What is the worst acceptable outcome for Trump and Xi?

(Edited and refined by Grace Chong, with the assistance of AI translation.)

Four months after their last meeting, Chinese President Xi Jinping and US President Donald Trump will meet again in Washington on 24 September. Ahead of the second Trump-Xi summit, Chinese Vice-Premier He Lifeng and US Treasury Secretary Scott Bessent are leading their respective economic and trade teams in final-stage consultations in New York. Tariffs, trade, rare earths, procurement and artificial intelligence (AI) are all reportedly on the negotiating table.

Scholars interviewed said procurement, being readily quantifiable, is an area where concrete results are more likely. Whether the trade truce and arrangements on rare earths can be extended will be a key focus of the summit. On AI, the two sides may be able to advance dialogue on risks, but substantive easing of technology restrictions is unlikely in the short term.

Broadly speaking, the short-term goal for both sides is to secure results that can be implemented and demonstrated, while keeping the least favourable outcome within an acceptable range. The summit will also test whether the framework for a “constructive relationship of strategic stability”, which the two sides agreed to establish in May, can be translated into more concrete and sustainable policy arrangements.

After the New York talks began, the US said the Board of Trade had been launched and that discussions were under way on issues including trade in non-sensitive goods. Bessent also disclosed that during the meeting, the US side discussed an AI safety dialogue and a safety incident notification mechanism. However, the 10 November deadline for the trade truce is approaching, while arrangements on rare earth supplies and procurement have yet to be finalised. China’s official statement said the two sides had held “candid, in-depth and constructive exchanges”, but provided no details.

Sun Chenghao, a senior fellow at Tsinghua University’s Center for International Security and Strategy (CISS), said the summit was most likely to produce progress on extending the economic and trade truce, implementing arrangements for trade in non-sensitive goods through the Board of Trade, and securing purchases of agricultural products. Chad Bown, a senior fellow at the Peterson Institute for International Economics, likewise said procurement was more likely to result in concrete arrangements. Continued fulfilment of purchase commitments could help stabilise bilateral trade, he said, but would not resolve the long-term structural differences in China-US trade.

AI could be bridge of cooperation or source of disaster

In AI and the rare earth supply chain, neither side is likely to make fundamental concessions in the short term. Wang Hsin-Hsien, director of the Institute of International Relations and distinguished professor at the Graduate Institute of East Asian Studies at National Chengchi University in Taiwan, said that AI and advanced semiconductors involve core US industries, making it difficult for Washington to significantly ease related restrictions in the short term.

Bown pointed out that it would take time for the US to establish alternative rare earth supply chains, while China still holds important leverage in areas such as the supply chain for rare earth permanent magnets. These are indispensable to manufacturing in many countries. He does not expect the US to make a breakthrough on this front, saying that “the best the US can hope for is probably just maintaining the status quo”.

Bessent said China and the US were expected to hold their next round of AI safety talks in Shenzhen in about two months. Zhou Bo, a senior fellow at Tsinghua University’s CISS, said it would be difficult for China and the US to agree on specific AI regulatory rules in the short term. Establishing government-to-government communication and reducing the risk of miscalculation would be more realistic, he said.

Sun said the more realistic AI outcome of the summit would be establishing communication channels — or even promoting a safety incident notification mechanism — rather than reaching a comprehensive agreement. Both scholars said AI could become either a “bridge for China-US cooperation or a source of disaster”.

As for Taiwan, which is closely watched by outside observers, Sun said the issue would not be a “deliverable” of the summit, but would be treated more as a matter of “risk management”. He said that during the Trump-Xi summit in May, China had already explicitly linked the Taiwan question to the overall stability of China-US relations.

Geopolitics and business

Iranian Foreign Minister Seyyed Abbas Araghchi visited China last week and met Chinese Foreign Minister Wang Yi on 16 September. The two sides exchanged views on US-Iran relations, the situation in the Middle East and the Strait of Hormuz, among other issues. Whether Iran will feature on the Trump-Xi agenda has attracted attention.

Zhou said the US would certainly be interested in what role China could play in the conflict in the Middle East. If Washington simply wanted China to convey a message to Iran, “that would be very easy to do”. But if it wanted China to put unilateral pressure on Iran over issues such as reopening the Strait of Hormuz to meet US demands, “that would probably be very difficult”.

On the Korean peninsula, Zhou said there was a limited role for China and the US to play. North Korea’s nuclear programme is tied to its own security and regime survival considerations, he said, making the issue unlikely to become a major topic at the summit.

In response to media reports that executives from companies including BYD, CATL and Xiaomi will accompany the delegation to the US, Sun said that, if confirmed, their participation would indicate that both sides were interested in exploring room for cooperation in areas such as advanced manufacturing, batteries and consumer technology. If food and financial companies also took part, this could address both procurement and financing needs.

Sun stressed, however, that the participation of business leaders would signal a willingness to engage and cooperate; whether that could translate into actual projects would depend on whether the US could provide clear, stable and fair conditions for market access.

What is the ‘worst acceptable outcome’?

