Growing Uncertainty Looms Over Trump’s China Visit Amidst Escalating Geopolitical Tensions

BEIJING – The planned high-stakes trip of U.S. President Donald Trump to China, scheduled from March 31 to April 2, is shrouded in increasing uncertainty following a significant escalation in U.S. foreign policy actions. The U.S. has targeted two foreign leaders in rapid succession, raising concerns about the potential impact on bilateral relations and the outcome of Trump’s diplomatic engagement with Beijing.

Over the weekend, President Trump announced that joint U.S. and Israeli strikes had resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei. This development comes less than two months after U.S. forces captured Venezuelan leader Nicolas Maduro and his wife from their residence in early January. These aggressive actions are being viewed by analysts as potential complications for Trump’s anticipated visit to China, which follows a fragile trade truce reached in late October.

George Chen, a partner at The Asia Group, expressed that Chinese President Xi Jinping is unlikely to feel at ease with the death of Iran’s top leader, given Beijing’s generally cordial relations with Tehran. "How can Xi feel everything is normal and alright and be prepared to welcome Trump to visit in [a] happy mood?" Chen questioned, advising investors to temper their expectations for what Trump might achieve during his trip, assuming it proceeds.

The White House has not yet officially confirmed the dates for Trump’s visit, which would mark the first by a sitting U.S. president since 2017. In response to the events in Iran, China’s Foreign Ministry on Sunday condemned Khamenei’s killing as "a grave violation of Iran’s sovereignty and security," calling for an immediate ceasefire. While this statement addressed the situation in Iran, it was notably less direct regarding the U.S. role compared to Beijing’s response following Maduro’s capture.

A foreign business executive, who requested anonymity due to the sensitivity of the matter, voiced concerns that the U.S. might leverage the situation in Iran to postpone the trip. "I worry the U.S. side might use Iran, if it’s going poorly, to delay the trip," the executive stated, adding that the risk of the trip falling apart appears to be greater on the U.S. side.

Prediction markets in the U.S. have reflected this growing apprehension. As of late Monday morning, Polymarket indicated a significant drop in the likelihood of Trump visiting China by March 31, falling to 42% from 83.9% on February 21. Bets on a visit by April 30, however, remained high at 81%. Kalshi also showed a slight decrease in expectations for a visit by 2027, though it still stood at a robust 91%.

While many analysts anticipate the trip will ultimately take place, navigating business dealings in China may prove more challenging for U.S. companies. A number of U.S. executives were expected to accompany Trump, a common practice for business delegations accompanying leaders on diplomatic visits aimed at fostering trade agreements. However, the current geopolitical climate appears to be making such participation less attractive.

"Prior to the attack on Iran, many American CEOs were already unwilling to go with Trump to China. Now the situation is even more tricky," commented an active member of the American business community in China, also speaking on condition of anonymity.

Neither the White House nor China’s Foreign Ministry immediately responded to a request for comment from CNBC.

Jack Lee, an analyst at China Macro Group, noted that China’s official statements thus far have exhibited an "unusually softer tone." He believes Trump will likely proceed with his visit but is closely monitoring whether Washington signals restraint on arms sales to Taiwan, a key point of contention in U.S.-China relations.

President Trump, in an interview with the Daily Mail, indicated that U.S. strikes on Iran could potentially last for four weeks. This timeframe, which extends into the planned start date of his China visit, was highlighted by Chinese state media. Yue Su, principal economist at the Economist Intelligence Unit, suggested that if the conflict escalates into a wider regional war beyond initial U.S. intentions, a delay in Trump’s trip is possible. Nevertheless, her base case remains that the trip will proceed as scheduled. She anticipates that Trump and Xi will likely engage in a phone conversation regarding the situation prior to the visit.

China is set to commence its annual parliamentary meetings this week, during which top diplomat Wang Yi is expected to address the press. In mid-February, Wang conveyed to U.S. Secretary of State Marco Rubio at the Munich Security Conference that the U.S. and China should collaborate to expand areas of cooperation. Beijing has consistently prioritized its national interests by fostering bilateral relationships and encouraging multilateral engagement. Official communiqués following past U.S.-China meetings have emphasized the importance of creating conducive conditions for the development of bilateral relations.

Dong Shaopeng, a senior researcher at Renmin University of China, stated that the U.S. actions in Iran have undermined trust between the two nations. While he still expects the Trump-Xi meeting to occur, he expressed hope that the conflict does not spread to other Middle Eastern countries.

A state-affiliated Chinese columnist, writing under the pseudonym "Niutanqing," described the Iran conflict as more intense than the situation in Ukraine, drawing several lessons from the recent events. According to a CNBC translation of the post, the columnist suggested that Khamenei’s death exposed the potential for internal betrayal and that negotiations might be used to mask an adversary’s true intentions.

Should the Trump-Xi meeting proceed as planned, it could present an opportunity for broader peace talks and a chance to address the strained U.S.-China relationship. Gary Dvorchak, managing director at Blueshirt Group, commented that the U.S.-China trade issues are significant, and the meeting has been in the works for a considerable time, making cancellation a "radical" step. He believes that canceling the meeting would not be beneficial for the current situation.