Trump visits China: Here's what to expect

  • Trump will likely announce billions of dollars in deals to address the U.S.'s trade deficit with China
  • Based on the business delegation traveling with the U.S. president, the deals will likely center on China buying American energy and farm products
  • Many in the American business community are concerned that Trump's fixation on the deficit could distract from larger problems challenging U.S.-Sino relations
U.S. President Donald Trump (R) welcomes Chinese President Xi Jinping (L) to the Mar-a-Lago estate in West Palm Beach, Florida, on April 6, 2017.
Jim Watson | AFP | Getty Images
U.S. President Donald Trump (R) welcomes Chinese President Xi Jinping (L) to the Mar-a-Lago estate in West Palm Beach, Florida, on April 6, 2017.

President Donald Trump is unlikely to change China's stance on North Korea when he visits Beijing this week, but he could well make some headway on trade deals between the two countries.

When Trump arrives in the capital Wednesday, he'll be meeting his Chinese counterpart possibly at the height of Xi Jinping's power. After the Communist Party Congress in October — when Xi consolidated his power base — the Chinese president has been projecting himself as a steady, stable leader with a set vision for the nation. Trump will be negotiating with China's most powerful leader in decades.

Addressing the trade imbalance

On the economy, Trump is expected to focus on the trade imbalance. After July's Comprehensive Economic Dialogue (an annual economic dialogue session in Washington), both countries expressed their interest in narrowing the U.S.'s trade deficit with China.

On the Chinese leg of his 12-day Asia visit, Trump will likely announce billions of dollars in deals to address the gap.

Based on the business delegation traveling with the U.S. president, the deals will likely center on China buying American energy and farm products, as well as aircraft and other machinery. Chief executives on his trip include those from Boeing, Cheniere Energy, Texas LNG Brownville, DowDuPont, and the U.S. Soybean Export Council.

Minor Chinese reforms

Meanwhile, Goldman Sachs CEO Lloyd Blankfein is in the delegation along with insurers such as PartnerRe. That has raised speculation that China could announce a liberalization in the financial sector soon — though expectations for any significant structural moves are quite low.

"More complicated structural issues, such as the U.S. criticism of China's intellectual property practices and China's demand to boost its technology exports to the U.S. to address its deficit, are unlikely to make material headway in the upcoming meeting," ANZ research said in a recent note.

Market access, tech transfers slip off the radar

Despite the likely deliverables, many in the American business community are concerned that Trump's fixation on the deficit could distract from larger problems challenging U.S.-Sino relations such as market access and competition in the industries of the future.

"My concern is (the Trump administration) will come and trumpet a bunch of deals and MOUs (memorandums of understanding) that have a big number and Trump will tweet victory," James McGregor, China chair with APCO Worldwide, said.

"China will focus on a couple of tweetable deliverables and the very serious industrial policies will not get the attention they deserve," he added.

Others are more hopeful. William Zarit, chairman of the American Chamber of Commerce in China, told CNBC that his best case scenario is what he would call a "proactive, reciprocal treatment."

"That is the Chinese will see that it's in their interest to open up different industry sectors to foreign investment and to U.S. products that will actually help the Chinese people."

"My worst case scenario is that we don't have any opening up and that we might see some kind of reactive, reciprocal treatment on the side of the U.S., limiting investment, limiting Chinese exports, that's what we do not want to see," he added.