It has been a year since President Xi and President Biden last met, and it’s hard to overstate just what a rollercoaster US-China relations have been on since then.
The fact this meeting is happening at all is the result of months of delicate planning.
But for all the “tough-line”, “hard-man” images that both men try to broadcast domestically, there is a mutual recognition of one key fact: it would cost more, both politically and economically, to allow relations to spiral.
Why now?
It was just nine months ago that US-China relations hit what felt like rock bottom as the so-called Chinese spy balloon was shot down over the US, plunging their diplomacy into crisis.
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Moment ‘spy balloon’ is shot down
The vast backdrop of disagreements from Taiwan, the Indo-Pacific, the Ukraine war, tech controls and economic sanctions meant the relationship felt as precarious and as dangerous as it had in decades.
But the summer has seen a blitz of diplomatic efforts to try to repair things, with multiple meetings of officials at various levels.
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Both sides know the window for progress is narrow.
Come next year, Taiwan’s presidential election will likely inflame tensions, and then the inevitable anti-China sentiment that will accompany the US election cycle will no doubt make things worse.
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The time to play statesmen and to push for their interests is now!
What do they want?
Don’t be under any illusion, both Bidenand Xiare coming to this table with immense amounts of scepticism about the other’s intentions.
Any meaningful breakthrough is highly unlikely.
What they both seek is a degree of what’s being called “tactical stabilisation” – a pause in deterioration that will allow each to pursue its interests in a more predictable environment.
On the US side, there is an understanding that only a meeting of the top men will unlock the Chinese system to enable cooperation on some of the “easier” issues like climate change and global health.
There is also a hope that military-to-military talks might be able to restart after being shut down following former Speaker Nancy Pelosi’s controversial visit to Taiwan last year.
From China’s perspective, a pause in deterioration gives it the space to continue to build up its economic and military strength to better compete going forward.
The visuals are also important to Xi Jinping domestically.
It has not been a brilliant year for him, with a chaotic end to his hated zero COVID policy, a faltering economy and deteriorating relations with multiple western countries. Being seen to be able to manage this crucial relationship is important to casting himself as a competent statesman.
So what will they discuss?
There are so many disagreements likely to be raised, but these are the top three on the list:
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China and US meet to ease tensions
Territorial claims and military tension
Perhaps top of the long list of issues between them is China’s increasingly assertive behaviour in contested areas that it claims as its own.
Most prominent is Taiwan, the self-governing island that China sees as a breakaway province. Xi has expressed multiple times his desire to “reunify” Taiwan, Biden has promised to defend it.
The other arena where tensions are rising is the South China Sea.
China claims the vast majority as its international waters, despite rival claims from the Philippines and others. In 2016, an international arbitral tribunal ruled overwhelmingly in favour of the Philippines.
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Boats from China and Philippines collide
The US claims that in both areas China’s behaviour is becoming increasingly aggressive and, in some cases dangerous. It has released videos of Chinese jets flying hair-raisingly close to US ones, in one recent case, just 10ft away.
The Americans say the risk of accidents and escalation is grave.
China, for its part, says that it is US conduct that is the dangerous force. It sees American presence in these regions as blatant provocation in its backyard.
These are deeply intractable issues, the best that might be hoped for is some sort of agreement to an offramp for if things ever escalate.
Global conflicts
The two leaders will also discuss the two major ongoing global conflicts in Ukraine and the Middle East.
In both, they have taken a drastically different tact.
When it comes to Ukraine, China has attempted to portray itself as a neutral peacemaker, one of the only nations with the ability to talk to both sides.
The reality, though, is that Xi has made no secret of his growing closeness to Putinand has quietly been providing Russia with finance, technology and diplomatic cover.
Image: Xi has made no secret of his growing closeness to Putin. Pic: AP
Meanwhile, in the Middle East, it has called for a ceasefire and peace, but it has stopped short of directly condemning Hamasfor the 7 October atrocities and state media has taken a decidedly pro-Palestinian tone.
In both cases, China’s approach is in stark opposition to America’s, and it has criticised its rival for its full-throated support for both Israeland Ukraine and the supply of military assistance.
At root, both have an interest in the other not gaining advantage or influence off the back of the outcomes of these conflicts.
Tech and economic sanctions
There is still a raft of restrictions on technology and economic sanctions that exist between them.
Just in the last month, new ones have been announced on both sides, with China restricting US access to graphite (a crucial component in making batteries) and the US further restricting Chinese access to semiconductors.
