As Trump-Xi summit nears, Europe is caught in middle of US-China rivalry

German and Chinese business leaders met in the German city of Düsseldorf for an economic dialogue last week. Although the panel focused on trade and investment between China and Europe, ongoing US-China rivalry was the elephant in the room.

As Xi Jinping and Donald Trump sit down in the US capital Washington this week, there is some hope that talks will show progress on alleviating the ongoing trade war launched by the US president. The last time the two leaders met at a Beijing summit in May did not yield any tangible results.

"The assumption in Beijing, and that's the way they're operating, is that China and the US will hold each other in check for the foreseeable future," Mikko Huotari, director of the Berlin-based China think tank MERICS, told a policy briefing last week.

"Xi really doesn't need a breakthrough in Washington. He needs more time. And the same is true for Washington. So we have this strategic stalemate situation, which I think is the best description of what we see currently."

A deal could benefit Trump's Republican Party ahead of the important US midterm elections in November, but that outcome remains far from certain.

"We will discuss everything," Trump said about Xi's visit to the White House.

Beijing and Washington are competing on multiple levels and nowhere is this rivalry more consequential than with artificial intelligence (AI).

The US government prohibits the export of high-performance chips to China. Beijing, in turn, restricts the export of rare earth elements, which are indispensable for semiconductor production.