On how the two sides could establish a baseline in the relationship, Sun said China hoped to prevent further escalation of tariffs and technology restrictions. As long as supply chains remained stable and communication channels stayed open, China would have room to accept the outcome. For the US, even without a large-scale procurement agreement, an extension of the economic and trade truce, continued supplies of key raw materials and the preservation of channels for negotiation would still fall within the acceptable range.

Zhou stressed that China and the US should not expect to resolve their structural differences through a “grand bargain”. More important, he said, was establishing strategic stability. Wang Zheng, a professor at Seton Hall University’s School of Diplomacy and International Relations and director of the Center for Peace and Conflict Studies, said China and the US could no longer exclude or change each other and would need to adapt to long-term “competitive coexistence”.

The real test after the summit

Overall, Sun said the focus of the Trump-Xi summit lies not only in how many agreements or cooperative outcomes the two sides reach, but should also be observed across three dimensions: whether the mechanisms agreed upon in May can actually operate; whether the matters reached in September can be implemented through October, November, and beyond; and whether China and the US will still have new topics to discuss at subsequent forums such as APEC and the G20.

Wang Hsin-Hsien, meanwhile, shifts the key focus to after the US midterm elections. He said Trump would need to demonstrate results in procurement and investment before the election, while whether US policy towards China would change after the election would be worth watching. He assessed that if the Republicans performed poorly in the midterms, Trump might adopt a tougher policy towards China after the election, creating new uncertainty for China-US relations.

Meanwhile, Sun said the Taiwan issue would serve as a stress test for the “constructive relationship of strategic stability” between China and the US.

The Taiwan stress test

With the second Trump-Xi summit approaching, the People’s Daily, the official newspaper of the Central Committee of the Chinese Communist Party, published an article on 22 September saying that “Taiwan independence” was a common enemy of China and the US, and that managing “Taiwan independence” was a key part of building a “constructive relationship of strategic stability” between the two countries. It urged the US to “exercise the utmost caution” in handling the Taiwan issue.

Taiwanese media asked at a press salon organised by the All-China Journalists Association in Beijing on 22 September whether China and the US were moving towards a new “tacit agreement on the joint management of the Taiwan Strait”.

Responding at the press salon, Sun said jointly managing the Taiwan Strait meant that the two sides should avoid “direct collision” over the Taiwan issue, with risk management being the key. He said that when the Chinese and US presidents met in Beijing in May, they agreed to build a constructive strategic stability relationship based on avoiding conflict and confrontation. The Taiwan issue could therefore become a stress test for that framework. “If China and the US cannot manage risks properly over the Taiwan issue, how can strategic stability be built?” he said.

CISS’s Zhou stressed that for Beijing, the Taiwan issue is a matter of principle and a core interest, and therefore cannot become a bargaining chip in any so-called “grand bargain” between China and the US.

He said the key on Taiwan was not what Trump said, but what the US did, because the US Congress and the next US president could hold views different from Trump’s. China must also guard against the US “using the empty to trade for the real”.

Zhou also said the Taiwan issue would certainly be discussed during the Chinese leader’s visit to the US, but that Trump’s response could not be predicted. He said Trump would be in a difficult position over Taiwan.

During Trump’s visit to China in May, he did not publicly discuss Taiwan. But on the flight home, he addressed two Taiwan-related issues aboard Air Force One: first, questioning why the US had to “travel 9,500 miles to fight a war”; and second, saying that arms sales to Taiwan had not yet been finalised.

Zhou said the two remarks were milestone statements, but believed the US would still seek to sell weapons to Taiwan, although it would find this “increasingly difficult”. As China and the US gradually approach parity in power, he said, China would have more means to respond if the US took actions that harmed Chinese interests.

On strategic ambiguity, Zhou said both China and the US pursued such a policy. Beijing maintained strategic ambiguity because it still hoped for peaceful cross-strait reunification, he said. For the US, strategic ambiguity had shifted from a display of strength in the past to a “fig leaf” used to conceal the US’s current lack of sufficient strength in the event of a possible confrontation with Beijing along the first island chain.

Sun, meanwhile, assessed that the US was unlikely to announce arms sales to Taiwan around the Trump-Xi summit, although there had been no fundamental change in Washington’s overall Taiwan policy. Trump had publicly described arms sales to Taiwan as a bargaining chip, leading Sun to believe that the US could still sell weapons to Taiwan, potentially towards the end of this year as Trump faces pressure from the midterm elections.

Sun said Trump might opt to sell weapons to Taiwan in batches rather than approving a single large-scale package, although the quality of the weapons might not necessarily decline significantly.

US media previously reported that Trump postponed approval of an arms sale to Taiwan worth about US$14 billion after meeting Xi in Beijing in May. Whether the sale will be approved, when approval might come, and whether it could be broken up into smaller packages are expected to be key points to watch in the Taiwan issue going forward.

This article was first published in Lianhe Zaobao as “习特二会：中美各守“最坏可接受结果” 争取可量化成果” and “台湾问题成中美“建设性战略稳定”压力测试”.

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