Trump-Xi meeting: What’s at stake and who has the upper hand?

In light of rising trade frictions between China and Washington, United States President Donald Trump anticipates “a lot of problems” will be resolved when he meets with him in South Korea on Thursday for a high-stakes meeting.

Relations between the two world powers have been strained in recent years, with Washington and Beijing imposing tit-for-tat trade tariffs topping 100 percent against each other this year, the US restricting its exports of semiconductors vital for artificial intelligence (AI) development and Beijing restricting exports of critical rare-earth metals which are vital for the defence industry and also the development of AI, among other issues.

The leaders’ meetings take place when?

Trump is scheduled to meet Xi on Thursday in the port city of Busan in southeastern South Korea. The meeting is scheduled to begin at 11:00 AM (GMT).

It will be the first time the leaders have met in person since Trump returned to the White House in January.

The US president last met Xi in 2019 on the eve of the Group of 20 (G20) summit in Osaka, Japan, during Trump’s first term.

“I think we’re going to have a great meeting with President Xi of China, and a lot of problems are going to be solved”, Trump told journalists on Wednesday on Air Force One while en route to South Korea.

The leaders “will exchange views on bilateral relations and issues of mutual interest,” according to a statement released by China’s ministry of foreign affairs on Wednesday.

What will Trump and Xi talk about?

Discussions are likely to include:

Trade tariffs
Fentanyl is traded annually in the US, where it is linked to tens of thousands of fatalities.
China’s export controls on critical rare-earth metals and its purchase of US soya beans
US semiconductor export controls
Geopolitical and security issues, particularly Russia’s war in Ukraine and Washington’s position on Taiwan
Chinese ships that are docking in US ports will be charged port fees.
Finalising a deal to buy TikTok, the social media platform, from its Chinese owners

Both sides will want to maintain an uneasy rivalry, according to Alejandro Reyes, an adjunct professor at the University of Hong Kong’s Department of Politics and Public Administration, but for various reasons.

“For Washington, the goal is to show that its tough line on China has delivered results. After signing trade agreements with Malaysia, Cambodia, and Japan that directly link market access to national security cooperation, the Trump administration will attend this summit. These deals require America’s partners to align with US export controls and supply-chain rules – essentially making ‘ economic security ‘ a shared obligation”, he said.

Beijing’s top priority is to project restraint and perseverance. The meeting comes just after the fourth plenum, which reaffirmed Chinese leader Xi Jinping’s authority and set the direction for the next five-year plan. He continued, “China’s message is that it has withstanded Western pressure and is now focusing on domestic stability and growth.”

But discussions on disputes over trade tariffs, critical rare-earth metals, AI technology and geopolitical strategies, the issues that most define the current relationship between the US and China, according to Reyes, are not going to be easy to resolve.

He claimed that the mistrust is now structural and is a result of how both nations view power and security.

What are the sticking points?

Fentanyl

Stopping the flow of drugs, particularly fentanyl, a potent synthetic opiate that is 50 times more potent than heroin, from China to the US is a key priority for the Trump administration. In February, Trump slapped a 20 percent trade tariff on all imports from China, citing Beijing’s lack of effort in curbing the flow of the drug into the US.

The US’s German Marshall Fund sent a media briefing note to Al Jazeera that Bonnie Glaser, managing director of GMF’s Indo-Pacific program, referred to the fentanyl trade as “a really contentious issue between the US and China.

“From what I have heard, a criminal money-laundering cooperation supports the fentanyl trade, and this is where China is willing to cooperate, in a way where it will have minimum negative impact on their domestic situation”, she said at a briefing held in Washington, DC, on Tuesday.

The Wall Street Journal reported late on Tuesday that “China is anticipated to commit to more controls on the export of so-called precursor chemicals used to make fentanyl.” The newspaper added that if this agreement is reached, Trump would reduce the tariffs imposed because of fentanyl by as much as 10 percent.

Trade tariffs

In retaliation for the fentanyl-related tariffs, China imposed a 15% tariff on a range of US farm exports in March, erupting a tit-for-tat tariff war.

In April, Trump raised tariffs on Chinese imports to 145 percent, prompting China to hit back with 125 percent tariffs of its own.

In May, Washington and Beijing agreed to a 90-day truce in August for trade talks, cutting tariffs to 30 percent and 10 percent, respectively. The truce has been extended twice, but despite repeated talks, a trade agreement has not been reached.

Soya beans and rare-earth metals

China has restricted exports of 12 critical rare-earth metals this year, as well as of the machinery needed to refine these metals, citing security reasons. Beijing added that its restrictions were in response to US restrictions on China’s maritime, logistics, and shipbuilding sectors.

The first seven metals to be restricted were announced in April, while the remaining five were announced on October 10. For the development of AI technology and the defense sector, these metals are crucial.

In October, Trump responded by threatening to impose 100 percent tariffs on China from November 1, citing Beijing’s strict export controls on critical rare earths as the reason for the tariffs.

Trump added that “any and all critical software” would also be subject to export restrictions from the US.

Reyes noted that while the US wants guaranteed access to rare earths and battery materials, it signed a new agreement with Japan and trade clauses with Malaysia this week, which aim to reduce the US dependence on China for these. He claimed that Beijing views this as an attempt to “contain its influence.”

Meanwhile, US Secretary of the Treasury Scott Bessent told many US media outlets this week that he expected China to defer its restrictions on rare earths and that Trump’s 100 percent tariff threat was “effectively off the table”.

Bessent added that China would consent to boosting its soybean purchases in the US.

Dylan Loh, associate professor in public policy and global affairs at Nanyang Technological University, said he anticipates some positive movement on solving these trade disputes but does not believe the fundamental economic tension between the US and China will be resolved at the meeting.

