Trump-Xi Washington summit: Why some expectations are low

President Donald Trump is set to welcome Chinese President Xi Jinping to the White House, and expectations are sky high, but some China watchers are once again keeping expectations low.

This is despite the possibility that the war with Iran over the summit could become even bigger than before, given new US plans to aggressively sanction Iran’s business partners, which could include China, by far Iran’s largest trading partner.

But while the war threatens to shake up the superpowers’ fragile relationship, it may end up being just a small part of the conversation, as it did when Trump and Xi met in Beijing four months ago.

At that summit, President Trump and his fellow business leaders received a great deal of hospitality from the Chinese side, but left with little concrete business deals or clear solutions on the thorniest geopolitical issues, including Iran and Taiwan.

Once again, both countries appear to be still interested in avoiding any move that risks breaking the current trade ceasefire.

Craig Singleton, senior director for China at the nonpartisan Foundation for Defense of Democracies, told CNBC that “this relationship is increasingly creating deals that are not trust-based, not conciliatory, not stable.”

He said this was a “low-expectation summit that focused primarily on managing the stalemate, not resolving it.”

Xi’s visit to Washington is scheduled for September 24, but China does not allow official visits.

This week’s G20 Finance Ministers’ Summit in North Carolina saw the light of day between the two countries. China was the only member state to vote against the joint statement, objecting to a provision requiring countries with “excessive and persistent external surpluses” to stop distorting trade.

According to the Treasury Department, China also took issue with language about the Iran war. Treasury Secretary Scott Bessent said Tuesday that the two countries have much to agree on on Iran, but that it is “China’s responsibility” to find a solution.

MS NOW reported on Wednesday that the White House plans to host a state dinner for Xi, citing four sources familiar with the matter. According to a report by MS NOW, only King Charles III of the United Kingdom has received similar treatment so far during the Trump administration’s second term.

Matthew Kroenig, a senior fellow at the nonpartisan Atlantic Council Scowcroft Center for Strategic Security, said Trump’s top-down style, favoring deals between leaders rather than the diplomatic “spade work” typical of previous administrations, also dampened expectations.

“Mr. Trump is going to go in there and have a conversation with Mr. Xi and see what comes out of that,” Kroenig told CNBC.

He said it could be released along with announcements about major results, “but if that happens it will be very important and it will be up to the government to work out the details.”

Nevertheless, the Washington summit is a key moment for the world’s top economies vying for supremacy in a highly volatile world characterized by multiple active wars and a global economy that is being reshaped by artificial intelligence.

Bessent confirmed on Tuesday that AI will be a topic of conversation between Trump and Xi.

White House press secretary Olivia Wales told CNBC in a statement that President Trump “has a strong relationship with President Xi, including an outstanding visit to Beijing in May, where we secured important agreements that promote good-wage jobs and open new markets for American products.”

“President Trump looks forward to President Xi’s historic visit to the White House in September and will always advance the interests of the United States,” the statement said.

In late August, U.S. Ambassador to China David Perdue said he had met with top diplomats in preparation for President Xi’s state visit.

The Chinese Embassy in the United States did not immediately respond to CNBC’s request for comment on Xi’s upcoming visit.

The Iran war, which President Trump initially predicted would be over within six weeks, will be seven months old by the time Xi arrives at the summit.

The stated aim of the war is to dismantle Iran’s nuclear ambitions, but its main focus is the Strait of Hormuz, a vital oil shipping route that has been cut off due to Iranian threats.

With the prospect of a peace agreement dwindling, the United States is trying to cut off Iran’s “promoters” and economically strangle the country through sweeping secondary sanctions.

In theory, that strategy could have serious consequences for China. In fact, shortly after Bessent announced it on August 24, the Chinese government immediately withdrew the plan, which was dubbed “Operation Economic Purge.”

“China has repeatedly made clear its firm stance against illegal unilateral sanctions that have no basis in international law or UN Security Council approval,” a Chinese Foreign Ministry spokesperson said at the time.

But even before Mr. Bessent’s official announcement, some geopolitical experts were questioning how aggressively the U.S. intended to corner China.

Targeting Chinese banks and other institutions could invite retaliation that could jeopardize the two superpowers’ easing of acrimonious trade tensions that began last year after a volatile tariff battle. It could also threaten U.S. access to China’s bulk supplies of critical minerals.

Scott Kennedy, who studies Chinese business and economics at the nonpartisan Center for Strategic and International Studies, said the United States is “increasingly caught between rocks and hard places” regarding China and Iran.

“I don’t know how they’re going to easily resolve all these different contradictions in the different foreign policy challenges that they’re facing,” Kennedy said.

Taiyi Sun, an associate professor of political science at Christopher Newport University, said the situation creates a “paradox” for the United States.

“Any strong option will create a China problem,” Son wrote in an analysis for the nonpartisan Toda Peace Research Institute in August. “The countries with the greatest potential economic influence over Tehran are also the countries Washington can least alienate before the September summit.”

Indeed, as Mr. Bessent laid out his sanctions plan, he suggested that China would not be exempt, insisting that “no one is immune to U.S. sanctions.”

But Sun told CNBC he doesn’t believe the policy will be implemented as the administration has touted.

The economic purge operation is “a way for President Trump to temporarily get out of the (Iran) situation before the midterm elections,” Sun said.

He pointed out that when asked why the United States was not only imposing sanctions on the day the plan was announced, but also setting deadlines for countries to comply, Bessent replied, “Why would you want to blow up the global financial system?”

Sun said the comments showed Bessent “clearly understood that the global financial system could melt down if the actual announcement was implemented.” Therefore, the Trump administration would rather deal with China behind closed doors, he said.

Singleton agreed. “The Iran story may come up, but I expect it to be only a small part of the conversation,” he said. “The threshold for the Ministry of Finance to take large-scale action against Chinese banks in the run-up to the summit is extremely high.”

This dynamic could coincide with President Trump’s domestic political headwinds, as persistently high consumer costs will be a top issue in the upcoming US election.

Mr. Xi is expected to arrive within six weeks of these contests. The latest polls show the president’s approval rating has fallen to a new low as Democrats look increasingly likely to regain a majority in at least one chamber.

According to the Congressional Research Service, the average U.S. tariff rate on China has fallen since last year, but remains high at 36.5% as of July.

President Trump has long denied that tariffs, taxes that U.S. importers pay on foreign goods, raise prices for Americans. However, he seemed to implicitly acknowledge the impact of import duties late last month, when he said he would allow up to 300,000 tonnes of ground meat products to be imported duty-free in a bid to deal with soaring beef prices.

After the Beijing summit, the United States and China announced their intention to build a “constructive” relationship with “strategic stability.”

Son said one of the key outcomes that could come from Xi’s state visit to the United States would be an agreement for further talks between the leaders.

“If both leaders are expected to visit each other’s countries, there will be less confusion before the meeting,” he said.

In May, the White House announced that the United States and China would seek to deepen economic ties through the creation of a “trade committee” and an “investment committee.”

Both countries have each confirmed that China will purchase 200 units. boeing However, that number was lower than some investors had expected. The US also announced that China would buy $17 billion worth of US agricultural products, but US soybean futures reportedly fell after no specifics were provided.

Singleton said some of those deliverables remain unfinished, “such as the Boeing contract and the Board of Trade proposals.”

He added: “Neither side seems to believe that leadership-level diplomacy will change the other’s fundamental strategy.”