China holds its ground as markets eye trade truce ahead of Trump-Xi summit

US president Trump and China president Xi will be meeting in Washington on 24 September this week. And from a markets perspective, I think the most interesting part isn't necessarily what gets signed. It is instead the position in which both leaders are negotiating from. On the one hand, China president Xi looks relatively comfortable coming into the meeting. China's export machine has weathered the trade war far better than Washington might have hoped, with its global trade surplus on course to exceed $1 trillion for a second straight year. If anything, Beijing has shown that it has leverage of its own through the likes of rare earths and critical minerals, where restrictions can quickly create headaches for US manufacturers. Now, US president Trump has his own powerful cards too. Tariffs, semiconductor restrictions and access to the US market still matter enormously. However, there is arguably more urgency on his side of the table. This is where the November midterm elections is making things more complicated for him. Trump's approval rating stood at 35% in the latest Reuters/Ipsos poll, while Republicans trailed Democrats 44% to 37% on the generic congressional ballot ahead of the 3 November midterms. The economic fallout from the Iran war and higher fuel costs has only added to that political pressure. And I would argue that gives Trump a clear incentive to come away from the meeting with something he can frame as an economic win. It would be something you would expect from him given the situation. So, that would and should shape what markets expect out of the summit in Washington this week. The most realistic outcome isn't another sweeping US-China trade deal. It is an extension of the current trade truce for the most part. Sure, there might be some added promises from Beijing on purchases of US agriculture, aircraft or energy, and perhaps even some improvement in access to rare earths. But at the end of the day, those will continue to be token gestures and sma