The aim on both sides is to hinder the other’s ability to develop in key areas such as AI. But this trade war hurts them both as they remain major trading partners and the two economies are highly reliant on each other.
Xi in particular has a need to mitigate these issues.
Amidst a flagging economy, he is trying to woo foreign investment back to China and is expected to meet with US business leaders while in San Francisco.
A smooth summit might help him stave off, at least temporarily, more US restrictions and it may help shore up the confidence of some foreign businesses spooked by the imposition of state-centric restrictions and raids on a handful of China-based US businesses.
I gently suggest that people in Britain might be shocked at the idea of a summer break in a country better known for famines and forced labour than parasols and pina coladas.
“We were interested in seeing how people live there,” Anastasiya explains.
“There were a lot of prejudices about what you can and can’t do in North Korea, how you can behave. But actually, we felt absolutely free.”
Image: Pic: Anastasiya Samsonova
Anastasiya is one of a growing number of Russians who are choosing to visit their reclusive neighbour as the two allies continue to forge closer ties following the Kremlin’s invasion of Ukraine.
Last year, North Korean troops supplied military support in Russia’s Kursk region, and now there is economic cooperation too.
North Korean produce, including apples and beer, has started appearing on supermarket shelves in Russia’s far east.
And last month, Moscow launched direct passenger flights to Pyongyang for the first time in decades.
Image: Pic: Danil Biryukov / DVHAB.RU
But can this hermit nation really become a holiday hotspot?
The Moscow office of the Vostok Intur travel agency believes so. The company runs twice-weekly tours there, and I’m being given the hard sell.
“North Korea is an amazing country, unlike any other in the world,” director Irina Kobeleva gushes, before listing some unusual highlights.
“It is a country where you will not see any advertising on the streets. And it is very clean – even the asphalt is washed.”
She shows me the brochures, which present a glossy paradise. There are images of towering monuments, pristine golf greens and immaculate ski slopes. But again, no people.
Image: ‘There is a huge growing demand among young people,’ Irina Kobeleva says
Ms Kobeleva insists the company’s tours are increasingly popular, with 400 bookings a month.
“Our tourists are mostly older people who want to return to the USSR,” she says, “because there is a feeling that the real North Korea is very similar to what was once in the Soviet Union.
“But at the same time, there is a huge growing demand among young people.”
Sure enough, while we’re chatting, two customers walk in to book trips. The first is Pavel, a young blogger who likes to “collect” countries. North Korea will be number 89.
“The country has opened its doors to us, so I’m taking this chance,” he tells me when I ask why he wants to go.
Donald Trump’s trade war has been difficult to keep up with, to put it mildly.
For all the threats and bluster of the US election campaign last year to the on-off implementation of trade tariffs – and more threats – since he returned to the White House in January, the president‘s protectionist agenda has been haphazard.
Trading partners, export-focused firms, customs agents and even his own trade team have had a lot on their plates as deadlines were imposed – and then retracted – and the tariff numbers tinkered.
While the UK was the first country to secure a truce of sorts, described as a “deal”, the vast majority of nations have failed to secure any agreement.
Deal or no deal, no country is on better trading terms with the United States than it was when Trump 2.0 began.
Here, we examine what nations and blocs are on the hook for, and the potential consequences, as Mr Trump’s suspended “reciprocal” tariffs prepare to take effect. That will now not happen until 7 August.
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Why was 1 August such an important date?
To understand the present day, we must first wind the clock back to early April.
Then, Mr Trump proudly showed off a board in the White House Rose Garden containing a list of countries and the tariffs they would immediately face in retaliation for the rates they impose on US-made goods. He called it “liberation day”.
The tariff numbers were big and financial markets took fright.
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What does the UK-US trade deal involve?
Just days later, the president announced a 90-day pause in those rates for all countries except China, to allow for negotiations.
The initial deadline of 9 July was then extended again to 1 August. Late on 31 July, Mr Trump signed the executive order but said that the tariff rates would not kick in for seven additional days to allow for the orders to be fully communicated.
Since April, only eight countries or trading blocs have agreed “deals” to limit the reciprocal tariffs and – in some cases – sectoral tariffs already in place.
Who has agreed a deal over the past 120 days?
The UK, Japan, Indonesia, the European Union and South Korea are among the eight to be facing lower rates than had been threatened back in April.
China has not really done a deal but it is no longer facing punitive tariffs above 100%.
Its decision to retaliate against US levies prompted a truce level to be agreed between the pair, pending further talks.
