The Trump-Xi summit did nothing except create breathing space

CHINA FINANCIAL - Report 21 May 2026 by Michael Pettis

Special points to highlight in this report:

- The Trump-Xi summit last week accomplished nothing substantial except possibly to allow each side an extra 2-3 years in resolving its domestic problems. But because problems in the US economy require the opposite solutions to problems in the Chinese economy, there was never going to be a set of negotiations that satisfied both sides.

- Contrary to what much of the press and research reports are suggesting, however, for all of Trump’s gaffes, the US benefits more from a no-resolution summit meeting than does China. In order to prevent a contraction in the Chinese economy, China’s already-high debt burden is rising so quickly that it cannot afford to put off a potentially disruptive restructuring of the economy for many more years, and the greater the global trade tensions, the more urgent a Chinese restructuring becomes.

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