As Chinese President Xi Jinping heads to the U.S. for a pivotal summit with President Donald Trump, expectations differ significantly between Beijing and Washington. While China views the meeting as a potential “U-turn” in relations, the U.S. remains concerned about growing issues from trade imbalances to the AI race. This high-stakes gathering aims to navigate critical topics, including extending a trade truce, addressing artificial intelligence concerns, and coordinating on the escalating Iran war, all while global observers question the long-term impact on bilateral stability.
Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a snapshot of what I'm seeing and hearing from local businesses.
I'm joined again by my Singapore-based colleague Anniek Bao, as we unpack expectations inside and outside China for a closely watched summit in Washington, D.C., later this week. Fanfare aside, what will this meeting achieve?
Image Credit: China Pool | Getty Images News | Getty Images (Depicts President Donald Trump and Chinese President Xi Jinping)
The Big Picture: Conflicting Optimism Ahead of Summit
Many in China appear considerably more optimistic than their American counterparts regarding the future of the bilateral relationship, a sentiment surfacing just before a highly anticipated summit this week. This perspective underscores Beijing's growing confidence, particularly after China became the first major economy to challenge the Trump administration's "Liberation Day" tariffs in April 2025. Despite this, the list of U.S. concerns has only expanded, with Washington's latest worry revolving around maintaining a lead in the artificial intelligence race.
As Chinese President Xi Jinping prepares for his inaugural state visit to the U.S. since the Obama administration, businesses are keenly observing several critical areas:
1. Potential Trade Truce Extension
An extension of the existing trade truce, set to expire in November, is widely anticipated, though its duration remains a key question. Last fall, during a meeting in South Korea, President Donald Trump and Xi Jinping agreed to a one-year suspension of rare earth export controls and retaliatory tariffs. This was followed by a May summit where Beijing committed to increasing purchases of U.S. agricultural products and Boeing jets, alongside plans for new trade and investment cooperation mechanisms. Both nations also resolved to pursue "constructive strategic stability."
Zhou Bo, a retired senior colonel, China Forum expert, and senior fellow at Tsinghua University's Center for International Security and Strategy, described the May summit as marking "a U-turn in China-U.S. relations." He noted it was a rare acknowledgment of Beijing as an equal power, stating, "Stability can only be found between countries of similar strength." China has recently boosted its purchases of American soybeans, fulfilling nearly half of its pledged 25 million tons for the year, according to Reuters. However, Boeing CEO Kelly Ortberg downplayed expectations for a single blockbuster deal for 200 jetliners, instead anticipating incremental orders from individual carriers.
Chad Brown, a senior fellow at the Peterson Institute for International Economics, suggested that the U.S. might only hope for a "maintaining the status quo," primarily due to China's current leverage over rare earths and permanent magnets. He emphasized that until this issue is resolved, China will continue to hold significant sway against major U.S. demands. Beijing confirmed Xi's U.S. visit from Wednesday to Friday, expected to mirror Trump's May 2026 visit to Beijing.
2. Artificial Intelligence (AI) Cooperation and Concerns
Chinese AI labs have made significant strides this year, narrowing the gap with their U.S. counterparts. Concurrently, American companies have voiced increasing alarms about the rapid development of AI outpacing control measures. While the exact scope of technological cooperation remains uncertain, Zhou Bo hinted at the possibility of general dialogue, similar to prior AI discussions held in Geneva.
Over the past weekend in New York, U.S. Treasury Secretary Scott Bessent revealed that senior negotiators from both nations discussed establishing a "U.S.-China AI Dialogue," with the U.S. proposing a notification system for AI incidents. His Chinese counterpart, Vice Premier He Lifeng, is in the U.S. for preparatory talks ahead of the summit. Sources familiar with Washington's recent thinking indicate that U.S. concerns about AI have escalated rapidly, making it a prominent topic in discussions between Trump and Xi. A crucial aspect will likely involve discouraging China from empowering malicious actors with its AI capabilities, with efforts to encourage China's purchase of Nvidia H200 chips not being a primary focus.
