CNBC's The China Connection newsletter: Five things Beijing wants from a Trump-Xi meeting

Suspense is building ahead of Thursday's expected meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea, as both sides look to resolve escalating bilateral tensions.

As Trump was on his way to South Korea for the final leg of his three-nation Asia tour, he said he looked forward to a "great meeting with President Xi of China, and a lot of problems are going to be solved."

"The relationship with China is very good," Trump said from Air Force One Wednesday. Beijing has only confirmed that Xi will also be in South Korea on Thursday.

Washington has been previewing potential wins, from delaying Chinese rare earths restrictions to a deal around divesting TikTok's U.S. operations from its Beijing-based parent ByteDance. Again, Beijing has been far less vocal.

Trump's optimism reflects a familiar pattern: the U.S. misunderstanding of China's capabilities and interests.

Here's what analysts told me are top of mind for Beijing:

The Trump administration's ad hoc approach contrasts with Beijing's emphasis on stability.

"The Chinese want basically a more stable, more conducive-like economic and trade relationship," said Zichen Wang, research fellow and director for international communications at the Beijing-based think tank Center for China and Globalization.

He expects that could include "some sort of ceasefire, so that there will be no more tit-for-tat escalations from the U.S. and then countermeasures from China."

Beijing's most practical ask is for the U.S. to roll back tariffs on Chinese goods. The duties more than doubled in just two weeks back in April, before both sides agreed to 90-day pauses of the duties, with the latest set to expire in mid-November.

But the overhang remains, especially as Trump has threatened that new tariffs of up to 100% could take effect next month.

However, just a few minutes before he landed in South Korea on Wednesday, Trump said he expects to lower fentanyl-linked tariffs on China ahead of his much-anticipated meeting with Xi.

"Businesses need to have certainty. There's no certainty right now," Cameron Johnson, Shanghai-based senior partner at consulting firm Tidalwave Solutions. They "need to have stability on the tariff structure."

Meanwhile, China is hedging — as its U.S. exports plunge, shipments of goods to other parts of the world are on the rise. Since the earlier round of U.S.-China tensions in 2018, Southeast Asia has overtaken the European Union as China's largest trading partner on a regional basis.

U.S. restrictions on Chinese access to Nvidia chips and other advanced American technology have accelerated over the last three years. Now, it's uncertain whether Nvidia can recoup the China market share that it says has gone to zero.

"What the Chinese themselves are hoping for is not to be as constrained with technology," Johnson said. "Is the U.S. done? Or is this going to continue and continue and continue?"

Trump on Wednesday alluded that export restrictions on Nvidia's fastest AI chips — the Blackwell graphics processing units — could be discussed when he meets Xi.

While Beijing still needs some of the most advanced U.S. tech in the near term, its top leaders last week emphasized plans to build up homegrown tech over the next five years.

China is also increasingly wary as U.S. trade and technology moves begin to ripple through its relationships with other countries.

Beijing is using its dominance in rare earth materials as leverage to counter Washington's semiconductor restrictions. On Oct. 9, China expanded its rare earths licensing regime to cover products — including advanced chips — with even just 0.1% of China-sourced rare earths.

What prompted the reaction? Analysts point to a new U.S. rule on Sept. 29 that expanded restrictions to include the majority-owned subsidiaries of blacklisted Chinese companies — potentially affecting some 20,000 Chinese entities.

Wang from the Center for China and Globalization noted that the Dutch government's order to take over Nexperia, a chip subsidiary of a Chinese company that's on the U.S. entity list, came on Sept. 30.

And on Monday, the U.S. trade agreement with Malaysia added clauses barring Kuala Lumpur from working with "third countries" in ways that disadvantage U.S. products, while calling on Malaysia not to "undermine" American tech curbs.

"Businesses are also concerned about that because that could bleed into all different kinds of situations," said Johnson, who added that Beijing wants to ensure legitimate Chinese firms abroad are not cut off from global technology supply chains.

Beijing has long demanded that trade talks with the U.S. be held on the basis of "win-win cooperation" and "mutual respect."

That mutual respect includes the U.S. adhering to Beijing's position on Taiwan and South China Sea claims, Dong Shaopeng, a senior researcher at Renmin University of China, told me. He also thinks the U.S. needs to see that China's development is "reasonable."

Still, few expect breakthroughs.

"I don't think this week's meeting will see results," Dong said in Mandarin, according to a CNBC translation.

From photo ops to framework agreements, both sides may leave with something on Thursday. Whether it lasts is another matter.

China touts quantum computing ambitions. Top leaders wrapped up a closely watched "Fourth Plenum" last week to set goals for the next five years, which include tech breakthroughs and boosting domestic demand.

Industrial profits surge. China's industrial profits surged by more than 20% in September, the biggest jump in nearly two years, amid Beijing's efforts to reduce non-productive, "involutionary" competition.

Airbnb relies on Alibaba AI. CEO Brian Chesky said Airbnb is using Alibaba's Qwen AI model quite heavily because it is faster and cheaper, while OpenAI's ChatGPT is not quite ready for integration with the travel booking platform, according to a Bloomberg report.

—Lee Ying Shan

The performance of the Shanghai Composite over the past year.

Oct. 30 - Nov. 1: Chinese President Xi Jinping to attend the APEC Economic Leaders' Meeting in Gyeongju, South Korea

Nov. 2: 2025 Hong Kong Digital Asset Forum

Nov. 3-7: Hong Kong Fintech Week

Nov. 5-10: China International Import Expo