Will the Xi-Trump Summit Be Over Before It Starts?

0:00If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day. A fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned, it's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise, and personal attention. Together with independent agents, Cincinnati Insurance focuses on relationships, not transactions.

0:37Their approach is grounded in experience, follow-through, and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built, and is ready to help you move forward. The Cincinnati insurance companies. Let them make your bad day better. Find an independent agent at c-i-n-f-i-n.com. The thing about AI for business, it may not automatically fit the way your business works.

1:06Stephanie Flanders:At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance.

1:50With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. Bloomberg Audio Studios. Podcasts, radio, news. We're doing a lot of business with you and making a lot of money. It's different than it used to be. But I'll be talking about that'll be one subject. But he's been very nice about this. You know, in all fairness, he gets like 60 % of his oil from hormones. And he's been, I think he's been very respectful. We haven't been challenged by China. They don't challenge us.

2:38Stephanie Flanders:I'm Stephanie Flanders, Head of Government and Economics at Bloomberg. and this is Trumponomics, the podcast that always looks at the economic world of Donald Trump, how he's shaking up the global economy and what on earth is going to happen next. This week, we're looking ahead to what could be one of the more consequential meetings of the year, if it happens. That's the long-anticipated, already once rescheduled summit between President Donald Trump and President Xi Jinping in China in two weeks' time. Now, President Trump has said this week he's still looking forward to meeting his Chinese counterpart.

3:14Stephanie Flanders:Xi Jinping and officials in the White House and Beijing have been preparing for this high stakes conversation for months. But in that period, the administration has also decided to start a war in Iran that has brought fresh trains between the two countries. It's choked off a major source of energy for China and its neighbours and offered an opportunity for China to once again paint itself as a more reliable global citizen than the US. In the past few days, Iran-related tensions have also ratcheted up again as China has taken the unprecedented step of ordering its companies not to abide by US sanctions on private refiners involved in trading Iranian oil.

3:55Stephanie Flanders:It's a pretty raise an attack on the legitimacy of US sanctions. So will Trump and Xi actually sit down this month? And if they do, what's left to agree on? Well, we're recording this Wednesday morning DC time, and it's really quite possible that the summit might have been cancelled or postponed again by the time you hear this. But if so, I would encourage you not to turn off, but to view the next 30 minutes or so as providing valuable insights into why that happened. Because we do have in our DC studio two extremely well-placed experts on US-China diplomacy. Jenny Welch, the chief geoeconomics analyst for Bloomberg Economics, who's been on the show before.

4:36Stephanie Flanders:She previously served as the director for China and Taiwan on the US National Security Council under the Biden and Trump administrations. She was also an advisor to Vice Presidents Harris and Pence on Asia and the Pacific. Jenny, thanks again for joining us. Thank you for having me. And usually in Hong Kong, and we've certainly heard him from there on occasion, but now in DC this week, Dan Tencate, Bloomberg executive editor who runs all of our economics and politics coverage in Asia. Dan, thanks for coming. Thanks for having me.

5:10Stephanie Flanders:Do you think this is going to happen? What are the probabilities? I know you wrote on this yesterday, but what probability are you putting on this now happening on the kind of timeframe that we were expecting? I tend to lean a little bit towards the meeting going forward as planned. And I think the main reason for that is that it's a relatively low-cost way for both sides to maintain stability. And both of them have an interest in that, especially given all the headwinds they're facing at home and from the energy disruptions caused by the Iran war. And that being said, as you mentioned, Stephanie, there are also a lot of friction points that are continuing to build, including over the war itself.

5:48China is not happy about the blockade. which is affecting a major source of energy imports for it coming through Hormuz. It is not happy about U.S. pressure on Iran and particularly recent U.S. sanctions targeting its private refineries. And more broadly, I think China is not happy to be hosting a major diplomatic summit in the midst of the U.S. carrying out, whether Washington says it still is or not, what the world perceives as a major military campaign in the Middle East.

