From China, with nothing?
Key Markets report for Monday, 18 May 2026
Probably the most important event of last week was President Trump’s state visit to China. By all accounts, the visit went well and the personal rapport between the two leaders seemed encouraging. However, the feedback from a number of analysts who have contacts in Chinese government and diplomatic circles was a bit less encouraging. Apparently, the Chinese side was underwhelmed by the Trump administration’s performance.
The impression, apparently was that Trump and his people arrived insufficiently prepared to fulfill the potential of the high-level, high-profile occasion. The Chinese hoped to accomplish more with their American counterparts in terms of resolving complex, long-standing issues of trade, diplomacy and security on the Eurasian continent. President Trump’s delegation seemed more inclined to take advantage of the summit to build personal rapport and score a few trophies: large trade deals that could be paraded at home for political points.
Trump’s fisherman tales
According to initial reports, Trump and his delegation did bag a few trophies in China. Allegedly, China pledged their readiness to buy substantial (but unspecified) amounts of oil from the U.S. along with a large order of passenger jets. In an interview with FOX News’ Sean Hannity, after his return from China, Trump boasted a bit about these trophies:
“One thing he agreed to, today he’s going to order 200 jets. That’s a big thing - Boeings. Two hundred big ones - that’s a lot of jobs!”
But the Chinese side’s version of Trump’s claims wasn’t the same. During the press conference at China’s Ministry of Foreign Affairs held after President Trump’s departure, New York Times correspondent asked the ministry’s spokesman whether President Xi Jinping actually committed to buying 200 Boeing jets from the U.S. His reply was distinctly non-committal:
“China-U.S. economic and trade ties are mutually beneficial and win-win in nature. Both sides need to act on the important common understandings reached between the two heads of state and inject more stability into bilateral economic and trade cooperation and the world economy.”
AFP correspondent asked, “During the talks between Donald Trump and President Xi Jinping, did China agree to purchase American oil?” After spending a few seconds fumbling through his talking points, Foreign Ministry’s spokesman gave another evasive reply:
“China stands ready to work with all sides to ensure global energy security and keep global industrial supply chains stable. The pressing task is to restore peace and stability in the Gulf and Middle East region.”
How China perceives the United States
But beyond the transactional stuff, what attracted the most attention and commentary during the whole summit was the following statement by President Xi Jinping’s in his opening remarks on Thursday, 14 May:
“The world has come to a new crossroads. Can China and the United States overcome the so-called ‘Thucydides Trap’ and create a new paradigm of major-country relations? Can we meet global challenges together and provide greater stability for the world? Can we build a bright future together for our bilateral relations in the interest of the well-being of the two peoples and the future of humanity?”
What’s very significant about this passage is that Xi expressed it in the form of questions, implying perhaps, that the Chinese government couldn’t fully trust their American counterpart’s ability to voluntarily restrain their war drive. Furthermore, Xi’s mention of “Thucydides Trap” implied that the Chinese regard the U.S. as an empire in decline.
It was Biden’s decline, honest!
When asked about this by journalists on Air Force One during their return flight from China, Trump tried to extract some political points by reframing the decline as the result of Joe Biden’s four year term:
“He [Xi Jinping] said today, he said it very publicly, that the U.S. was declining for the last four years, and he said, ‘what President Trump has done in the last 15-16 months has been virtually a miracle. He said that - he said that we had the hottest country anywhere in the world. But he said that it was a declining country under Joe Biden.”
Bloomberg’s correspondent at the Chinese Ministry of Foreign Affairs press conference took the trouble to fact-check Trump on that allegation also, and the ministry’s spokesman had this to say:
“President Trump hopes to make America great again: under his leadership, the American people have scored important achievements for their country’s prosperity. President Xi Jinping is leading the Chinese people in the endeavor of realizing the great rejuvenation of the Chinese nation. Both China and the United States stand to gain in their respective development and rejuvenation endeavors from strengthening cooperation with each other.”
In all, it would seem that the Chinese hope they can have good relations with the United States under Trump, but their demeanor suggests a very cautious and skeptical stance. Trump returned to the United States claiming substantial trophies and perhaps even a conviction that they’re already in in the bank. Chinese view seems different…
We can work together if you’re nice
China's noncommittal stance suggests that all future cooperation is conditional: it will depend on whether the U.S. will act as a constructive partner, or a domineering hegemon. It will have to restrain its war preparations, not only vis-a-vis China and Taiwan, but also with respect to its willingness to “restore peace and stability in the Gulf and Middle East region.”
For their personal meeting, Xi Jinping brought Trump to the Temple of Heaven, which probably had a symbolic significance, conveyed poetically in the inscription visible in the above photo behind the two Presidents: 屏山鏡水 時從芳徑探幽 translates as, “Screen-like mountains and mirror-like waters; at times, follow the fragrant path to explore the secluded.” The meaning emphasizes harmony with nature and peaceful exploration.
The subtlety of Xi’s gesture might have been lost on Trump, unfortunately: only three days after returning from China, he’s reverted to language of threats and coercion toward Iran, suggesting that another war escalation could still be on the table. If that happens, Boeing’s 200 jets customer could simply turn around and take their business elsewhere. Stated otherwise, if Trump opts for hegemonic goals, his China trophies could amount to a whole lot of nothing.
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Today’s trading signals
With Friday’s closing prices we have the following changes for the Key Markets portfolio:
