Trump-Xi meeting: Why China's self-sufficiency changes the calculus

BEIJING — The trade deficit that escalated tensions between China and the U.S. in recent years has yet to shrink significantly, and the world's second-largest economy faces deep challenges. But China's efforts to build up self-sufficiency have reduced the threat to its domestic market from global trade developments.

U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet this week for their second in-person summit of the year. U.S. concerns about artificial intelligence have gained prominence in the days ahead of the meeting.

But the best that businesses are hoping for is an extension of a trade truce reached last fall. Even then, tariffs have done little to dent America's appetite for Chinese goods.

While an escalation in trade tensions last April briefly sent the U.S. trade deficit with China to its lowest level since 2017, surging demand for AI-related parts have helped send it higher again so far this year, according to China Customs data accessed through Wind Information.

And even as the U.S. has diversified away from China, it's hard for the world to shake its dependence on the Asian country.

Asia still accounts for more than 60% of U.S. imports, the same as before "Liberation Day," pointed out Jens Eskelund, president of the European Chamber of Commerce in China.

He estimated between half and three-quarters of container traffic from China to Southeast Asia subsequently heads on to other destinations.

That's all sped up the pace at which the world relies on China-made goods.