There’s a backlash against the EU over its deal, with many national leaders accusing the European Commission of giving in too easily. A broad 15% rate is to apply, down from the threatened 30%, while the bloc has also committed to US investment and to pay for US-produced natural gas.
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Millions of EU jobs were in firing line
Where does the UK stand?
We’ve already mentioned that the UK was the first to avert the worst of what was threatened.
While a 10% baseline tariff covers the vast majority of the goods we send to the US, aerospace products are exempt.
Our steel sector has not been subjected to Trump’s 50% tariffs and has been facing down a 25% rate. The government announced on Thursday that it would not apply under the terms of a quota system.
UK car exports were on a 25% rate until the end of June when the deal agreed in May took that down to 10% under a similar quota arrangement that exempts the first 100,000 cars from a levy.
Who has not done a deal?
Canada is among the big names facing a 35% baseline tariff rate. That is up from 25% and covers all goods not subject to a US-Mexico-Canada trade agreement that involves rules of origin.
America is its biggest export market and it has long been in Trump’s sights.
Mexico, another country deeply ingrained in the US supply chain, is facing a 30% rate but has been given an extra 90 days to secure a deal.
Brazil is facing a 50% rate. For India, it’s 25%.
What are the consequences?
This is where it all gets a bit woolly – for good reasons.
The trade war is unprecedented in scale, given the global nature of modern business.
It takes time for official statistics to catch up, especially when tariff rates chop and change so much.
Any duties on exports to the United States are a threat to company sales and economic growth alike – in both the US and the rest of the world. Many carmakers, for example, have refused to offer guidance on their outlooks for revenue and profits.
Apple warned on Thursday night that US tariffs would add $1.1bn of costs in the three months to September alone.
Barriers to business are never good but the International Monetary Fund earlier this week raised its forecast for global economic growth this year from 2.8% to 3%.
Some of that increase can be explained by the deals involving major economies, including Japan, the EU and UK.
US growth figures have been skewed by the rush to beat import tariffs but the most recent employment data has signalled a significant slowdown in hiring, with a tick upwards in the jobless rate.
It’s the prospect of another self-inflicted wound.
The elephant in the room is inflation. Countries imposing duties on their imports force the recipient of those goods to foot the additional bill. Do the buyers swallow it or pass it on?
The latest US data contained strong evidence that tariff charges were now making their way down the country’s supply chains, threatening to squeeze American consumers in the months ahead.
It’s why the US central bank has been refusing demands from Mr Trump to cut interest rates. You don’t slow the pace of price rises by making borrowing costs cheaper.
A prolonged period of higher inflation would not go down well with US businesses or voters. It’s why financial markets have followed a recent trend known as TACO, helping stock markets remain at record levels.
The belief is that Trump always chickens out. He may have to back down if inflation takes off.
Donald Trump says he has ordered two nuclear submarines to be positioned in the “appropriate regions” in a row with former Russian president Dmitry Medvedev.
It comes after Mr Medvedev, who is now deputy chairman of Russia‘s Security Council, told the US president on Thursday to remember Moscow had Soviet-era nuclear strike capabilities of last resort.
On Friday, Mr Trump wrote on social media: “Based on the highly provocative statements of the Former President of Russia, Dmitry Medvedev, who is now the Deputy Chairman of the Security Council of the Russian Federation, I have ordered two Nuclear Submarines to be positioned in the appropriate regions, just in case these foolish and inflammatory statements are more than just that.
“Words are very important, and can often lead to unintended consequences, I hope this will not be one of those instances. Thank you for your attention to this matter!”
Image: Dmitry Medvedev. Pic: Reuters
The spat between Mr Trump and Mr Medvedev came after the US president warned Russia on Tuesday it had “10 days from today” to agree to a ceasefire in Ukraine or face tariffs, along with its oil buyers.
Moscow has shown no sign it will agree to Mr Trump’s demands.
Mr Medvedev accused Mr Trump of engaging in a “game of ultimatums” and reminded him Russia possessed a Soviet-era automated nuclear retaliatory system – or “dead hand” – after Mr Trump told him to “watch his words” and said he’s “entering very dangerous territory!”
Mr Medvedev, a close ally of Russian President Vladimir Putin, was referring to a secretive semi-automated Soviet command system designed to launch Russia’s missiles if its leadership was taken out in a decapitating strike.
He added: “If some words from the former president of Russia trigger such a nervous reaction from the high-and-mighty president of the United States, then Russia is doing everything right and will continue to proceed along its own path.”
He also said “each new ultimatum is a threat and a step towards war” between Russia and the US.
This breaking news story is being updated and more details will be published shortly.