Trump-Xi summit to show that everything now is leverage

Trump’s world is not rules-based globalization or full Cold War fragmentation — it’s perpetual leverage economics. This week’s summit in Beijing between Donald Trump and Xi Jinping will showcase that reality more clearly than any major diplomatic encounter since Trump returned to the White House. Forget the ceremonial choreography and the carefully staged photographs in the Great Hall of the People. What matters is that the world’s two largest economies are now negotiating within a permanently transactional framework in which trade, security, energy, finance and military power are fused. Trump arrives in Beijing carrying tariffs, sanctions, Taiwan, Iran, semiconductors, Boeing aircraft orders, soybean exports and rare earth minerals all in the same negotiating brief. Xi receives him as China confronts a far weaker domestic economy than It projected only a few years ago. The property sector remains under severe strain after the collapse of developers, including Evergrande and Country Garden. Exports are slowing under mounting trade friction with the US and Europe. Foreign direct investment into China fell sharply again last year as global companies accelerated supply-chain diversification. And its energy security is now in question with the Iran war and dueling blockades of Hormuz. It appears that nothing is compartmentalized anymore. For instance, Taiwan is tied to trade, trade is tied to security, security is tied to energy, energy is tied to sanctions, and sanctions are tied to investment flows. This is the new operating system of the global economy. For three decades after the Cold War, markets operated on the assumption that economics would gradually overpower geopolitics. Countries could compete strategically while still deepening trade integration, expanding supply chains and increasing capital flows. Investors believed economic interdependence reduced the chances of serious confrontation. Trump and his policymakers never believed that. The US leader’s worldview has always been aggressively transactional. Economic dependence, military alliance, access to American consumer markets creates leverage, tariffs create leverage and tech access creates leverage. And yes, even uncertainty itself becomes leverage. The Beijing summit will likely reflect this with extraordinary clarity. Ahead of Trump’s arrival, Washington sanctioned several Chinese satellite companies accused of assisting Iran through imagery and logistical support linked to military operations in the Middle East. The Treasury also targeted entities allegedly connected to Iranian procurement networks. At the same time, the White House is discussing expanded Chinese purchases of Boeing aircraft, US agricultural exports and possible trade-management mechanisms designed to stabilize commerce in non-sensitive sectors. The contradictions are, of course, not accidental; they’re the strategy. US-China goods trade still exceeded roughly US$575 billion last year despite years of tariffs, sanctions and escalating strategic hostility. China remains one of the largest export markets for American agriculture, particularly soybeans. Boeing continues to view China as one of the most critical long-term aviation markets globally, even after years of political tensions and delivery disputes. Yet Washington is simultaneously tightening restrictions on advanced semiconductor exports, increasing scrutiny of outbound investment into China and accelerating military support for Taiwan. This isn’t Cold War economics. The Soviet Union was never deeply integrated into the architecture of global trade, manufacturing and capital markets. China is central to all three. China accounts for around 30% of global manufacturing output. It dominates processing capacity for critical minerals essential to electric vehicles, batteries and defense systems. The US, meanwhile, remains the world’s dominant financial power and China’s largest single export market. Neither side can afford full rupture. But neither side trusts the other enough to preserve the old rules-based framework either. This superpower tension is increasingly driving markets across Asia. A decade ago, investors focused overwhelmingly on interest rates, earnings and central-bank policy. Today, geopolitical signaling moves markets almost as powerfully as macroeconomic data. The Taiwan issue demonstrates the dynamic. Beijing wants Trump to shift the official US language toward explicit opposition to Taiwanese independence. Washington publicly insists policy remains unchanged while preparing another substantial arms package for Taipei after approving more than $11 billion in military sales to Taiwan since Trump returned to office. Yet reports indicate that the White House delayed formal congressional notification of the latest package, in part, to avoid destabilizing the summit atmosphere. As such, even timing becomes leverage. China faces enormous contradictions of its own. Beijing wants stable export markets, uninterrupted energy flows and calm financial conditions. It also wants strategic partnerships with Iran and Russia, reduced vulnerability to American pressure and greater geopolitical influence across the developing world. Those objectives increasingly collide with Trump’s worldview. China imports more than 11 million barrels of crude oil per day and remains heavily dependent on Middle Eastern energy flows. As such, serious disruption hits Asian manufacturing, shipping costs, inflation and financial markets. Yet Beijing resists fully aligning with Washington’s pressure campaign against Tehran because Iran remains strategically valuable to China, both economically and geopolitically. China increasingly wants the advantages of geopolitical disruption without absorbing the costs of geopolitical disorder. Trump understands this vulnerability instinctively. His negotiating style is designed to merge commercial pressure with security pressure until the distinction between the two disappears completely. Previous administrations often compartmentalized disputes, but Trump collapses the walls between them. The result creates a structurally more volatile world for investors. Traditional globalization was optimized for efficiency. The new system optimizes for strategic resilience, political flexibility and leverage. Many investors still underestimate how profound this transition is likely to become. The world is not returning to the relatively frictionless globalization model that dominated the 1990s and 2000s. But it is not entering a clean Cold War split either. Instead, the global economy is moving into a permanently negotiated environment where economic relationships become instruments of strategic pressure. This week’s Beijing summit between Trump and Xi will likely offer the clearest demonstration of this yet. No side fully decouples, no side fully trusts and no issue remains isolated – for everything now is leverage. Nigel Green is CEO and founder of the deVere Group