Trump-Xi summit in Beijing this week amid Iran chaos

The Trump-Xi summit scheduled for Beijing May 13-15 is shaping up as a major catalyst for global risk sentiment. Trump is expected to press Xi on using Chinese influence to pressure Iran back to the negotiating table, though Beijing's appetite for such mediation is uncertain. The summit also offers an opportunity to address unresolved trade issues, including the Trump administration's recently-ruled-unlawful 10% global tariffs and escalating tariff disputes over Chinese goods.

China has already confirmed the summit despite the Iran war delays, signaling willingness to maintain diplomatic momentumThe empirical fact that winners keep winning over the medium term.. China's yuan has been fixed at a three-year high ahead of the meeting, potentially a gesture of good faith on currency stability. However, geopolitical observers note that Beijing could use Middle East instability as a strategic opportunity to expand its influence in the region and secure favorable energy deals with Iran, potentially undercutting US negotiating leverage.

Markets are watching for signals from the summit on trade, tariffs, and China's cooperation on Iran. A constructive meeting could boost risk appetite, particularly for Chinese equities (FXI, KWEB) and reduce safe-haven demand for USD and gold. Conversely, escalation or breakdown in talks could trigger a flight-to-quality move. The summit's timing is fortuitous for Trump, as it allows him to shift narrative away from failed Iran negotiations and focus on major-power diplomacy.

The key debate is whether Trump will prioritize Iran peace (which benefits energy importers and global stability) or use the summit to extract concessions on trade and technology that could tighten China-US tensions further. A hawkish Trump approach could reignite tech decoupling fears and create headwinds for semiconductor supply chains despite the current rally.