Trump-Xi Summit Fuels Fresh Optimism for US-China Reset Despite Lingering Tensions
The world’s biggest power struggle just got a fresh coat of diplomacy. President Donald Trump and Chinese President Xi Jinping wrapped up their latest Beijing summit with warm rhetoric, vague promises, and a room full of powerful American CEOs chasing business opportunities. But beneath the diplomatic warmth, the relationship remains locked in deep tensions.
Shaky foundations: The two leaders agreed to pursue what Beijing called a “constructive China-US relationship of strategic stability,” though concrete outcomes remained limited. Xi told American executives that China’s doors would “only open wider and wider,” as Trump introduced business leaders, including Elon Musk, Jensen Huang, and Tim Cook, during the summit. The meeting followed earlier talks in South Korea that both sides described positively, signaling dialogue may finally be easing some corporate concerns.
- Trump and Xi agreed to deepen cooperation across trade, agriculture, and tourism, while Washington pushed Beijing to curb fentanyl flows and boost purchases of American farm goods.
- China also signaled interest in buying more US oil as both sides stressed the importance of keeping the Strait of Hormuz open.
The Chip War Tradeoff
While business leaders praised the importance of China’s market, the chip standoff reflects a deeper contradiction. The US approved ~10 Chinese firms — including AlibabaBABA, TencentTCEHY, and JD.comJD — to purchase Nvidia’sNVDA H200 AI chips, with each company allowed to buy up to 75K units. Yet despite the approvals, not a single chip has shipped as Beijing reportedly fears the imports could slow China’s push for domestic AI and semiconductor independence.
- Chinese hyperscalers are under pressure to secure advanced AI hardware quickly, even as Beijing accelerates efforts to reduce reliance on foreign technology.
- To chip away at Nvidia’s dominance in China’s chip market, Tencent is ramping up AI spending, while Alibaba said its T-Head GPU chips reached scaled production.
The long freeze ahead: Xi reserved his sharpest language for Taiwan, calling it the “most important issue” — warning mishandling it could lead to “collision or conflict.” Still, markets rallied on optimism from the talks, sending the S&P 500 and Nasdaq to fresh record highs. Yet beneath the market enthusiasm, the deeper tensions between both sides remain far from thawed.