Trump heads to Beijing for high-stakes Xi summit amid Iran war

After the Iran talks took a negative turn late Sunday, attention is now turning to Trump's imminent visit to China for his second in-person meeting with Xi Jinping. The summit was originally delayed by the Iran war but has now been officially confirmed to proceed May 13-15. This high-stakes meeting comes as the US seeks leverage on multiple fronts: pressuring China to influence Iran toward a ceasefire, addressing trade imbalances, and managing tech competition in semiconductors and AI.

China has fixed its currency at three-year highs ahead of the summit, signaling stability and a willingness to negotiate rather than escalate. Goldman Sachs stated the yuan is 20% undervalued and expects continued strengthening, removing a potential flash point. However, geopolitical observers note that Beijing could turn the Middle East instability to its advantage, using the chaos to expand market share in energy and refining partnerships. China's private refiners have already sought approval to cut oil-processing rates after being ordered to produce at peak capacity a month earlier, suggesting Beijing is managing the energy shock.

The summit's agenda is expected to cover trade frameworks, tech restrictions, and potentially Iran policy. US officials hope Xi will lean on Tehran to accept a ceasefire, but China's appetite to exert pressure remains unclear. Some view Beijing's relative silence on Iran as strategic, a position of strength from which it can extract concessions on trade or semiconductors. The meeting occurs as US tariff policy faces legal headwinds; a federal trade court declared Trump's 10% global tariffs unlawful, handing the administration a fresh setback.

Markets are watching for any signals of a 'grand bargain' or deepening of tensions. A successful summit could defuse both Iran and trade concerns, supporting risk assets. Conversely, any breakdown in talks or new US tech restrictions on China could reignite volatility in semiconductors and emerging-market equities. The fact that Trump is willing to proceed despite Iran tensions suggests both sides see value in dialogue, though expectations are modest.