Donald J. Trump faces the most-important meeting of his short presidency this week, when he goes head-to-head with Chinese President Xi Jinping.
No other country came in for more criticism than China when Trump was running for office. It was a convenient target (big, "inscrutable") at a convenient distance (far, unknown) with a convenient government (secretive, Communist -- oooh, scary).
What kind of criticism? "We can't continue to allow China to rape our country, and that's what they're doing," Trump said on the stump. "It's the greatest theft in the history of the world."
Xi won't be far away for long -- and I'm willing to put down a little money that Trump doesn't call him a rapist or a thief to his face. The pair will meet at Trump's Palm Beach resort, Mar-a-Lago, on April 6 and 7, the end of this week. It is the only U.S. destination on Xi's itinerary.
Trade is a key topic. While I don't expect any major announcements on specific policies, we will definitely get our first sense of where the two men really stand, now they actually have to deal with each other in real life, not in Trump's hyphothe-space.
Wall Streeters are watching for any trade policy clues, whether there's any tangible progress and a sense of whether the two men will cooperate, for all their tough talk. Xi positioned China as the alternative to Trump at the Davos summit earlier this year, championing globalization and warning that trade wars would hurt economic growth.
Beyond business, the two leaders will also need to address Asia's problem child: North Korea. A teenage brat of a nation, the north persists in blasting occasionally successful missiles into the Sea of Japan, in the direction of its former conqueror, and appears well on the way to developing an intercontinental ballistic missile. The extent of Kim Jong-un's nuclear program is never going to be clear, but you can be sure it's working overtime.
China is North Korea's primary ... in fact, its only benefactor. But even China is getting tired with its antics, which put Xi's administration in an increasingly embarrassing spot. Trump has already warned that, if China doesn't help out, the U.S. will tackle North Korea on its own.
The South China Sea is also a highly contentious issue between the two nations. Chief strategist Steve Bannon, perhaps the largest of the many China hawks (maybe he's an eagle!) in the Trump administration, and said on the radio in March last year that China and the United States will be at war over the islands within the next 10 years.
U.S. Secretary of State Rex Tillerson said during his confirmation that China should be denied access to the South China Sea islands that it has built into mini-fortresses. But when he visited China on his first Asia spin, he used phrases like "mutual respect" and "win-win solutions", which mimic language used by the Chinese.
That suggests a more pragmatic approach. It's much the same as the U.S. approach to Taiwan. Trump made the controversial call to chat on the phone with the Taiwanese president soon after entering office. He also said the U.S. position on the island should be reviewed.
But Trump then went on to say in his first phone call with Xi that he would heed the "One China" policy. That says there's only one true Chinese government, the one in Beijing, and deems Taiwan -- a separate country in every sense in my book, with a democratically elected government -- a renegade Chinese province.
Some analysts viewed that interaction as a victory for Xi in their first fistfight. Both politicians have carved out images as tough-talking men of the people. And both will undoubtedly claim they won out of the talks.
It's unthinkable that Xi and Trump will caddy up for a round of golf while at Mar-a-Lago, which Trump calls his "Southern White House." That would present a true winner in at least one game, a loss neither man would probably want to risk at this stage.
Trump already has a budding bromance with Japanese Prime Minister Shinzo Abe, and the pair bonded over 18 holes. But Xi is a soccer fan, doesn't play golf, and is combating corruption and conspicuous spending. His government has shut down numerous courses, with the sport dubbed a "sport for millionaires" by Mao Zedong.
Trump has already tweeted that the summit will be "a very difficult one," since the United States can't have massive trade deficits and job losses and must look at other alternatives.
He won't be able to make good on a frankly ridiculous claim that he would impose tariffs of 45% on all Chinese goods. China would retaliate hard, and such a shift in trade policy would also need to be cleared by Congress. The Republicans who dominate both House and Senate have made it very clear they'll cut ranks if it serves the interests of their constituencies, or re-election prospects.
Of course, it's possible that Xi and Trump hit it off. I'm pretty sure Trump will take a deal-making, pragmatic approach to China. He may well bring in headline-grabbing high tariffs on a couple of products, to look like he is following through on his promises, while tasking his team with keeping China happy economically too.
Who benefits from warmer relations between the United States and China?
Alibaba (BABA) could possibly gain entry to the U.S. market, Nomura analyst Jialong Shi believes. That would be good not just for Jack Ma's online-sales platform, but also for the thousands of small businesses that use it to sell their wares.
Ma's namesake Pony Ma, founder of what is now Asia's biggest company by market cap, Tencent Holdings (TCEHY) , might also be booking a flew flights on American. He, via Tencent, has bought a 5% stake in Tesla (TSLA) , which looks to me more like a straight investment and way of parking cash than a business tie-up.
Tencent takes on WhatsApp and its now-parent, Action Alerts PLUS charity portfolio holding Facebook (FB) , with its WeChat text app, and Twitter (TWTR) , with Sina Weibo. Its mobile and phone games are incredibly profitable business lines that the company develops not just in China, but also with its Palo Alto, Calif., office.
Trump's promise to spend big on infrastructure could also result in contracts for Chinese companies. Look to China Railway Group (CRWOY) , China Railway Construction Corp. (CWYCY) , CRRC HK:1766, China Railway Signal & Communication Co. HK:3969 and Sany Heavy Equipment International Holdings HK:0631 as potential beneficiaries.