Despite months of tough talk on trade, rekindled North Korean tension and countless trademark tweets, most experts don’t expect fireworks when President Donald Trump launches meetings with Chinese President Xi Jinping today.
Southern Californians, with a deep stake in Chinese trade and tourism, are hoping for something more. Much more: shared goals, a commitment to mutually beneficial trade and a deal that inevitably satisfies both superpowers.
Talks at Trump’s lush Florida estate, Mar-a-Lago, start Thursday and conclude Friday afternoon.
“This will signify to the Chinese investor and international community whether the U.S. continues to be a welcoming and open environment for the investment coming in,” said Stephen Cheung, president of the World Trade Center, Los Angeles.
Observers here will be watching closely for signals of a cordial, promising relationship between the leaders of the world’s largest economies. For California, its mammoth economy largely powered by Pacific Rim imports and exports, China is also a huge source of investment in real estate, development and retail commerce.
The historic summit could set the tone of U.S.-China relations for years, and have deep financial ramifications in the Golden State.
“The U.S.-China relationship is by far the most important relationship in the world,” said Clayton Dube, president of the USC U.S.-China Institute. “Because of that, we have to get it right. We cannot afford to be in complete opposition.”
The U.S. is on the wrong side of a $347 billion trade deficit with China, and that fact figured prominently in the election, as Trump largely blamed cheap imports for a decline in manufacturing jobs.
Trump has little foreign policy experience but has earned an enduring reputation as a tough deal maker. Some hope Trump’s candor and unpredictably — he has called for a 45 percent tariff on imported goods and has hinted at sanctions on Chinese banks — could provide him new leverage with a wary Beijing.
“The most important objective is for the two gentleman to establish some kind of personal rapport or understanding,” said Kenneth Jarrett, a former U.S. diplomat and president of the American Chamber of Commerce in Shanghai. The largest U.S. chamber based in Asia has welcomed a forceful approach on trade.
The atmosphere may not appear to be ideal for measured discussion, and that worries California officials who hope for thoughtful compromise.
Trump has backed away from an independent stance on a sovereign Taiwan, unexpected talk that jolted the Chinese in the days after his campaign victory. But this week, the fuse was lit anew as North Korea launched a missile off its coast.
U.S. officials said the launch was a failure and didn’t threaten North America, but the incident underscored volatile strongman Kim Jong-un’s intent to advance his weaponry in defiance of international law.
Trump warned this week: “If China is not going to solve North Korea, we will.” He didn’t elaborate, but his administration is considering sanctions against Chinese banks and companies that provide North Korea access to the international financial system, a move strongly backed by Congress. And on a recent trip to Asia, Secretary of State Rex Tillerson reminded the region that the U.S. also retains the option of pre-emptive military force.
“The wording coming from the Trump administration is such urgency. I don’t want to say it’s posturing, but all of this is an effort to induce more out of China,” said Jonathan Pollack, fellow at the Brookings Institution and expert on North Korea and Chinese security strategy. “But the Chinese don’t want to feel pressured to do things.”
But the meeting amid such tensions could prove surprisingly workable for both superpowers.
North Korea has increasingly become a liability for China, and there’s room for both to come to a compromise, he said.
What they both need to avoid, he said, is any signal they are prepared to legitimize North Korea’s aspirations of possessing nuclear weapons.
“Xi and Trump both need wins at the summit,” he said. “Both want to come out and feel if they have got something out of this both on trade and North Korea.”
When President Barack Obama hosted Xi in a mini-summit at the Sunnylands resort in Rancho Mirage in 2013, the Asian leader called the region an epicenter for Sino-U.S. relations.
“Immediately after, you saw a flood of investment come to the Los Angeles region,” Cheung said.
In 2014, Chinese investments in California more than doubled from the year before, topping $2.8 billion.
In the years that followed, that interest only heightened, according to Rhodium Group, which monitors such investments. In 2016, investors sunk $16.4 billion into California.
And Chinese tourism here has grown to record levels, even after months of campaign salvos over trade gaps and tariffs.
Economic growth spread in both directions. Around the same the same, Hollywood’s entertainment giants, including DreamWorks and Disney, gained entrance into booming Chinese markets.
Meanwhile, Californians snatched up Chinese goods, consuming billions of dollars worth of consumer electronics and apparel.
Most of those products come in through the ports of Los Angeles and Long Beach, considered the trade gateway to Asia and a vital economic engine for the region.
At the same time, California made China a top export destination. The Chinese snapped up everything from semi-conductors to almonds to wine from California, most of it headed to the nation’s growing middle class.
Still, the gap in trade is wide. And Trump is expected to seek even more access to a growing Chinese market of potentially 1.3 billion consumers.
Roads and bridges?
Experts say China will be looking for market stability and more opportunities to expand its industry, including infrastructure projects.
Trump touted fixing America’s ailing roads, bridges and dams on the campaign trail and is now starting to map out how to fund such efforts.
“The president has consistently emphasized that one of his top priorities is modernizing our country’s outdated infrastructure,” Transportation Secretary Elaine Chao told The New York Times this week. “The proposal will cover more than transportation infrastructure. It will include energy, water and potentially broadband and veterans hospitals, as well.”
Chao said Trump hoped to “unleash the potential for private investment” through public-private partnerships. Could that open the door for Chinese investors and developers?
Dube believes the two countries’ interests may dovetail there.
China has developed an impressive mass transit and high-speed rail system. With plenty of money to invest, but a shortage in labor, China will be looking to other countries to serve as customers for such capital projects, he said. And it’s tough to find such a large market among their trading partners closer to home.
But could California, now debating a tax increase to fix its long-overlooked state highways and facing myriad other aging-infrastructure challenges, be such a partner?
“It’s the one place where our interest needs and resources fit,” he said.
Two days of talks are unlikely to produce such specific outlines for cooperation, experts say. But they could indicate how willing the two leaders are to truly negotiate — and compromise.
“They need to get a sense of each other’s objectives and priorities,” Jarrett said, “and establish some foundation for working together.”
Dube stated it simply: “We have to find common ground.”
The Associated Press contributed to this report.