Macro Crossroads | Trump's visit to China: One Step at a Time

Prof. Zhu Ning

 

Macro Crossroads is a column by Prof. Zhu Ning, Senior Macro Strategist at Primavera Capital Group. In this series, he offers perspectives on the macroeconomic trajectory of China and the global economy, technological and industrial developments, and key policy shifts.

 

U.S. President Trump recently traveled to China for a three-day state visit, an event that has become one of the most significant for the world’s most consequential bilateral relationship thus far in 2026. Both sides walked into the meeting with realistic and somewhat modest expectations given their divergent stances on tariffs, export controls, and the conflicts in Ukraine and Iran.

 

Largely consistent with expectations, the two countries did not release joint statements immediately after the summit, even as China extended full hospitality to President Trump and his delegation. In their respective statements, while both sides acknowledged mutual differences and rationally managed competition, China touted the establishment of “strategic stability” aimed at breaking the “strategic competition” narrative that the U.S. has long sought to impose on bilateral ties. In comparison, the U.S. statement focused more on the specific areas where both sides reached agreement while leaving out others where deals or discussions did not progress.

 

On the economic side, even with a notable number of U.S. CEOs joining President Trump’s delegation, there were only a handful of major deals. However, China is broadly committed to purchasing more American oil, agricultural products, and Boeing aircraft. The U.S. approved Nvidia’s sale of H200 chips to major Chinese firms, although China may not allow its companies to purchase such chips in the hopes of encouraging advanced domestic semiconductor capabilities. In the wake of the visit, the stock markets in both China and the U.S. took a beating on Friday as President Trump left Beijing.

 

Stock markets, however, are often overly focused on the short term, and there are still reasons to remain hopeful for the broader relationship following the visit.

 

Figure 1. China’s direct exports to the United States declined rapidly after the 2017 trade war, reflecting the combined impact of Sino-U.S. trade frictions, global supply chain adjustments, and the rerouting of some exports via third-party transshipment to circumvent tariffs (i.e., ‘origin washing’).

 

Symbolically, this was the first state visit between the two nations’ leaders in almost a decade. President Xi is now scheduled for a reciprocal state visit to the U.S. in September 2026, more than a decade after his last such visit in 2015. Continued face-to-face communication between the two leaders is crucial when so much is going on in the world and so much remains at stake between the two nations.

 

Strategically, the shift in global order and national power makes it imperative for both nations to remain collaborative to ensure mutual and respective safety and prosperity. More realistic progress will come should both sides delineate their respective “red lines” while at the same time setting out common areas for sustained collaboration, such as AI governance, global peace, and life sciences.

 

More broadly, the strategic frameworks of both nations regarding their bilateral relations are shifting simultaneously. From Clinton and Bush to Obama, Washington’s approach toward China remained anchored within the framework of the “Engagement Policy” and the characterization of China as a “Responsible Stakeholder.” A critical inflection point occurred in 2017 when the Trump administration officially defined the US-China relationship through the prism of a “Strategic Competitor” in its National Security Strategy. The Biden administration has continued and intensified this strategy, expanding this competition to nearly every sector. However, during his second term, Trump began characterizing China as a “near-peer” and focused the competition between the two countries on trade and high-tech export controls, even though this shift was highly controversial in U.S. political circles.

 

Simultaneously, Beijing’s positioning of the relationship has undergone a comprehensive evolution over the past decade—shifting from a posture of vigorous pushback against external definitions, to the establishment of “strategic guardrails,” and ultimately culminating in the newly articulated framework of a “Constructive Relationship of Strategic Stability.” Beijing has integrated “competition” as an enduring and structural reality of the bilateral ties on a “moderated and controlled” basis, while steadfastly positioning cooperation as the essential bedrock of this strategic stability.

 

If both superpowers move back towards a more pragmatic and level-headed realist positioning, the political rhetoric surrounding the relationship, though no longer generating public exhilaration, serves to effectively lower the risk of strategic miscalculation and reduce the intensity of potential conflict. This “illusion-free” new normal provides the business community and global markets with far clearer, long-term predictability. Consequently, it allows both sides to identify more grounded avenues for tangible cooperation within clearly delineated boundaries. What was referred to as the Thucydides Trap happened almost three thousand years ago, and modern leaders have learnt from history far better since then?

 

The two nations are so closely intertwined under the current global system that neither can stomach the shocks from sudden and drastic decoupling. China receives almost 100 percent of its ethane imports from the U.S., whereas the U.S. imports three-quarters of its rare earths and more than a third of its active pharmaceutical ingredients from China. In more pragmatic areas, the two sides agreed to set up councils aimed at boosting two-way trade and capital flow and resolving differences.

 

Trade flow and investment ties are important because historical experience indicates that mutual commercial interests can be conducive or even vital in avoiding catastrophes and maintaining bilateral relationships. However small these steps may seem, they reflect that President Trump is still pivoting the bilateral relationship towards an improved outlook rather than a downward track.