Here's What Will Happen When Trump and Xi Meet Face to Face

 | Apr 06, 2017 | 9:00 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


Donald Trump today makes his most-important move so far on the diplomatic front when he welcomes Chinese President Xi Jinping to his Florida "hideaway," the Mar-a-Lago resort he's clearly so keen to promote. The China-U.S. relationship could be one that defines his so far chaotic presidency.

There has been criticism that the two-day meeting is happening too early, that it's a "high-stakes gamble" for which neither man is properly prepared. This is, of course, total nonsense.

It's true that, as usual, the Trump team hasn't followed protocol by outlining the event well in advance. No one, not even them, knows what to expect. But it's essential that the leaders of the world's two most-powerful nations meet, and as soon as possible, in my view.

The Chinese pushed for an early meeting, and it's a success for them simply that it is happening. Trump waited his good time to call Xi after taking office, so Xi is keen to gain the "face" that is so important in Asia just by being there. That, on the Chinese side, is enough.

Here in China, there's a theater in every meeting, a strict decorum about who gets to sit where, and near whom. That Xi and Trump will be front and center (surely, smiling warmly) cements Xi's reputation back home as a strongman who means business, and can get the "leader of the free world" to welcome him to his home.

So this isn't a duel, some kind of showdown in the Florida sun. It's a photo call. It's a sign that the two men respect each other -- and, crucially, are willing to do business.

There will be comedy as well as tension to the meeting. "The Handshake" will be scrutinized ad infinitum for what it says on how the two men feel about each other. Xi put on a show of disdain about meeting his Japanese counterpart, leader of China's wartime occupier, as is amply clear in this photo back in 2014.

Will Xi "beat" Trump's tight squeeze and pull (from his "small" hands!), a grasp that Trump holds until he's well and good? For good measure, Trump provides a patronizing pat on the hand at times, as he did with Japanese Prime Minister Shinzo Abe. Watch the South China Morning Post's hilarious video on the Trump grasp here.

I'm not expecting Xi and Trump to become best buds. The meeting will be cordial despite of the tensions between the two nations. China and the United States must cooperate on many issues.

Currency and trade may be contentious topics -- but the United States is buying what China is making, and vice versa, in fact. China was the top buyer of U.S. crude oil in February, and has been the second-largest source of demand since late 2015, when Washington lifted a 40-year ban on crude exports to China.

U.S. companies such as Action Alerts PLUS charity portfolio holding Apple (AAPL) couldn't compete internationally without producing parts in Asia, and for now they're doing that in China. And then there's North Korea, and nukes. 

Trump pledged to label China, which he called a rapist and thief on the campaign trail, a currency manipulator on Day 1 of his presidency. He has yet to do so, and probably never will. 

That's because China meets only one of the three criteria laid out by the U.S. Treasury Department to fit that description, as Société Générale notes in a report on the issue. Yes, it has a major bilateral trade surplus over the United States. But its current account surplus remains low, below 3% since 2011, and it is likely to stay that way. The central People's Bank of China has persistently intervened to make the currency stronger rather than weaker, too.

So there would have to be a legislative change to allow the United States to slap that label on the Chinese yuan, whatever Trump wants to do. The same is true of his pledge to put in place ludicrous 45% tariffs on all Chinese imports, which also requires congressional backing. It would hurt U.S. consumers, not Chinese companies with the rest of the world as their customer, anyway.

You'd expect a U.S. leader to be bigger on an end result from this summit than his or her Chinese counterpart, looking for more substance over style. But in this instance, Trump will probably be happy enough if everything goes smoothly. Members of his administration have been all over the place on how to deal with China, generally talking tough from a distance and backing off when close.

Progress for Trump, then, is demonstrating that he can handle the situation calmly and coherently. It will be a way to bridge the divide created by his constant China-bashing while running for office. Since he has little ... well, no ... diplomatic experience, this first brush with big-time stakes is probably one he just wants to get past.

Trump is, after all, a deal-making businessman. He knows a trade war, or a real one over Taiwan or the South China Sea, would be disastrous for all involved. While he has made a good show of talking tough protectionism, he will also be keen to win business from China. That's success for him.

Xi on the other hand is a career politician and a champion of globalization. He wants to make China's seat at the adult table a permanent one. Success is being in the room, his sizeable frame measuring up against Trump's bulk. 

It's quite likely that the Chinese team will announce major investment in the United States through state-owned enterprises. Infrastructure is the most-obvious way for that to happen.

This suits both men. Trump has pledged extensive investment in that area. China, with a government traditionally dominated by engineers, has huge concrete-pouring expertise. And, frankly, it's already happening. CRRC HK:1776, China's largest maker of railway equipment, just inked a $650 million deal to provide subway carriages to Los Angeles.

The subway cars will be assembled at its Massachusetts factory, which employs 250. Chinese companies invested more than $45 billion in the United States in 2016, up from $15 billion the year before. As a result, last year was the first time ever that Chinese investment into the United States outdid U.S. investment into China.

Announcing something that's already happening, and everyone wants? Like championing education and fighting crime, that's politics.

Columnist Conversations

View Chart »  View in New Window » View Chart » 
Hug declines in Advance Auto Parts (AAP) and Dick's Sporting Goods (DKS) made for great chances to buy stock a...
Pepsi is trading at new all time highs today. The stock is up 0.7% and is taking out major resistance near the...
FIBOCALL: AAP down 22% "FIBOCALL: AAP opens much lower today. We took a look way back to see where support ...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.