Traders Eye Xi-Trump Meet for Clues on AI Rivalry, Yuan Outlook

(Bloomberg) — Artificial intelligence, a lingering trade war and the yuan will likely dominate the agenda of the upcoming US-China summit, with focus on whether the two nations can reach concessions or put guardrails around key areas of competition, analysts say.

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For now, markets are sending mixed signals about the outcome of next week’s meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

Indicating cautious optimism, a Goldman Sachs Group Inc. survey shows 46% of offshore and 38% of onshore investors expect Chinese stocks to rise after the talks. Only a small minority foresees losses. Meanwhile, overseas exchange-traded fund flows and options positioning suggest foreign investors remain wary ahead of the summit, according to Tony Lee, JPMorgan Chase & Co.’s equity-derivatives strategist.

AI is widely expected to be a central topic as the technology race turns increasingly heated, with access to advanced US chips, safety standards and disputes over the pace of the industry’s development among key points of contention. The fate of a soon-to-expire one-year tariff truce, Beijing’s export curbs on rare earths, as well as the value of China’s currency may also be in the spotlight.

Here’s a closer look at what investors are watching ahead of the event:

Artificial Intelligence

The two countries’ tech rivalry has become more intense lately, with Beijing criticizing calls among leading US industry executives to slow AI development and impose tighter curbs on Chinese model makers as fearmongering and confrontation.

It risks weighing further on Chinese AI firms from Z.AI Co. and MiniMax Group Inc., whose stocks have been under pressure in recent months due to fierce competition and concerns over cash burn.

“Ultimately, both leaders know that AI is critical for national security, so neither is likely to slow its efforts and each will seek to undermine the other,” said Vey-Sern Ling, a managing director at Union Bancaire Privée. “Any loosening of semiconductor restrictions will be positive for both countries, especially for Nvidia, and China’s large language model developers such as Alibaba, Tencent and Zhipu.”

Tariffs and Market Access

Expectations are high that the summit may result in an extension of the bilateral trade truce that will expire in November, after the two nations have started talks over slashing tariffs on certain goods, including on American energy and agricultural shipments, as well as lower duties on Chinese inputs for manufacturers.

With representatives from state-owned food trading firm Cofco likely to join President Xi’s delegation, investors will be watching for fresh Chinese orders for US agricultural products such as soybean, analysts say. The potential for BYD Co. to feature in the trade mission also has drawn interest in Chinese electric-vehicle makers’ access to the US market.

A major sticking point in the bilateral relations, access to Chinese rare earths will likely remain high on the agenda. Any easing by Beijing on export restrictions could help downstream manufacturers, while reducing some of the scarcity premium in alternative suppliers, Charu Chanana, chief investment strategist at Saxo Markets, wrote in a note.

Currency Value

The yuan may also be discussed at the summit, especially after US Treasury Secretary Scott Bessent said in August that many people considered the Chinese currency undervalued.

The yuan has strengthened around 4% against the dollar this year, making itself Asia’s top performer. Despite the gains, Beijing also faces criticism from European countries such as Germany for using an artificially cheap currency to gain an unfair trade advantage.

While some analysts expect China to allow the yuan to see modest gains in the coming days to help create a more conducive environment for the summit, it’s unlikely to tolerate significant appreciation given the country’s reliance on a robust export machine to keep its economy humming.

“China’s strategy has been maintaining currency stability at a reasonable level, and this does not look likely to change even if there is external pressure,” said Lynn Song, chief economist for Greater China at ING Bank NV.

–With assistance from Elena Popina.