3. High-Profile Attendees and Investment Dialogue
A star-studded list of U.S. business executives, including Amazon's Jeff Bezos, Elon Musk, Google's Sundar Pichai, Michael Dell, Nvidia's Jensen Huang, OpenAI's Sam Altman, Citigroup's Jane Fraser, and Apple's Tim Cook, are slated to attend Trump's state dinner for Xi. However, as of Friday, U.S. officials had not received any visa applications for potential Chinese business attendees.
Details on the proposed "Board of Investment," formally suggested in May, also remain sparse. Orville Schell, Arthur Ross Director of the Center on U.S.-China Relations and Vice President at the Asia Society, noted that both Chinese and U.S. businesses require assurances of geopolitical stability to safeguard their cross-border investments. This, he acknowledged, is a challenging request in the current volatile environment.
4. The Iran War Takes Center Stage
Discussions regarding Taiwan are widely expected to be secondary to the Iran war during the Trump-Xi meeting in Washington. Beijing has carefully avoided direct intervention in the U.S.-Iran conflict, instead positioning itself as a facilitator for ceasefire talks. Iranian Foreign Minister Abbas Araghchi recently met with China's top diplomat Wang Yi in Beijing, seeking support from Tehran's largest oil buyer. Meanwhile, President Trump expressed openness to meeting Iranian President Masoud Pezeshkian on the sidelines of the UN General Assembly this week.
Daniel Kritenbrink, a partner at The Asia Group and former U.S. Assistant Secretary of State for East Asian and Pacific Affairs, believes Iran will be a significant topic given its urgency and disruptive impact on the global economy and energy markets. Washington will likely seek Beijing's commitment to refrain from militarily assisting Tehran and potentially leverage its ties with Iran to encourage a peaceful resolution. Kritenbrink anticipates that while Xi will likely reiterate China's long-standing stance against U.S. arms sales to Taiwan, the issue of Taiwan itself will not feature as prominently as it did during their Beijing meeting in May, where Xi underscored the implications of mishandling the island, which Beijing considers its territory.
5. Global Repercussions of Bilateral Stability
This week's summit is among several recent efforts to stabilize U.S.-China relations, with the possibility of Trump and Xi meeting two more times this year if discussions progress positively. However, significant changes to China's export-driven economy are unlikely, as domestic demand remains weak and the U.S. continues its reliance on Chinese manufacturers for essential components.
Asia Society's Schell pondered, "People are even beginning to wonder could we get summited to death." He stressed the need for both sides to adopt greater flexibility, noting rising global skepticism toward China's exports, citing concerns like their impact on German auto sector jobs. Schell questioned why China, having achieved an economic miracle through manufacturing exports and becoming a global supplier, couldn't relax and enjoy its success, rather than exhibiting an aggressiveness that makes many neighboring countries uneasy. He added, pointedly, "You could ask the same question of Donald Trump, too."
In Other News: What You Need to Know
- China's AI leaders remain reserved despite U.S. outreach on tech risks: In contrast to prominent U.S. labs sounding alarms on artificial intelligence, Chinese companies have largely maintained silence. Rhodium Group, a U.S.-based research firm, reports that China's collective AI models generate only about 10% of the revenue reported by U.S. leaders like OpenAI and Anthropic.
- China's August economic indicators: Retail sales miss, investment slump deepens: Retail sales in August grew by a modest 0.4% year-over-year, falling short of economists' 0.8% forecast. Industrial output accelerated to 5.2% growth, surpassing July's 4.5% increase and economist expectations. However, urban fixed-asset investment for the first eight months of the year saw a significant drop of 7.2% from the previous year.
- Chinese biopharma stocks surge on potential U.S. policy shift: Chinese biopharma stocks listed in Hong Kong experienced a rally on Monday following reports that the U.S. is considering regulations that would permit American pharmaceutical companies to continue most drug licensing deals with Chinese firms.
Upcoming Dates:
- Sept. 23-25: Chinese President Xi Jinping scheduled to meet with U.S. President Donald Trump in the U.S.
- Sept. 25: Mainland China stock markets closed for Mid-Autumn Festival; Hong Kong open
