What’s at stake in the countdown to the Trump-Xi meeting

This report is taken from this week’s CNBC The China Connection newsletter, which brings you insights and analysis on what’s driving the world’s second-largest economy. You can subscribe here.

The first is the annual meeting of the Chinese Parliament which begins Next Thursday. That’s when Chinese Premier Li Qiang announces growth targets and stimulus plans for this year – in exchange for renewal Definitional uncertainty.

But all eyes will turn to the American president Donald TrumpMeeting with the Chinese President Xi Jinping. The White House said that the visit will take place from March 31 to April 2Although China has not confirmed the dates yet.

The focus will be on tariff reductions. Hai Zhao, director of international political studies at the Chinese Academy of Social Sciences, a state-run think tank, said the two leaders could send a positive signal by publishing white lists that support cross-border investment.

Zhao also hopes that the United States and China can agree on guidelines that can prevent the relationship from being shaken by short-term developments.

However, time is limited for both sides to improve negotiating points. China’s parliamentary meeting is likely to end only in the second week of March, followed by the state-organized China Development Forum that usually attracts executives from US and other foreign companies.

If Trump’s trip continues, it will be the first visit to China by a sitting US president since 2017.

The calculus of US customs influence over Beijing has changed in the years since that trip. The United States’ share of China’s total exports fell sharply from 18% at the end of 2017 to 9.6% at the end of last year.

After a weekend of debate in Washington over global tariff rates, China’s Ministry of Commerce broke its holiday silence with a statement on Monday that… It urged the United States to remove its tariffs.

“For companies, [U.S. Supreme Court tariff] The ruling renews business uncertainty as stop-and-go politics will prevail and complicate inventory management, Ludovic Subran, chief investment officer and chief economist at Allianz Research, said in a report he co-authored on Monday.

“The Global South and China now emerge as the biggest winners,” Allianz Research said.

Zhao said China will not change its demand to reduce US tariffs and hopes for a more stable and predictable tariff regime. He added that China is not seeking to maximize its capabilities Trade surplus With the world and may need to adjust its relations with other countries to address the economic impact.

Interconnected economies

China’s top diplomat, Wang Yi, usually asks questions during the nearly week-long parliamentary session and can shed light on Beijing’s position on global trade.

But the ultimate answer lies at home. What are the actual economic pressures that China’s policymakers face?

Larry Hu, Macquarie’s chief China economist, noted that the US economy and Chinese exports remain closely linked.

This is because US economic growth has been largely driven by investment in artificial intelligence, while Chinese export strength has been supported by overseas sales of chips and energy equipment, according to Hu’s analysis.

“If the AI ​​failure leads to a decline in China’s exports… Beijing will need to step up domestic stimulus,” Hu said. In this scenario, Beijing is likely to increase its support for… ownership sector, which will then revive the long-awaited recovery in consumption.

While investors are preparing for more Artificial Intelligence-Driven VolatilityWhat are ready meals? If spending and AI-related stocks decline, the ultimate winners will be companies exposed to consumer spending in China, according to Hu.

The market turmoil comes as Beijing accelerates its efforts in artificial intelligence. In recent weeks, local startups and established tech giants have rolled out a wave of new models, moving quickly ahead of a widely expected update from local AI company DeepSeek.

As its parliamentary meeting begins next week, policymakers are expected to release more details about its five-year plan to boost domestic technology capabilities.

Deepseek, which became a talking point for policymakers at last year’s meeting, signaled a renewed focus on the technology.

The question at next week’s meeting is less about whether China will redouble its technology efforts than how much Beijing can trust the fragile US trade truce that keeps exports afloat.

Port controversy. China-linked CK Hutchinson did just that Officially lost control On the assets of the Panama Canal – which local authorities handed over to Danish shipping giant AP Moller-Maersk and Switzerland-based Mediterranean Shipping Co.

‘distinct.’ That’s how Sam Altman, CEO of OpenAI, described it Chinese technology companies advance In an interview with CNBC. It’s not just about artificial intelligence. The pace of their development in “many areas” is “astonishingly fast,” he said.

Hominin progress. From bumps to kung fu flips, Chinese robots showed off their human form Rapid improvement in just one year.

Chinese and Hong Kong stocks rose in afternoon trading on Wednesday, after declining Concerns about the impact of artificial intelligence In select industries it led to a technology-driven rally on Wall Street

Hong Kong Hang Seng Index The CSI 300 rose 0.39% and the mainland rose 0.49%. Year to date, the CSI 300 is up 2.26%, while the Hang Seng is up 4.12%.

The yield on Chinese government bonds for 10 years rose to 1.807%, while the yuan was little changed abroad at 6.9088 against the dollar.

-Li Ying Shan

February 26: Baidu launched Quarterly profits After the Hong Kong market closes

March 1: China reduces tariffs on Canadian canola seed Canadian beef imports resume

March 4: China Services and Manufacturing PMI, NBS’s official manufacturing PMI