Global Eyes Focus on Mar-a-Lago

Two days from now, the eyes of the world will be intensely focused on a members-only club in Palm Beach, Florida, as the first American-Chinese summit begins. On Thursday, two of the most powerful men in the world will meet for the first time. There seems to be an extreme amount of uncertainty surrounding the meeting between the Chinese President Xi Jinping and President Trump. As such, we have seen safe haven assets continue to gain value, with gold trading higher for the last three consecutive days.

The tone and timbre of this upcoming summit are unknown; but, it seems highly unlikely that the two world leaders will play a round of golf. According to Evan Osnos of the New Yorker, “When Xi Jinping, the Chinese President, assumed control of the Communist Party, in 2012, golf was a popular pastime for wealthy dealmakers. But in an effort to restore the image of public servants, which had been damaged by reports of corruption, Xi closed hundreds of courses and barred members of the Party from playing the game using public money.”

Each president has their work cut out for them, as public statements made on both sides have marked this first meeting as being on edge. The underlying truth is that the trade relationship between the United States and China is deeply interconnected, with both countries greatly benefiting from the outcome of their trade.

It is no secret that President Trump regards the current trade policies as one-sided, benefiting China more than the United States. He has been on record saying that he believes China is a “currency manipulator.” Furthermore, his words towards China have been cutting, with statements like “We can’t continue to allow China to rape our country.”

It is also no secret that many in China question the resolve of our new American President and wonder whether President Trump can “walk the walk” by backing up many of his statements and pledges. According to Evan Medeiros, an Asian expert at the Eurasia group, “Many in China believe Trump is a ‘paper tiger’ whose focus on short-term gains can be manipulated.”

If President Xi Jinping is amongst those that believe Trump can be manipulated, there is little hope for the summit to result in meaningful policies. This also puts into question whether the Chinese president will offer input and exert pressure on North Korea in regards to their current nuclear proliferation program.

The truth of the matter is that both countries need each other. Without each other, neither China nor America would be enjoying the prosperity that both countries currently have. Therefore, it is in the interest of both countries that these two presidents find common ground and focus on the policies that will benefit both countries, rather than focusing on how green the grass is, or if the grass can be manipulated. If both presidents can come to the table with the belief that any long-term agreement must be mutually beneficial and fair, then this week’s Chinese-American summit promises to raise the bar for both countries. As remote as this outcome is, billions of lives could benefit from such an accord.

Wishing you as always, good trading,