Hello, I’m Evelyn. I am writing to you from Beijing. Welcome to the latest edition of The China Connection. This is a snapshot of what I’ve seen and heard from local businesses.
Now that the second Trump-Xi summit of the year has concluded, it’s clear that the show was more domestic than it produced tangible results. Is it enough to agree to a discussion?
The $30 billion tariff rollback announced Monday morning Beijing time looks like the perfect shopping list.
American consumers will be able to buy cheaper curtains, sporting goods and Christmas lights. Chinese people can buy U.S. beef, soybean meal and other agricultural products at discounted prices. American ice cream is also on the list.
This was the most detailed outcome yet of the summit between US President Donald Trump and Chinese President Xi Jinping, which took place last week in Washington, DC.
Other official announcements did not make much progress on key issues, other than an agreement to continue dialogue and extend tariff cuts and a trade ceasefire that keeps rare earths flowing for another two months.
“Both sides are sending signals to their side, not to each other,” Cameron Johnson, senior partner at Shanghai-based consultancy Tidal Wave Solutions, told me on Monday.
“The reality is that neither side can do much technologically without the other,” he said, “so it’s important that both sides communicate to their respective devices that some competition is okay.”
Over the weekend, The Information reported, citing sources, that the Chinese government has indicated it may allow some domestic companies, including ByteDance and Alibaba, to buy Nvidia chips made for high-end business computers. The United States has agreed to let Nvidia sell some less advanced chips to China, but there is little sign that Chinese companies will be allowed to buy chips as Beijing pushes for self-sufficiency.
In a readout of the Chinese government’s meeting with Trump, President Xi acknowledged that “healthy” competition with the United States is possible without confrontation. The two countries plan talks on AI in the coming weeks.
“I think the top priority for both leaders is to maintain domestic stability and prosperity,” said Hai Zhao, director of international politics research at the Chinese Academy of Social Sciences, a state-run think tank.
“If the top two economies are stable and growing, I think that’s the biggest contribution to global stability and prosperity,” he said Friday.
Both countries have experienced growth concentrated in high-tech sectors, also known as “K-shaped” economies. Advances in AI pose the same risks to jobs and national security.
The readings from the United States and China also showed some agreement on limiting Iran’s nuclear weapons capabilities and an agreement that “no country or entity will be allowed to impose tolls on international waterways.”
“China (and the United States) may have different strategic goals in different regions, but sometimes they share the same mutual interests,” Zhao said, pointing to the need for stable trade flows through the Strait of Hormuz and the Red Sea.
“In many ways, we can work toward the same goal without necessarily cooperating with each other,” he said. “I call this passive cooperation.”
Mr. Zhao also hopes that encouraging Chinese companies to invest will resolve US and European scrutiny of Chinese exports.
While the United States and China have announced further details about their trade commissions, less is known about their investment commissions.
The problem is whether they will be able to secure enough air time within their packed political calendar.
President Trump is facing midterm elections in early November. Mr. Xi is scheduled to oversee a general meeting in late October aimed at unifying the Chinese Communist Party. The two presidents are scheduled to meet in Shenzhen in November and Miami in December.
“After eight tumultuous years, from Trade War 1.0 to Trade War 2.0, signs of stability carry real weight for domestic audiences and entrepreneurs concerned about the external environment,” Larry Hu, Macquarie’s chief China economist, said in a report on Sunday.
“The U.S.-China relationship actually underpins much of China’s broader diplomacy with the world,” he said.
