Trump Hosts Xi in Washington as AI Race and Trade Frictions Simmer

US President Donald Trump is hosting Chinese leader Xi Jinping in Washington this week, a state visit that comes not amid warm relations but as economic and technological competition between the two powers intensifies, particularly in artificial intelligence.

Neither side is expected to reach a grand bargain. The meeting, Xi's first visit to Washington in ten years and his third with Trump since the US president returned to the White House, is instead aimed at steadying fragile ties.

"The fact that they are meeting, and there's dialogue occurring and building that relationship, is probably as important as outcomes from the meeting," said Senator Steve Daines, a Montana Republican who advises Trump on China and recently travelled there to prepare for the summit.

Cui Tiankai, a former Chinese ambassador to the US, said at a recent forum in Beijing that problems between the countries are constant and sometimes very large, but that both will work to preserve overall stability.

The visit follows last year's intense trade war, in which the two sides exchanged steep tariffs that threatened the global economy, and China restricted its world-leading supplies of critical minerals used in products ranging from electric cars to fighter jets.

Analysts describe the stability both governments seek as driven by deep competitive motives. Evan Medeiros of The Asia Group consultancy characterised the dynamic as two geopolitical strongmen circling each other, weighing their next moves. Da Wei, director of the Center for International Security and Strategy at Tsinghua University, said the countries appear to be entering a "new normal" of overall stability even as they blacklist each other's companies and restrict high-tech trade.

AI has emerged as a central battleground. Trump has repeatedly said whoever wins AI wins, and claimed on social media Monday that the US is leading and that he would not stifle growth in something bigger than the Industrial Revolution or the internet. China's Ministry of State Security head, Chen Yixin, warned in a rare blunt essay that AI poses a direct threat to Communist Party rule if hostile foreign forces gain superior capabilities.

Washington already restricts exports of the most powerful AI chips to China and has accused Chinese developers of extracting capabilities from American AI models at industrial scale. Beijing says the practice, known as distillation, is widely used, including by US companies, and criticises US efforts to monopolise the industry. China is also courting developing nations to shape new global AI guardrails.

Still, the two sides are taking a small cooperative step. Treasury Secretary Scott Bessent said Sunday after meeting Chinese Vice Premier He Lifeng in New York that the US has proposed a "notification mechanism" for AI incidents that could affect national security, arguing that greater transparency between the world's top two AI powers is important.

While both have avoided broad punitive measures that would break their trade truce, they continue targeting individual companies and products. The US has recently moved against Chinese telecommunications and surveillance equipment, firms accused of using forced labour in Xinjiang, and advanced robots and drones. The Pentagon has barred Alibaba, BYD, Baidu and other major Chinese businesses from US defence contracts. Beijing responded with export controls on drones and related technologies and blacklisted six US companies over their support for Xinjiang-related measures.

After the Supreme Court struck down Trump's tariffs on trade partners this year, the administration has sought other routes. In July the White House imposed a 12.5% tariff on imports from 60 trading partners, including China, citing insufficient action against forced-labour goods, and plans an additional 7.5% tariff on China over excess production capacity. Analysts say current tariff levels are acceptable to both sides, but a significant increase could reignite tensions.

The US has also campaigned to isolate Iran from its remaining economic partners, while Beijing insists on its right to trade with Tehran. Washington has so far held back from punishing China, partly to avoid jeopardising the summit, but it is losing leverage as China, Iran's biggest oil buyer and largest trading partner, builds ways to make payments outside the US-led financial system, according to Alicia Garcia Herrero, an Asia-Pacific economist at the French bank Natixis.

Taiwan remains among the thorniest issues. Trump paused a large weapons package to the self-governing island, which Beijing claims as its territory, after his May trip to Beijing, though US law obliges Washington to provide sufficient hardware and technology for its self-defence. Analysts expect Xi to press Trump to delay arms sales further, sowing doubt in Taiwan about US commitment.