Trump-Xi Summit Underway in Beijing; De-Risking US-China Trade; Oil, Semiconductors on Table

The first US presidential visit to China in nearly a decade is reshaping market expectations around US-China relations. Trump and Xi convened in Beijing on May 14 for what both sides characterized as a warm start, lasting more than two hours. Trump extended an invitation to Xi to visit the White House in September, signaling intent to maintain high-level dialogue. While Xi delivered blunt warnings on Taiwan and rejected US proposals for a toll on Strait of Hormuz transits, the overall tenor was markedly less adversarial than market participants feared.

Trade topics discussed included agricultural commitments, oil purchases (China has renewed import licenses for hundreds of US beef plants), and implicitly, semiconductor access. Jensen Huang's presence in Beijing suggests that semiconductor export policy may be under review or softening. The summit also highlighted the mutual economic dependence of the world's two largest economies; both sides signaled recognition that instability serves neither country well. This messaging is reducing near-term de-escalation fears and potentially unlocking pent-up capital rotation from defensive hedges into risk-on positions.

Market implications are broad. Energy exporters, particularly those dependent on Middle East oil, see reduced geopolitical risk premium. Semiconductor names with China exposure, including Nvidia and others, are de-risking on reduced export-control uncertainty. Emerging-market equities in Taiwan and South Korea surged on perceptions that trade tensions are moderating. The offshore yuan posted its best win streak since 2017, reflecting growing confidence in Chinese asset stability. For US equities, the summit removes a key tail-risk scenario in which trade tensions spiral, dampening growth forecasts.

Skeptics argue that Xi's Taiwan warnings demonstrate that the core strategic divide remains unresolved and that summit optics mask deeper structural competition. Trade concessions (beef, oil purchases) are modest relative to the scale of US-China decoupling already underway. Semiconductor export controls may be narrowly liberalized for specific companies or chips but unlikely to fully reverse. If expectations for broad trade liberalization are disappointed in coming weeks, the goodwill rally could reverse.