Summary

When Xi Jinping invited Donald Trump to visit China last year, it was part of an effort by both sides to stabilise their relationship after a short, sharp trade war triggered by the “Liberation Day” tariffs. Trade will still top the agenda when the two men meet at Beijing’s Great Hall of the People today but there is now another burning issue on the table in the shape of the war in Iran. China was unequivocal in condemning Trump’s war against Iran as an illegal act of aggression and Beijing has offered humanitarian aid as well as diplomatic support to Tehran. But China also has important economic ties with the Gulf monarchies, notably Saudi Arabia and the United Arab Emirates, and it has suffered from the impact of the closure of the Strait of Hormuz. The White House signalled in advance of Trump’s trip that he would press Xi to curb Chinese help for Iran, particularly the supply of dual use technology that could help Tehran’s military defence. But when the US this month sanctioned Chinese companies over dealings with Iran, including one that provides satellite imagery, Beijing warned that anyone complying with the American measures would be prosecuted. When Trump and Xi met in the South Korean city of Busan last November, they agreed a year-long truce in the trade war triggered by Washington’s imposition of triple-figure tariffs on Chinese imports. China responded to the tariffs by choking off the supply to the US of rare earth minerals used in modern manufacturing and Trump backed down. Both sides hope to extend the truce and build on it by establishing a Board of Trade and a Board of Investment to manage their bilateral economic relationship. China may agree to buy more American soya beans and to increase its orders of Boeing aircraft. READ MORE The US has sought to exclude Chinese electric vehicles from the American market but there is speculation that Trump could agree an investment deal with Xi that would see Chinese manufacturers establishing production plants in the US. Some European Union member-states have also sought to attract Chinese investment in electric vehicle production in a pattern similar to that which followed the appearance of Japanese cars on the western market in the 1990s. Taiwan is watching Trump’s visit with anxiety, fearing that Xi will persuade him to shift Washington’s rhetorical position by declaring opposition to Taiwanese independence. The US acknowledges Beijing as the sole government of China but has been vague about the legal status of Taiwan. However, Trump has alarmed Taipei by suggesting that it is up to Xi to decide what he wants to do about the island and saying he was prepared to discuss US military support for Taiwan. Whether this issue becomes part of a complex web of trade-offs in the talks will be vital.