Investors expect US President Donald Trump and his Chinese counterpart to keep trade tensions on the backburner when they meet in Beijing, saying they are focused on the booming AI sector and whether the US will ease chip export restrictions.

This is in stark contrast to years of Chinese asset prices on trade and tariff headlines and is most clearly reflected in the yuan, which has risen steadily for a year to hit a three-year high. (CNY/)

While thorny topics such as the US-Israel war over Iran, Taiwan, rare earths and nuclear weapons could be debated and major disagreements could damage market confidence, investors are currently betting on China’s technology drive.

China’s benchmark Shanghai Composite is trading at an 11-year high and export growth is riding on a wave of AI-driven orders. Even a growing trade surplus doesn’t make fund managers nervous about a new round of US tariffs, and they’ve shifted their portfolios behind China’s artificial intelligence self-sufficiency drive.

“The tables have turned. There is little China eager to discuss with Trump,” said Yang Tingwu, vice general manager of Tongheng Investments, adding that Trump’s unresolved war with Iran has weakened his hand. Yang has invested in China Mobile and China Telecom to gain exposure to their data-center businesses.

The market’s shift in focus on Wednesday, with Trump set for his first visit to China in nearly nine years, reflects the diminishing stiffness in US-China relations since Trump and President Xi Jinping pressed for a pause in their trade war six months ago.

US courts have struck down Trump’s initial tariff barriers. Trade data suggests ⁠Chinese goods are reaching the US anyway via Southeast Asia.

And as the fallout from the Iran war strengthens China’s push to shore up its supply chain, investors have also priced in and bet on US-China tensions and a boost to China’s technology development.

“China has made great strides in technology, developed a new economy, expanded its global influence and increased its advantage in global power competition,” said Wen Xuneng, founder and CEO of Zhu Liu Asset Management.

They are investing in AI infrastructure and expect US-China relations to remain stable until Xi makes an expected reciprocal visit to the US.

“After Xi’s visit to the US, the two countries may enter the next phase of hostilities, but now it is a relatively peaceful time,” he said.

Rising Yuan tells the story

During Trump’s first term and early in his second term, the yuan traded as a barometer of bilateral relations.

Since the tariff storm began in April 2025, however, the yuan has been guided more by booming exports and the market’s belief that authorities are comfortable with a strong currency in contrast to a volatile dollar.

“The summit could be a strategic catalyst for CNY strength and an important marker in stabilizing trade relations,” Goldman Sachs analysts said in a note.

“(But) we think the case for a stronger CNY is more fundamental and longer-lasting than this week’s events,” they said, as China’s external surplus drives the currency to a 12-month forecast of $6.5.

The yuan hit a three-year high of 6.79 to the dollar on Monday and traded near that level on Tuesday.

The expected presence of top US business leaders at the summit has also raised hopes for deals on finance, agriculture, energy and airplanes, while some investors see an opportunity for China to push for peace in the Middle East.

“I’m hoping that maybe Trump can get Xi to pressure Iran to reopen the Strait of Hormuz and get oil flowing,” said Jack Ablin, chief investment strategist at Cresset Wealth Advisors.

But with expectations of a big announcement dwindling, the fallback for most traders is to see what the markets are moving towards and that is the global AI boom.

Zeng Wenping, a fund manager at Beijing Monolith Fund Management, said he was mainly interested in whether the US would allow more advanced Nvidia chips to be sold in China, which would put pressure on domestic manufacturers.

“The only thing worth monitoring is the development around AI,” he said. “This is the top focus of the market, like no other.”