Having previewed the contents of today’s (12 May) King’s Speech yesterday, Global Trade Today is turning to Beijing, as the leaders of the world’s two largest economies meet to discuss the ongoing Iran conflict, trade ties and tech.
Trump’s much anticipated and delayed visit to Beijing gets underway today, with the president jetting off with a clutch of senior business leaders and government officials.
Iran
The cause for the visit’s delay – the Iran war – will be one of the key discussion points as Trump seeks counterpart Xi Jinping’s support in bringing the conflict to an end.
While China has been instrumental in getting Tehran to the negotiating table, peace deal agreements between the US and Iran remain at an impasse.
China is reportedly better insulated from the short-term economic shocks caused by disruption to oil supplies in the region. Analysts have turned their attention to the impact of a drawn-out, longer-term conflict on the country’s export-led economic model.
International Crisis Group senior adviser Ali Wyne said last week that “no country’s national interests are advanced by the perpetuation of this conflict”.
“China is much better prepared than many US allies and partners in Asia to weather a short-term disruption to commercial traffic through the strait of Hormuz … a longer-term disruption becomes more problematic.”
The conflict is having a more immediate effect on the US economy, with April inflation levels estimated as currently being 3.8% – up from and 3.3% in March – and Trump’s approval rating falling.
Taiwan
In return for that support, Beijing is expected to seek to discuss US military support for Taiwan.
Amid China’s claims to the island nation and diplomatic blacklisting of countries recognising its sovereignty, the US most recently approved an arms sale worth US$14bn to Taiwan in January.
Former US army secretary Christine Wormuth, who served in the Biden administration, told Politico that previously the US “would have taken pains to avoid any perception that China was dictating what the US would or would not provide to Taiwan”.
Although the US formally cut ties with Taiwan in 1979, in a 1982 pledge it agreed not to discuss Taiwanese military cooperation with Beijing.
Trade and tariffs
Tariffs will also be on the agenda. In October, the tariff war between the two countries de-escalated, with both suspending rates on the other’s imports for one year, in addition to shipping rates. China also deferred the introduction of more stringent export controls on several critical minerals required for advanced manufacturing.
According to AP reporting, Trump will be aiming to maintain the truce, with the establishment of a ‘board of trade’ to arbitrate similar disagreements on the agenda. He’s also seeking to bolster exports of American food and aircraft to China.
Tech
Balancing the demands of US corporate interests with a strategy of suppressing Chinese AI advances has been an ongoing challenge for the second Trump administration.
A last-minute invite was issued to Jensen Huang, CEO of the world’s largest chipmaker Nvidia, who will be joining the delegation alongside other tech bosses like X and Tesla’s Elon Musk and outgoing Apple chief Tim Cook.
Huang criticised the president in an April interview following decisions to place controls on the export of the most advanced Nvidia chips to China, and reports suggested he had been snubbed.
An Nvidia spokesperson has said that Huang will be “attending the summit at the invitation of President Trump to support America and the administration's goals”.
Despite long-standing concerns about China’s development of AI, Trump said ahead of the trip he was keen to “open up” the Chinese market to US tech firms in a Truth Social post.
Elsewhere in the trade headlines
- Politico reports US President Donald Trump’s claim that he’ll “remember” that business that refrain from claiming tariff refunds, after 26,000 firms signed up to the country’s refund portal
- The government has provided more detailed guidance on how firms can apply for compensation for indirect costs associated with low-carbon electricity policies – businesses in the most electricity-intensive sectors operating in internationally competitive markets could be disadvantaged by these costs
Yesterday in trade
- The UK was granted a key concession on food and drink by the EU, as ‘reset’ negotiations progress
- A parliamentary group opposing the Windsor Framework was established
- As the Iran war and consequential oil crisis continues, some Nato members upped drilling in dormant fields, while the alliance’s energy agency advocated for an increased use of renewables to ensure supply chain security
You can read those stories and more here.
