Trump-Xi Summit Looms as China's Self-Sufficiency Reshapes Trade Calculus

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U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet this week for their second in-person summit of the year, with businesses hoping at best for an extension of the trade truce reached last fall. While an escalation in trade tensions last April briefly sent the U.S. trade deficit with China to its lowest level since 2017, surging demand for AI-related parts has helped send it higher again so far this year, according to China Customs data accessed through Wind Information. Asia still accounts for more than 60% of U.S. imports, the same as before "Liberation Day," said Jens Eskelund, president of the European Chamber of Commerce in China, who noted China reached 40% of global container exports this summer, a milestone he had previously expected in 2030. Think tank CF40 estimated that for the first time this year, AI-related exports fell significantly in August from a year ago, and Macquarie chief China economist Larry Hu said the recent performance of the PHLX Semiconductor Index does not bode well for China's export outlook over the next year. Within tech-related manufacturing, industrial robot output rose 34.6% year-on-year in August while smartphone output fell 22.3%, and Goldman Sachs chief China economist Hui Shan said in a Sept. 20 report that policymakers do not appear to feel much urgency to introduce additional easing measures absent a sharp deterioration in the labor market. The American Chamber of Commerce in Shanghai said this month that three-quarters of members responding to a survey saw Chinese rivals as more advanced, and that domestic competition has surpassed geopolitical tensions as the top challenge for members for the first time since 2022.

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