Stephen Roach: Xi May Be Using Trump Summits to Buy Time

You basically pulled out the guns in your latest blog posts in the Substack post. Don't. This was your unsolicited advice to China. Don't trust anything Trump is prepared to offer now. I need to take a sort of a devil's advocate approach here. I know the summit happened. Not much really came of it right now. But isn't stability in China's most important diplomatic partnership or adversary important? Stability is good, but they put a couple of adjectives in front of the word constructive. Strategic. Well, what does that mean? I mean, take the word strategic. Donald Trump does not have a strategic bone in his body. He's transactions based and deal focused. And so it strikes me that, um, you know, all he wants to do and he sort of desperate to do it is to cut a deal with his lifelong, you know, best buddy, Uh Xi Jinping. And I'm puzzled. Uh, why would Xi Jinping want to cut a deal with a man who was likely to renege on a deal? I mean, think about Canada. Mhm. Think about Ukraine. Mhm. Uh, think about NATO. Can Donald Trump be trusted to stay firm on a commitment he makes? Uh, with any major country in the world? Do you think it was too risky for a Xi Jinping to bring a contingent of business leaders to the white House? A lot of people were questioning what? Where? I mean, the Elon Musks and the Zuckerberg's and all that were lined up at the white House. Uh, Jamie Diamond's, uh, and the like, but no Chinese business exists. Well, you know, you know, American corporate leaders, um, you know, they're they're good at groveling and they love to, you know, hang out with, uh, President Trump, you know, contribute to his inauguration, go to white House meetings and tell him how visionary he is with respect to new technologies. And Trump's more than happy to go along with it until it doesn't serve him well. What do you think? Beijing's ultimate aim by basically adhering to what Trump has wanted? Yeah, they had the summit in May in Beijing. They had this one a couple of weeks ago. There will be another one, which could be a trilateral meeting with Putin as well at APEC in about a month's time or less than a month, about three weeks time, and then Mar-A-Lago in December. What's XI Jinping trying to get out of this? You know, it's a puzzle to Jen, to me, quite honestly. Uh, I think XI Jinping is still worried a lot about, uh, sort of the Chinese economy. Yeah. Uh, some time maybe. I think time is the only thing he can get out of this, these next few summits with Trump. I don't think XI Jinping feels, uh, that reciprocal camaraderie that best friends are supposed to feel, uh, as Trump would lead you to believe. Um, you know, they're they're pretty smart in deciphering, uh, the limited progress they can make with a unpredictable guy like, um, Donald Trump. We disappointed there wasn't really much development on the I front, other than they're going to have an eye hotline. But they had different narratives, for sure, especially on the the more doomsday scenarios involved with AI, which have been run by some of the biggest frontier personnel. What is an eye hotline? I mean, what do you do? You know, you've got some agents that hacked into, um, you know, a strategically important system. You pick up the phone and say, stop hacking. Yeah, right. I mean, I'm not sure what that does. What kind of cooperation do you think there can be between China and the United States on a I when the two countries are competing for air supremacy. Well, look, there has to be cooperation in a technology that has the potential, uh, that I has, especially if we get to, um, you know, the so-called artificial general intelligence of many people think we're we're a lot closer to that than, uh, we had ever imagined in a such short period of time. Uh, but, you know, Trump does not want to have at least his latest version does not want to regulate AI. He thinks that, you know, we have the advantage and, uh, we have the stronger companies, and he doesn't want to shut them down, uh, or regulate them for, uh, any, any consideration whatsoever. China's moving the other way. Uh, clearly, in terms of, um, you know, recent actions that seem to be, uh, more restrictive from the standpoint of regulatory oversight. So we'll see how that works out. Are you supportive of the export controls on the most advanced chips and technology, or does it spur the indigenous innovation and more? Billions and trillions of dollars by China to build that out, which some say was inevitable? Yeah, I think. I think any restrictions we put on advanced technologies on China just lights a fire under them to do it their way. And I think we're seeing signs of that already with, uh, Huawei and its subsidiaries building out, um, uh, processing technology that will support the deep seek, uh, open architecture type support that China is favoring. So we're not going to stop them. Uh, and the more we try to do it, uh, I think, uh, the greater the incentive that China will have to do it their way. Right. Where do you think the center of the Trump administration's China policy is right now. Um, obviously they want to make sure and hold China's feet to the fire on the export licenses for rare earth, uh, and critical minerals. Uh, but China has found a lever. Very strong, powerful leverage in that. I don't know if two more summits, uh, before 2027 is going to get any resolution on that. Jamison Greer did not want to have an extension of the trade truce, but they ended up coming up with a two month extension. Yeah. Look, I think the senator, from the standpoint of the U.S. is a defensive center. Uh, we want to limit the Chinese would say contain, uh, China from moving ahead. Uh, and I think by the end of this year, two summits later will have some type of a deal because Trump can't couldn't stand losing face in doing four summits with his good friend without walking away, uh, with a deal. So I think there will be a deal. I think it will be a lousy deal. For whom? Lousy in terms of what the United States gets out of it. Uh, on trade, on AI, and on, uh, you know, any other, uh, meaningful issue, uh, between us. But he'll call it a deal. And for him, a deal is success. What are your views on the midterm? And if there is a blue wave, what's next for the Democrats? Well, we'll to the polls. And you can always be suspicious about the polls. And I and I certainly feel that we've been burned by the polls in the past. The polls are unanimous in saying that, you know, this is, um, uh, as close to a wave outcome as we've seen. Uh, I'm a little wary that we want to declare, uh, a wave in the Senate, but it looks like the House is, you know, pretty much a done deal. And, uh, Mike Johnson is going to be looking for a new job. Looking forward to the Apex summit, which is or at the Apex gathering, if you will, in Shenzhen in about three weeks time. The news flow yesterday, and I saw you mentioned it in your Substack post about the possibility of this trilateral summit between Xi Jinping Donald Trump and Vladimir Putin. What does that signal does that send to you when the other key parties in the Ukraine war with Russia are not at the table, potentially European leaders, and most notably Zelenskyy? Yeah. It's appalling. To be honest with you. I mean that the US Congress passed in Lindsey Graham's memory, honor, uh, a secondary sanctions bill that would have really put some teeth, uh, into Russia's war machine. And Trump can't deal with that. Uh, so he signs an executive order, uh, to basically countermand the legislation that he himself, uh, signed, uh, very, very recently. And, and the idea that, uh, we can, uh, override, uh, the support that we have had or tried to have for, uh, Ukraine by not limiting, uh, Russia's ability to continue to, uh, do grave damage to, uh, Ukraine's brave civilian population, uh, and have a trilateral summit, uh, with two counterpart, uh, uh, dictators, I think is just appalling. And just quickly looking forward to 20, 27, given everything we've just talked about in the stresses and maybe a blue wave in the midterms, what does 2027 look like given the prospects of the Iran war are not improving whatsoever? Inflationary pressures are remaining sticky and the eye bubble is showing vulnerabilities like 2027 is going to be a contentious year. Uh, politically, I think the first order of business will be, uh, Trump's, um, playbook on challenging election outcomes. That will create a lot of uncertainty, uh, in the markets. But I think the residue of, um, you know, the war in the Middle East, uh, and the suffering that's going on in Ukraine will continue to override, um, you know, the, the foreign policy aspects of it. And Trump is to call him a loose cannon is a compliment. I mean, there's nothing constructive we can say about an American president, uh, who, uh, continues to challenge, uh, our values domestically and our alliances, uh, uh, internationally. So anything can go.