6:16Stephanie Flanders:And I guess, yeah, so they'd sort of rather it wasn't happening, But given that it is, they also would see significant costs to putting it off or cancelling it. That's right. I think there is the risk that it could turn from just a diplomatic snafu into a larger friction point in the relationship. And that comes in a moment where while China has insulated itself from the effects of the Iran war through its reserves, its energy diversification, is still facing costs and still worried about the impact this war will have on its ability to sell its exports around the world. And so all that is to say, I think they would not necessarily want a trade fight if they can avoid it with the United States.

6:56Certainly they would wage it if they felt they had to. But hosting Trump is a relatively low cost way of potentially avoiding that outcome.

7:04Stephanie Flanders:Dan, Jenny's obviously kind of thinking about both perspectives, having spent a lot of time sort of advising U.S. administrations on how China is looking at things. But, you know, you're normally sitting in Hong Kong. How do you think the Chinese authorities will be viewing the summit and the decision to potentially postpone or delay? I agree with Jenny. Definitely, it's not the preferred time to be having a summit. Xi Jinping will often say things to leaders like when he dressed down Justin Trudeau at the G20 in Bali a couple years ago. You know, we need to create the right conditions for the relationship.

7:42And this is not the right conditions. It definitely puts them in an awkward position in terms of what do you do on the ground? They like to just make sure that everything is stage managed. They measure out the distance that Xi Jinping needs to walk from point A to point B. They don't like any surprises. So dealing with Trump normally, there's so many unknowns when it comes to that, that you're not quite sure what he's going to say, and you're trying to stage manage the whole thing. So it just adds an element of uncertainty that they don't like. But they also do have a way of looking at the bigger picture.

8:20And the bigger picture is the U.S. is still an important market. Their economy is still heavily reliant on exports and a stable external environment. They're also set to host APEC later in the year. Trump is going to host the G20. They're supposed to meet three more times after this. So to keep that all on track, this meeting has to happen at some point, or otherwise it gets derailed. And this truce is set to expire in November unless you extend it. And so for all those reasons, there's a lot of reasons to go forward with this meeting, even if it's not an optimal time.

8:55Stephanie Flanders:The Chinese could maybe take some advice from the palace, given that you've had the planning for the king's visit in DC. I suspect there were very similar concerns. I suspect the Chinese will be kind of thinking through similar ways to reduce the amount of time for anything surprising to happen. I do want to get into what they might talk about, what the, to use the phrase, is much loved in these kind of discussions. Deliverables might be from the summit. It'd be good to get a sense of this more recent news in the last week that I mentioned at the top, that China ordering its companies to ignore U.S.

9:31Stephanie Flanders:sanctions, the sanctions that were on refiners that had been linked to refining Iranian oil. How unprecedented is that? Because we've heard the Chinese before kind of complain about U.S. sanctions, say they're not legitimate. But what's new in this move? Yeah, I mean, we have seen this before, particularly in Hong Kong, where I'm based during the protest or the 2020 after the national security law. That specifically says that Chinese companies should not comply with U.S. sanctions and banks were in effect being forced to choose. Do you comply with the U.S. or do you comply with the national security law?

10:12And even Chinese state-run banks were complying with U.S. sanctions then because they didn't want to be cut off from the dollar system. So there is a little bit of a dance where what they say and what they do can be two different things sometimes. I think what's different now is that China has stood up to Trump, particularly last year. They showed the leverage they have by cutting off rare earths, and that's still there. So they're in a relatively stronger position to say things like, hey, we're going to dare you essentially to put sanctions on our banks, and that's going to blow up the relationship.

10:48And do you want to blow up the relationship? Now, Rubio was giving a briefing here in Washington yesterday where he said we don't put sanctions on to be symbolic and we are going to enforce them. But, you know, from the Chinese perspective, they know that Trump wants a summit and doesn't want things to blow up. He's got enough problems on his plate now. We see them trying to squeeze Taiwan a bit more as well. So it's an opportune time in their mind to say, OK, we'll call your bluff on this one. And do you go ahead and potentially could roil the relationship, could roil markets, certainly will have an impact on China as well.

