Trump Holds Leverage as High-Stakes Talks with China’s Xi Set to Begin

When Chinese President Xi Jinping arrives in the United States this week for high-stakes talks with President Donald Trump, there will be an understandable temptation to conclude that the American president is negotiating from a position of weakness. But the data reveals a far more compelling picture that it is Xi who must be prepared to make concessions while Trump holds all the leverage.

There is no doubt that Americans are feeling some economic pressure at home with high gas prices due to the war in Iran and creeping inflation. China also possesses a powerful bargaining chip of its own in that it controls roughly 70 percent of global rare-earth mining and more than 85 percent of refining and production of the critical minerals used in everything from automobiles to advanced weapons. Its willingness to restrict those exports has already complicated global trade.

But beneath those potential American vulnerabilities, Xi arrives in Washington facing serious economic problems of his own. More specifically, Beijing is exposed to precisely the sort of economic pressure Trump has spent the past two years applying.

China’s economy grew just 4.3 percent year-over-year during the second quarter, down sharply from five percent in the first quarter and the country’s slowest pace since late 2022.

Chinese retail sales also grew just 0.4 percent in August from a year earlier, meaning that Chinese consumers are barely spending more than they were last year. At the same time, investment in buildings, equipment, infrastructure, and other long-term projects fell 7.2 percent during the first eight months of 2026. Investment in China’s battered property sector plunged even more dramatically by 19.9 percent.

Housing remains an especially serious problem. Property sales by floor area dropped 12.1 percent during the first eight months of the year, and China is estimated to have roughly four million unsold homes.

China’s young people are struggling as well. The urban unemployment rate among 16-to-24-year-olds who are no longer students climbed to 18.9 percent in August, up from 17.9 percent in July. In other words, nearly one in five young people in that category who want a job cannot find one.

China’s financial system is also showing signs of strain. Earlier this month, Beijing announced roughly $54 billion in new capital for major state-owned banks and insurers. The move does not mean those institutions are failing, but it strengthens their financial cushions and their ability to keep lending as China struggles with weak demand for credit and slowing growth.

Moreover, those numbers reflect official government data, which is hardly trustworthy. Dr. Qi Yangyu, a former CCP propaganda official, has cautioned that official economic pronouncements from Beijing frequently require careful interpretation. “Reading between the lines is essential,” he said, arguing that positive government narratives often obscure underlying weaknesses.

According to Professor Ban Mingze, an economist who advised a Chinese local government before defecting to the West, Beijing’s efforts to retaliate against the United States have compounded some of those existing problems.

“They tried to fight back, but ended up paralyzing themselves,” he said.

Ban argues that Chinese Communist Party leaders have been reluctant to acknowledge the severity of the underlying problems and that Trump’s trade strategy has further limited Beijing’s options.

None of this means that China’s economy is in all-out collapse, but the evidence leaking through the CCP’s state-controlled media filter strongly indicates that Trump’s economic pressure campaign is having its intended effect.

China can produce vast quantities of goods. Its own consumers, however, are not buying enough of them. Huang Yiping, a member of the People’s Bank of China’s monetary policy committee, recently described the problem as one of strong supply and weak demand and called for policies aimed at increasing domestic consumption.

In other words, exports have become an increasingly important part of China’s economy because other sectors remain weak. And Trump’s policies are cutting China off from this economic lifeline by restricting exports to the United States, the number one consumer economy in the world. Direct U.S. imports from China fell to $308.4 billion in 2025, down nearly 30 percent from the prior year.

That is why Trump’s trade strategy remains particularly relevant. Since returning to office, Trump has repeatedly demonstrated his willingness to restrict Chinese access to the enormous American consumer market. The trade conflict escalated significantly in 2025 before the two countries ultimately pulled back and reached a temporary truce. After the Supreme Court struck down some of Trump’s emergency tariffs earlier this year, his administration imposed new duties under other legal authority.

The current U.S.-China trade truce expires November 10, which sets a dramatic backdrop for the meetings this week, and underscores the urgency of the talks.

The United States also retains significant leverage over technologies critical to Beijing’s ambitions. The Trump administration continues to restrict access to some advanced American semiconductors and computing equipment. Artificial intelligence and advanced semiconductor access are expected to be major subjects during this week’s talks.

Trump did not create China’s property crisis, weak consumer spending, or youth unemployment. But those problems can magnify the costs of a renewed trade confrontation – particularly for an economy increasingly reliant on overseas customers to compensate for sluggish demand at home.

For all the attention on America’s immediate economic headaches, the deeper weaknesses inside China will also be sitting at the negotiating table – and Trump has spent the past two years building economic pressure points aimed directly at them.