He told Al Jazeera, “The competition and mistrust extend beyond just economics.” “But the problems can be managed and must be managed well. Political capital and the capacity to think beyond the bounds of zero-sum thinking are required.

Technology and TikTok

In response to national security concerns, Trump signed an executive order in September to transfer TikTok’s US assets to US investors. On Sunday, Bessent told US broadcaster CBS that the US and China had “reached a final deal on TikTok”, which will be finalised at the Trump-Xi meeting.

Reyes asserted that the agreement “cools one dispute but doesn’t put an end to the conflict over chips, AI, and digital control.”

In October, Washington blacklisted hundreds of Chinese tech firms, claiming they posed a risk to national security. In order to encourage China’s advancement, the US has also prohibited businesses like Nvidia from exporting cutting-edge chips, which are crucial to the production of crucial equipment for the development of AI.

Beijing has been irked by Washington’s restrictions and has launched antitrust investigations into Nvidia and Qualcomm, and has also increased its export controls on rare-earth elements.

Trump said he might talk to Xi about Nvidia chips while speaking to reporters on Air Force One’s Wednesday departure from South Korea.

“I think we may be talking about that with President Xi”, Trump said.

Geopolitical Problems

According to analysts, Trump is eager to use this meeting with Xi to discuss ways to end Russia’s war in Ukraine.

A protracted conflict in Ukraine “serves no one’s interests,” according to Beijing, a close ally of Moscow. But, in July, according to a report by The South China Morning Post, Chinese Foreign Minister Wang Yi told the European Union that it can’t afford to have Russia lose the war in Ukraine since the US would then turn its attention to China.

In an effort to put an end to the war, Trump has threatened to impose sanctions and tariffs on nations that purchase Russian crude oil. It has already imposed an additional 25 percent tariff – bringing the total to 50 percent – on India as a punishment for purchasing Russian oil.

However, China imports about 1.4 million barrels of Russian oil by sea each day, but the US has not yet done so.

According to a Reuters report, however, after the US sanctioned two of Moscow’s largest oil companies, Rosneft and Lukoil, in October, Chinese national oil companies like PetroChina and Sinopec have said they will refrain from importing seaborne Russian oil for the short term.

Trump wants to negotiate a peace agreement with Ukraine. Putin has been unwilling to play ball, and Trump, I think, intends to raise this with Xi Jinping, possibly ask him if he can reach out to Putin and encourage him to come to the negotiating table”, Glaser said.

“We are aware that Xi Jinping has been very, very cautious about entering the dialogue. I think he will be reluctant to pressure Putin to do”, she added.

Beijing will be interested in hearing about the US position on Taiwan, Glaser predicts.

“Xi Jinping will raise concerns about what Beijing views as the pro-independence policies of Taiwan’s President Lai Ching-te, and I think he will want clarification of the US stance and may well press Trump to say that the US opposes Taiwan independence and supports China’s unification”, she said.

Bottom line: Trump won’t likely leave Taiwan because using force could lead to a People’s Republic of China [People’s Republic of China] decision, and he wants to take credit for ending wars rather than starting them, Glaser said.

Trump, however, told journalists on board Air Force One on Wednesday that he was “not sure” he would discuss Taiwan.

How assertive are their negotiations?

The balance of power in the respective negotiating positions of China and the US has shifted in the recent past.

Much to China’s annoyance, former US president Joe Biden slowed US semiconductor exports, which are crucial for AI development. Then, early this year, Trump compounded this with 145 percent tariffs on Chinese goods.

Before the two sides agreed in May to pause the tariffs so that trade talks could continue, China retaliated by imposing a tariff of 125 percent on US goods, escalating the trade war.

But that was not before China placed export restrictions on seven rare-earth metals in April. Trump threatened 100 percent tariffs once more in retaliation after China restricted exports of five additional rare-earth metals in October.

This week, seeking to diversify trade and its supply chains, China strengthened a trade deal with the Association of Southeast Asian Nations (ASEAN). However, the US also signed new trade agreements with Cambodia, Malaysia, and Japan. On Wednesday, South Korea announced that it too had reached a trade agreement with the US, and was lowering tariffs on imported US goods.

Between the US and China, according to Loh, it is still unclear who currently has the upper hand.

“While the signing of the FTA]with ASEAN] has certainly enhanced China’s position and influence and is indeed quite significant for ASEAN and China, it does not necessarily have a direct bearing on US-China itself”, Loh said.

Trump’s trip to this region of the world demonstrated how much of US political and economic influence is still there, he continued.

According to Reyes, each side has different kinds of leverage.

According to him, “The United States has established a new network of allies who have figuratively accepted Washington’s script,” referring to the Malaysian trade agreement that requires Kuala Lumpur to abide by US trade restrictions. Malaysia has clarified that this deal would only apply to matters of shared concern.

Reyes claimed that the agreement “gives Trump’s team political and legal momentum ahead of the China meeting.”

“China, though, has the economic stamina. It continues to be the heart of global manufacturing, is the dominant supplier of critical minerals, and has demonstrated that tariffs cannot impair its business model. China used the trade war to build muscles, resistance and resilience – it learned to do everything faster, cheaper and at scale”, he said.

“The US has the “louder” hand, and China has the “stiff hand.” Washington can escalate, but Beijing can outlast”, Reyes added.

What will most likely result from these discussions, then?

The stakes are high with Trump announcing that he anticipates a “great” meeting. However, little is known about any “great” outcomes.

Reyes said he expects a truce in their strained ties with photo opportunities rather than any grand bargain.

Expect “both sides to announce small victories,” he said, “such as a working group on crucial minerals cooperation, a delay in tariffs, a joint statement on trade stability, etc..”

Source: Aljazeera

Trump-Xi meeting: What’s at stake and who has the upper hand?