11:25But if you're going to take a stand, you know, why not, especially ahead of the summit?

11:30Stephanie Flanders:It feels like a sign of the times, Jenny. If the previous situation was that the Chinese in public would say they don't respect these sanctions, but in private would largely kind of turn a blind eye to their biggest companies abiding by sanctions in order to stay in the US system and for all those reasons. If we're now in a reverse situation where it's actually the U.S. that has to kind of turn a blind eye to countries just ignoring the writ of America because it no longer has the same kind of weight. I mean, that's something that we're not just seeing in China. No, I think that's true. I think, too, what this situation really underscores is the shift in leverage between the United States and China over the last year.

12:16I can't underscore enough the impact of China's use of its grip over critical minerals to put the onus back on Washington last year during the height of the trade war and push Washington towards the negotiating table, push it towards a pause that eventually led to the Busan meeting and a more enduring truce. that had a real psychological effect on Washington in demonstrating China's trump card. And it's a trump card that even though Beijing has put a pause on some of those measures, it hasn't fully rolled them back. In fact, it's continuing to gather information from every company that imports Chinese critical minerals on how they're using it and what specifically they use them for.

12:58So all of that is information that China could very quickly use again if it felt, for example, that the U.S. is not respecting its interests. And I think that that really casts a shadow over policymaking in this administration. You've seen them be very careful about, for example, how China is referred to and everything from the national defense strategy to future export control rules. And I think it's also likely to be a factor in how the U.S. is approaching this meeting in particular.

13:25Stephanie Flanders:We had a fantastic bit of research that was out about a week ago from your colleagues, Nicole Gorton-Caratelli and Chris Kennedy, just looking at how much rare earths are implicated in the US economy. And it's an incredibly complicated bit of work because it's going through not just the direct use, but the indirect use. So you have to really get under the hood. But they find that 4 % of US GDP is implicated. That's$1.2 trillion. And although some of them can be substituted for rare earths from other parts of the world, there's actually about 1.5 % of that, which just can't be substituted. China's the only source.

14:03Stephanie Flanders:So it really, really showed us why that is such an important bit of leverage. Dan, I remember talking to you, actually, when I was in Hong Kong earlier in the year, and we were talking about the sort of relative balance of power, the shifting ground underneath the US and China. I mean, it's not just Iran that's happened since then. We've also seen the overturning of a lot of the tariffs that had been put on China. China's now got a big advantage relative to the start of the year and the tariff rate that it's facing going into the U.S. What are you looking for if this meeting does go ahead? What's possible on the trade front?

14:42The U.S. has the 301 investigations ongoing and they vowed to rebuild this tariff wall. So I think China's big concern now is that it doesn't get rebuilt in a way that they see as going beyond what was there before. And they just want to issue some warnings there. So there is some uncertainty hanging over what that rate is going to be or what that picture looks like. And I think until you sort that out, it's really hard to go beyond that. And this notion that, OK, they've made this truce and then they were talking about how can we build off of that truce? Can we actually do some bigger things with the economy?

15:19Can we sell more advanced chips into China? You've had the H200s ready to go. Not many have been shipped yet.

15:26Stephanie Flanders:They're not the super important, the Blackwell chips. They're sort of one down from that. Right. You've got the Blackwells, you've got the Rubens. They're a couple generations back. We don't see that there's going to be anything further in that area. And then the question is, can you get a big Chinese investment package in the US? there was some talk of are they going to, you know, if anyone, I guess Trump could totally flip the script and say, you know, we're going to welcome massive BYD investments and electric vehicles and things like that. But there doesn't seem to be anything on the cards there.

