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US–China Summit Sends a Signal of Stability

18 May 2026

Market Development:

  • Last Thursday to Friday, the leaders of China and US held a two-day summit in Beijing. Both sides expressed support for maintaining stability in bilateral relations. A new positioning in building a “constructive strategic stability” relationship seems to be the way forward.
  • Reaffirming bilateral economic and trade relationship: The two leadership teams held in-depth discussions on economic and trade issues, reiterating that the essence of US–China economic relations is “mutual benefit and win–win situation”, and agreed to jointly maintain the hard-won positive momentum. 
  • Positive consensus on tariff arrangements: Building on and implementing outcomes from earlier discussion, the two sides reached consensus on follow-up tariff arrangements. In principle, they agreed to pursue reciprocal tariff reductions on products of comparable scale and mutual concern.
  • Establishing bilateral mechanisms: They agreed to set up a Trade Council and an Investment Council as standing platforms to address concerns in trade and investment (including tariff-reduction topics).
  • Advancing agricultural market access: The two sides will resolve or make substantive progress on certain non-tariff barriers and market-access issues for agricultural products. The US side will address China’s concerns on items such as dairy and aquatic products; China will advance US concerns including facility registrations for beef and poultry exports to China from certain US states.
  • Expanding two-way trade and aviation cooperation: Supports two-way trade (including agricultural products). The two sides also reached arrangements covering China’s aircraft purchases from the US and US assurances on the supply of engines and parts, with follow-up discussions and implementation to be accelerated.

HSBC economic views：

  • For the market, the summit outcome reinforces expectations that both countries will continue working towards stabilize relations, helping to reduce the a renewed escalation in trade tensions. Overall, the constructive tone should support corporate confidence and consolidate progress made at the Busan summit six months ago, laying the groundwork for more proactive engagement ahead.
  • As a sign of stabilizing bilateral relations, US President has invited China’s President to visit the White House in September. The two leaders may also meet at the APEC summit in Shenzhen in November and the G20 Leaders’ Summit in Miami in December.
  • In the near term, the summit may support risk-asset sentiment. Over the medium to long term, competition in strategic areas such as semiconductors is likely to persist, and technology restrictions and major-power rivalry may remain the norm.

HSBC asset class views：

  • China equities: China continues to expand advanced manufacturing and exports, with a strategic focus on high technology and “new quality productive forces”—a trend that is likely to continue. With improving US–China relations a potential catalyst, we maintain an overweight view on China and Hong Kong equities, and recommend a barbell strategy focusing on both innovation themes and high-dividend stocks.
  • Renminbi (RMB): As US–China economic and trade relations become more stable and constructive, we believe the RMB still has fundamental support for further modest appreciation. Key domestic structural factors supporting the exchange rate include corporates actively converting trade-related FX receipts into RMB, RMB internationalization, longer-term diversification to reduce reliance on the US dollar, and economic rebalancing. We remain constructive on the RMB outlook.
  • US equities: US domestic demand remains resilient with structural growth drivers, and visibility on the outlook has improved. We expect AI-driven innovation to support a higher capex cycle and strong semiconductor demand. While the US indices have reached new highs, market breadth remains relatively narrow, and most stocks still trade below their 52-week highs. If participation broadens, there is still room for further gains.
  • US dollar: Our view remains that the USD is likely to stay broadly soft over the longer term, rather than moving into a sustained period of strength. That said, oil prices remain relatively high, which can affect inflation expectations and the broader economic outlook, potentially limiting further USD weakness. 

“Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.