Summit in Beijing
Trump and Xi will struggle to strike a major economic deal
Just avoiding a renewed clash will count as success
Illustration: Jared BartmanLONG-SUFFERING OBSERVERS of Chinese-American relations have a plea: banish the term “grand bargain”.
For a time, doe-eyed optimists and investors thought Donald Trump and Xi Jinping might overcome their countries’ rivalry to strike a major, even epochal, deal.
They imagined a package involving some mix of balanced trade, real openings in the Chinese market and American military retrenchment in East Asia.
When the two leaders meet in Beijing on May 14th and 15th, they will accomplish far less.
All going well, they will prolong their countries’ tetchy trade truce—and that is about it.
Mr Trump’s mere presence in Beijing is a small victory.
His summit with Mr Xi, initially planned for early April, was delayed because of the Iran war.
But the White House and Mr Xi’s team were determined the summit happen, not least because it is meant to be the first of four meetings between the two men this year.
Such a tight schedule cannot withstand further delay.
The refrain from almost everyone involved is that at least they are talking.
One year ago they were on the brink of a mammoth trade war.
America had set tariffs on Chinese goods at 145% and China’s rare-earth export controls threatened global industry.
A worldwide recession loomed.
That danger paved the way to a truce, agreed on in October 2025.
Both scaled back tariffs, China resumed shipments of rare earths and America refrained from slapping more export controls on China.
The question now is whether the two can build on that truce.
A few months ago, there was chatter of something ambitious, perhaps a deal for big Chinese investments in America.
Yet such talk always seemed unrealistic: there is too much mutual suspicion to justify the multi-decade commitment such projects would require.
China has mostly given up hope of Mr Trump resetting relations.
“The problems between America and China are fundamental and structural, and I don’t think Trump is a good person to deal with these,” says an adviser to the Chinese government.
The Americans have also settled for focusing narrowly on purchase commitments rather than structural reform, once the ultimate goal.
“We know we can’t change their economic model,” says an American official.
“Our conversations now are grounded in a quarter-century of frustration.”
Chairmen of the bored
Headlines about the summit are likely to focus on a seemingly big result: the creation of a Board of Trade.
China’s surplus with America has fallen from a peak of more than $400bn in 2018 to about $200bn last year, evidence for Mr Trump’s boosters that his tactics are working (in reality, many Chinese exports are routed through third countries).
Some in the Trump administration think the board will steer the surplus towards zero.
Trade officials will, in this vision, decide which non-sensitive goods can pass between the two countries and erect tariffs around the rest.
Enacting such managed flows is a “white whale” for US trade representative Jamieson Greer, says someone briefed on the talks.
Yet the Board of Trade is a weak concept.
China’s trade imbalance with America arises because China produces many more things that America wants than America does that China wants.
He Lifeng, China’s vice-premier, has expressed concern that too many sectors will be declared sensitive, suggesting that even Chinese tea might be deemed a security risk.
Business executives joke that China’s appetite for American goods boils down to three b’s: beef, beans (of the soya variety) and Boeings.
The summit in Beijing may feature big orders for all of these.
That will not be enough to balance bilateral trade.
Rather than Mr Greer’s preference for an empowered Board of Trade, China wants one that functions as a “working mechanism” for dealing with trade frictions, says Wu Xinbo of Fudan University.
As for the grandiloquent name “board”, that is something the Chinese can live with, aware it is the kind of branding that Mr Trump loves.
But an American official warns that if China turns the board into a talking shop—a way to prevaricate on purchase commitments, say—they might find that Washington’s fuse is short indeed.
At this point everyone accepts that tariffs are here to stay.
What the Chinese side wants most of all is predictability.
The two countries had a couple of 90-day pauses last year before agreeing to a one-year deal that set American tariffs on Chinese goods at about 47% and put Chinese tariffs on American goods at about 30%, according to estimates by the Peterson Institute for International Economics.
Although not ideal for China, its exporters have more than adjusted to them, as shown by the country’s record global trade surplus last year of roughly $1.2trn (see chart).
But a Supreme Court decision striking down most of Mr Trump’s global tariffs has injected new uncertainty.
Now the administration is trying to rebuild its tariffs by other means.
In particular, American trade officials are conducting two investigations that, though covering many countries, are implicitly focused on China: one threatens tariffs on countries with industrial overcapacity, while the other threatens tariffs on those using forced labour.
If these investigations result, yet again, in much higher tariffs on China, it could well restart tit-for-tat escalation.
So another positive outcome from the summit in Beijing would be a pledge to hold tariffs steady.
Other irritants keep bubbling up.
Mr Trump has tried to restrain his bureaucracy: he has frozen sanctions on thousands of firms linked to blacklisted Chinese companies, allowed sales of relatively advanced semiconductors to approved Chinese customers and required that any major action against China cross his desk.
Yet he is struggling to hold back the dam.
In April the White House published a memo accusing Chinese entities of conducting “industrial-scale” theft of American AI technology.
America also placed sanctions on five Chinese refiners for buying Iranian oil, a warning shot to Chinese firms co-operating with Iran.
“It’s hard to keep the US system bottled up for so long with no action,” says Sarah Beran of Macro Advisory Partners and a former American diplomat.
At the same time, China has pressed on with plans that complicate life for American firms.
In recent weeks the State Council, or China’s cabinet, has issued two menacing decrees.
One threatens trade curbs in response to actions that undermine Chinese supply chains (potentially including shifting orders to foreign factories).
The other vows countermeasures against firms that apply foreign sanctions against Chinese companies, which in effect criminalises compliance with American law.
China’s planned global licensing system for rare-earth exports also looms.
It suspended the scheme after Mr Xi’s meeting with Mr Trump last year, but that pause expires in November.
Even if it is extended again, the threat is not going away.
Fear factor
Can the truce last?
Many on both sides think it can, simply because the alternative—full-bore economic conflict—is so unappealing.
Yet the truce is based not on love but on fear.
And both sides are working to lessen the other’s leverage.
China is trying to forge ahead in advanced semiconductors and to diversify its exports so that it can thrive without the American market.
America is trying to break China’s strong grip on rare earths.
“There is a lot of magical thinking in Washington that we’ll get far enough on rare earths later this year to push back hard on China again.
We’re just not there,” says Sean Stein, president of the US-China Business Council.
For now there will be a show of good feeling.
In late summer Mr Xi is expected to make a return bilateral visit to America, and they will probably see each other again twice more this year on the sidelines of international meetings. They will have some progress to celebrate.
The leaders may begin discussions on AI safety, which would mark a rare instance of co-operation on a serious shared risk.
China will probably announce big purchases of beef, beans and Boeings.
And businesses may unveil drug-development partnerships.
Bosses of American aviation, energy and pharmaceutical firms are reportedly on standby in Asia, in case the White House summons them to Beijing for signing ceremonies.
But expectations will be low.
“A big win would be just the two presidents having a nice meeting and agreeing that we trade a lot with each other,” says Michael Hart of the American Chamber of Commerce in China.
The Chinese crave the same.
“Stability doesn’t mean improving the relationship but preventing it from being even worse,” says Tu Xinquan of the University of International Business and Economics.
That is a far cry from the grand bargain of yesteryear.
Avoiding a grand breakdown is now the best thing on offer.
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