On May 14-15, U.S. President Trump and China’s President Xi Jinping will meet in Beijing. The two were set to meet in March, but the bombing of Iran delayed that. How will the meeting play out?
The BBC characterized China as stronger and more assertive than the last time they met. In 2017, China was still investing heavily in its technology and serving as a trade hub to the world. Still, trading volumes slumped substantially in the last few years. COVID-19 caused many foreign companies to close their shop in China and to lower their import volumes from the country.
The U.S. has many priorities to cover. Tariff rate negotiations on trade might be secondary. The Supreme Court ruled the tariffs were illegal. But on May 12, the appeals court paused a ruling against Trump’s 10% global tariff.
Watch the reaction of the long-term U.S. treasuries. If the TLT ETF slumps, it would suggest that demand for U.S. debt is weakening. A weaker U.S. dollar would mean that the currency market is pricing in a weaker U.S. dollar against China.
The U.S. might ask China to decrease its support for Iran. Trump might ask that China refrain from shipping materials used for drones, like chips.
Any indication that China would lessen its support for Iran would weaken oil prices. Watch for stocks like ExxonMobil (XOM) in the days following this summit.
