(Bloomberg) — President Donald Trump became the first US leader in almost a decade to visit China when he landed in Beijing on Wednesday. His much-anticipated two-day summit with President Xi Jinping — delayed from March due to the Iran war — offers the leaders of the world’s two largest economies a chance to reset personal ties and look for common ground on trade, technology and a range of other contentious topics.
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Here are the issues that are likely to dominate the agenda.
Iran War
The US-Israeli conflict with Iran is a new focus of tension between Washington and Beijing.
Trump is under pressure to end the conflict that’s triggered a global energy crisis, and is expected to press Xi over China’s relationship with the Islamic Republic.
China is Iran’s biggest oil buyer and provides a measure of diplomatic support for the country on the world stage. The US has sanctioned several Chinese firms for purchasing oil from or providing satellite imagery to Iran’s government. Trump made cryptic comments on April 21 suggesting China possibly provided weapons or other potentially lethal war supplies to Iran, saying the US caught a ship with a “gift” from China. A Chinese foreign ministry spokesperson rejected the “false association” linking the foreign-flagged container ship with China.
Trump has downplayed any negative impact of the war on US-China relations, saying he has a “great relationship” with Xi. Nevertheless, US officials have said the revenue China provides to Iran, as well as potential weapons exports, will be discussed at the summit.
Beijing has ordered Chinese companies to defy US sanctions targeting their Iranian oil purchases, deploying a blocking measure introduced in 2021 aimed at protecting its firms from foreign laws it deems unjustified. The country’s foreign ministry has repeatedly voiced opposition to what it calls illegal, unilateral sanctions affecting Chinese companies, and urged the US to avoid a collapse of the current ceasefire with Iran rather than “throwing mud at China.”
Tariffs
Import tariffs levied by the US and China on each other’s goods remain in place following an October truce in the trade war initiated by Trump after he returned to the White House.
Xi and Trump are both expected to seek an extension of the détente, which dialed down the tariffs and suspended some proposed export controls on shipments of products including Chinese rare earths.
The levies remain a source of tension in the relationship. China’s government has long complained about US tariffs, but the Trump administration is proceeding with investigations into China’s trade practices that could give it the option to impose new import duties after the president’s earlier tariffs were struck down by the US Supreme Court in February.
One point of alignment has emerged with China’s efforts to curb the illicit fentanyl trade. Trump last year imposed a 10% tariff on Chinese goods specifically to pressure Beijing to crack down on production of the synthetic opioid that’s driven an addiction and overdose crisis in the US. The tariff was later raised to 20%, then lowered, before being struck down by the Supreme Court, and the Trump administration has been seeking to replace it with new levies.
Two days ahead of Trump’s arrival, China said it had dismantled a cross-border drug trafficking network in a joint operation with the US, signaling progress on the issue.
Trade and Purchasing Commitments
Japan and South Korea have made large-scale commitments to invest in the US or purchase more American goods as a way to meet Trump’s demands on trade, and his administration is pursuing the same approach with China.
The summit is likely to yield business deals and purchase commitments from China, potentially including a historic order of jets from Boeing Co. White House spokeswoman Anna Kelly told reporters ahead of the summit that agreements on agriculture, aerospace and energy were also up for discussion.
Scott Kennedy, a senior adviser at the Center for Strategic and International Studies in Washington, said the US is heading into the summit focused on five Bs: Boeings, beans, beef, the Board of Trade, and the Board of Investment.
American negotiators introduced the Boards of Trade and Investment following talks in Paris in March as a way to formalize US-China trade flows, including exports of agricultural products such as soybeans and beef, which Washington has sought to expand. The trade war prompted China, the world’s largest importer of soybeans, to halt some US crop purchases for months last year, disrupting a key market for American farmers, before imports rebounded following the October truce.
The investment part of the negotiations appears to be less advanced, with one administration official saying ahead of the summit that there are no current plans for a major new program of Chinese investments in the US.
AI
The US and China are in a race for leadership in artificial intelligence, and have both taken steps to restrict access to the other’s technology.
US officials said they plan to raise concerns about AI, and will explore the possibility of opening a new channel of communication with Beijing to regularly discuss issues around the emerging technology.
The US government is concerned that Chinese developers are using the outputs of cutting-edge American AI platforms to produce rival systems at a fraction of the cost. In April, amid complaints from US companies including OpenAI Inc., Anthropic PBC and Alphabet Inc.’s Google, the White House unveiled measures aimed at preventing this practice, known as “adversarial distillation.”
There are also tensions around access to each country’s markets and dealmaking. China’s recent demand that Meta Platforms Inc. unwind its $2 billion acquisition of AI startup Manus showed how anxious it is to limit foreign access to its domestic technology.
China has long complained about US export controls that limit the ability of Chinese companies to access the most cutting-edge chips from companies such as Nvidia Corp. It’s unclear how prominently those restrictions will feature in the talks. In December, Trump agreed to allow Nvidia to ship a less capable AI accelerator chip to Chinese customers, the H200. The US government is set to receive a 25% fee from Nvidia for any H200s sold to China.
Taiwan
Taiwan remains one of the most sensitive and potentially volatile issues in US-China relations. While China claims the island as part of its territory, the US supports the self-ruled democracy militarily and maintains robust but unofficial ties with its government.
Beijing has previously asked the Trump administration to officially declare that it “opposes” Taiwanese independence, a concession that would represent a major diplomatic win for Beijing. A US official told reporters that no changes in US policy toward the self-governing island are expected at the leaders’ summit.
Taiwan’s Deputy Foreign Minister Francois Wu told Bloomberg in late April he had concerns the island might be “on the menu” during the talks between Trump and Xi. Under current US policy, Washington acknowledges Beijing as China’s sole government without clarifying its position on Taiwan’s legal status.
Days ahead of the summit, Trump was asked if he would discuss with Xi a proposed $14 billion sale of US weapons to Taipei. Trump said he would “have that discussion” even though “President Xi would like us not to.”
Critical Minerals
Critical minerals such as rare earths — a key source of leverage for Beijing — have emerged as a battleground in US-China economic competition, given their importance to industries such as defense and clean energy. US officials are looking to ensure better access to rare earths and other materials that China has restricted through sweeping export controls.
While trade in these products has picked up since the leaders reached their agreement in October, flows remain below where they were before the controls were imposed. And despite Washington’s efforts to diversify its sources of critical minerals, the US is probably still years away from denting China’s dominance of rare-earth mining and processing, according to Bloomberg Economics.
Meanwhile, Beijing has issued new rules aimed at countering foreign efforts to shift global supply chains away from Chinese suppliers and restrict China’s access to key materials and technology. While China appears unlikely to give up its leverage over rare earths by allowing them to flow freely to other markets, it has been pushing ahead with more streamlined permits through general licenses. The impact of those measures remains unclear, with global buyers expressing concern that approvals are still being slow-walked.
–With assistance from Joe Deaux, Jeff Mason, Michael Shepard and Michelle Jamrisko.
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