16:00The national security restrictions are still in place on a lot of those things. You have pent up demand for Boeing airplanes, and it looks like a deal there might go through. And of course, that also gives China leverage with Airbus. If you're just buying from one supplier, you don't have much leverage there. So that also helps the Chinese in a way fill demand that they already have and gives them some negotiating leverage against Airbus. You're very still in the straight jacket of national security restrictions that limit how far you can go either way on the trade and investment front. I'll announce some wins, but I don't see anything that would really move the needle to break through those restrictions that we've seen.

16:39Stephanie Flanders:Jenny, the bad news for you is that you're going to have to be quite focused on this summit if it does go ahead for the next two weeks and get people excited about soybeans as well as maybe the old Boeing jet. Yes, I think that's right. I think the ambition is relatively low for it. That being said, obviously, President Trump would trumpet it as a major foreign policy win, major deliverables. But as with so many things, all of it depends on the execution, right? There were a lot of promises made in Busan last year, and I think we're still waiting to see how some of those turn out. including on soybean purchases.

17:11The Chinese fulfilled the requirement to purchase, I think it was 12 million metric tons by February of this year, but they're on the hook to buy about 25 million by the end of this year. And I think it's a huge question, especially for U.S. farmers, when do those orders come in? Because it makes a big difference on whether they come in now or whether they come in closer towards the end of the year, which is when Beijing might have an incentive to do it. You don't want to front load all those orders and lose all your leverage. So there are just a number of friction points in the relationship. And I think that this meeting would help to provide some stability and additional time to work through those.

17:46But it's not going to probably resolve all of them, including because the president in the United States is not the only actor here. You have Congress, for example, considering laws that would restrain his ability to do some of the things he's talking about, including on Chinese vehicles in the United States.

18:02Stephanie Flanders:Dan, you said something on a news call earlier today that made me think about it slightly differently. So we've talked about, you know, the leverage that China has kind of now exercised when it comes to rare earths. We tend to feel quite beholden to China's extremely cheap EVs and solar panels and all these things that are incredibly useful in the world right now, especially in Europe, as people are trying to avoid higher energy costs. But I guess on the other side, what's happened in the last few months is we've really seen the power of some of these AI tools, including some of the things we discussed it on the show a couple of weeks ago, things like mythos coming out of Anthropic.

18:41Stephanie Flanders:The US does seem to have the lead still on these very potent forms of AI. Is that something that Donald Trump sort of has in his favor or, you know, gives him a little bit more leverage or at least the US has a bit more standing going into this? It's not all on China's side. Yeah, I think that's right. And I've been struck by that in conversations I've had here in Washington with some people in this space who see that as something that China would be very concerned about, obviously. And imagine it was the other way around where China had this AI tool that could penetrate any defenses and they would be very freaked out about that.

19:24We have actually tried to get reporting on this from the Chinese side, and they've been very, very quiet on it, which suggests they're very concerned about it. And I think that that is one of the things where that also gives China an incentive for the meeting to go forward to keep things stable there. How the U.S. would use that, whether they would use it for leverage. These are all questions I don't think we know totally right now. But even if you have a two-month lead or something like that before China develops a similar tool, there is an interest either way in preventing rogue actors from getting this and putting some sort of guardrails on it.

20:05And I think to the hawk's point, it does, from what I understand here, is that it has given the Trump administration a new appreciation of the need to maintain a lead on China in these areas. So in a sense that, you know, it's helped focus the mind instead of, hey, let's give them all these advanced chips. It's like, oh, these weapons are actually really powerful and could cause widespread destruction and give us leverage in the real world. So that's a good thing. Like, let's keep that advantage and press it a little bit. So I think there has been a little shift in that regard.

20:46Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts, Yep. High yield cash. Yes, again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps.

21:21Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market.

21:41See complete disclosures at public.com slash disclosures. Being a small business owner isn't just a career. It's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools.

22:15Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Here's a paradox. We buy insurance for peace of mind, yet the very policies we trust can deliver the biggest financial shocks.