China’s Xi reasserts Taiwan stance in call with Trump, while U.S. president pushes trade

U.S. President Donald Trump said Wednesday that he had a “long and thorough call” with his Chinese counterpart Xi Jinping, naming Iran, Russia’s war in Ukraine, China’s energy purchases and his upcoming visit in April among the key talking points.

Beijing’s statement, however, singled out Taiwan as “the most important issue” in bilateral relations, urging the U.S. to “handle the issue of arms sales to Taiwan with prudence.”

China maintains Taiwan is part of its territory, claims that have been rejected by the democratically governed island.

Washington approved arms sales to Taiwan worth as much as $11.15 billion in December last year — one of its biggest ever — to strengthen the island’s defenses and deter any military aggression by Beijing.

China appears to be reminding Washington “where the red lines are” while seeking to avoid any action that could jeopardize Trump’s plans to visit China in April, said David Meale, practice head for China at Eurasia Group.

Trump during his call stressed on the commercial ties between the two countries, including China’s purchase of oil and gas, agricultural products and airline engine deliveries.

China agreed to increase its purchase of American soybeans to 20 million tones for the current season, 25 million for next, Trump said.

“The ‘transaction-oriented’ mindset of Trump should be a gift to Beijing as opposed to an ideology-driven one reinforced by coalition-building,” said Neo Wang, lead China macro analyst at Evercore ISI in New York.

The U.S. ambassador to China, David Purdue, reportedly said in a closed-door meeting in Hong Kong last month that Boeing was involved in the ongoing negotiations ahead of Trump’s visit.

Wang expects a signing ceremony for a deal covering as many as 500 Boeing aircraft to be witnessed by the two leaders during Trump’s trip to Beijing.

With a potential aircraft deal being the “headline victory,” Trump could remove the remaining 10% fentanyl-related tariffs on Chinese exports, “during or shortly after” the April meeting, Wang added.

While Trump portrayed the call as an “excellent” discussion and touted his personal relationship with Xi was “an extremely good one,” Xi took a more measured tone, saying that “the U.S. has its concerns and China has its concerns” but a solution could be found if both sides approached each other with “reciprocity.”

That could be a sign that the flow to the U.S. has been “satisfactory,” Wang said. Trump also sought to ramp up the U.S. stockpile of critical minerals through a new initiative, dubbed “Project Vault,” aimed at strengthening its supply chain to counter China’s dominance in the sector.

The official readouts from both sides also left out the simmering tensions around Venezuela after the U.S. captured Venezuelan President Nicolas Maduro and his wife in a stunning military operation earlier this year and seized the country’s oil industry.

Following the military operation, Trump had demanded that Venezuela cut its economic ties with several countries including China, but later softened his tone to say that Chinese investment would be welcome.

Trump’s call with Xi came hours after the Chinese president held a video conference with Russian president Vladimir Putin to discuss geopolitical flashpoints in the region.

Putin’s foreign affairs adviser Yuri Yshakov told reporters at a briefing following the Xi-Putin call that the two leaders sought to align their positions on global flashpoints including over Iran, Venezuela and Cuba.

According to the official readouts, Xi and Putin appeared to be projecting a strong united front, with Moscow calling bilateral relations an important stabilizing factor at a time of growing global turmoil.

Trump’s call with Xi, where they discussed “the current situation with Iran,” came ahead of a critical talks between Washington and Tehran on Friday, although debates continued over the scope of the talk’s agenda.

The Trump-Xi call suggested “both sides have asks of each other for how they approach third country issues,” said Meale, expecting the Middle East tensions to continue to be in play in the lead up to Trump’s April visit.

Trump had threatened strikes against Iran following Tehran’s violent crackdown on protestors and earlier this week deployed a naval task force including aircraft carriers to the region. China is the largest buyer of Iranian oil.

“The broad swathe of topics covered in the call points to Trump’s carrot and stick approach with China,” said Reva Goujon, director at Rhodium Group, as the American leader takes aim at Russia’s oil exports and seeks Beijing’s cooperation in bringing Putin to the negotiation table to ultimately broker a peace deal in Ukraine.