China Briefing | Is China-US fighting talk a ploy ahead of Trump-Xi summit?

The Chinese president traded barbs with US vice-president Mike Pence in Papua New Guinea. But that could be a reason for optimism, not pessimism

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Happier times: Trump and Xi meet in Beijing in 2017. Photo: AFP

Published: 9:00am, 24 Nov 2018Updated: 9:01am, 24 Nov 2018

Deal or no deal, next weekend’s high-stakes summit between President Xi Jinping and his United States counterpart Donald Trump will determine the trajectories not only of China-US relations but also the world economy, and particularly the stock and capital markets.

As investors wait nervously for clues coming out of the crucial meeting, expected to take place on the sidelines of the G20 summit in Buenos Aires, any kind of deal that would bring a ceasefire in the trade war would help reduce uncertainties that have already led to a rout in global markets.

But the lack of a deal would not only escalate trade tensions and darken the clouds hanging over global economic growth, it could also expand the trade war into a cold war with dire geopolitical implications.

With so much at stake and plenty of potential deal breakers, it is little wonder that pessimism has prevailed.

But there are also reasons to remain optimistic as after nearly a year of trade tensions, both Xi and Trump are under rising pressure to thrash out a deal to calm the markets and bring respite to the turbulent bilateral ties.

On the surface of things, the war of words and displays of bravado between the two countries in the run-up to the summit hardly augur well.