Showdown at Mar-a-Lago

The leaders of the world’s two largest economies will meet, face-to-face, for the first time today. Traders, investors, and market participants will be listening intently as they look to get a sense of the overall tone of this historic meeting. Both Air Force One and the Chinese presidential aircraft have already landed at opposite ends of the airport in Florida.

With so much at stake, what happens over the next two days could very much shape the future of economic prosperity of both countries. It is quite evident that there are deep divisions in each country’s trade policies, in addition to distinct differences in the leadership style of both presidents.

Content Vs Protocol

Inasmuch as the outcome of this first meeting is unknown, according to the White House, the only scheduled event so far is tonight’s dinner with Donald Trump and Xi Jinping, along with their wives. Whereas meetings will be quite formal, White House sources have said that the dinners will be intimate.

The White House has provided very few details regarding a daily itinerary or a listing of meetings that will be held over the next two days. Not knowing whether there is a complex itinerary immediately alludes to some fundamental differences between the United States and China regarding their protocol.

According to the South China Morning Post, “Summit diplomacy is perceived differently in Beijing and Washington, with Chinese diplomats appearing to attach more importance to protocol and American ones preferring to focus on substance over form, and that raises the stakes enormously. Gu Su, an expert on mainland politics from Nanjing University, said the debate might boil down to differences in political system and ideology.”

“It’s been a tradition in China to value these kinds of in-person meetings between important leaders,” he said. “Small symbols such as their handshakes are all part of our face diplomacy and often cited as diplomatic accomplishments. But in the West, where political systems were more open and transparent, people would want to know “where’s the beef?”

The real question is whether or not Trump and Xi can get along. Noting their distinct and different styles of leadership, many believe it will not be that easy. How Trump’s ‘shoot from the hip’ leadership style matches up with the more reserved demeanor of Xi could be a determining factor. However, with so much at stake, it is essential that both leaders find mutual understanding because without it no real progress can be made. If their collective focus can remain on common ground, there is truly the opportunity for significant progress, which will lead to increased prosperity for both countries.

Wishing you as always, good trading,