countries.
Broader Points of Contention
Beyond tariffs, Washington and Beijing are also at odds over several other critical issues. These include the flow of fentanyl, access to high-end chips, controls over rare earth minerals, and agricultural trade, particularly soybeans.
In a potential goodwill gesture ahead of the talks, China’s state-owned COFCO purchased three U.S. soybean cargoes. These represent China’s first purchases from this year’s U.S. harvest, according to trade sources.
Meeting Context
President Xi’s visit to South Korea, from Thursday to Saturday, includes attendance at the Asia-Pacific Economic Cooperation (APEC) meeting and a state visit. President Trump will not be attending the regional APEC summit.
The confirmed meeting between President Trump and President Xi holds significant implications for the trajectory of U.S.-China relations and the global economic outlook, with both sides expressing a desire for positive outcomes.
