The historic meeting between U.S. President Joe Biden and Chinese President Xi Jinping ended with few concrete details for businesses with China exposure. But as with many complex relationships, what was left unsaid perhaps was just as telling as what was communicated during the Biden-Xi meeting.
Wednesday's summit capped lengthy behind-the-scenes negotiations between the two nations, all aimed at cooling tensions between the two superpowers and re-establishing dialogue. The meeting took place near San Francisco, on the sidelines of the Asia-Pacific Economic Cooperation Summit.
The talks were particularly focused on re-establishing military communication between the countries. Tensions reached a new nadir in February after American officials alleged that a high-altitude object discovered over the continental U.S. was a Chinese surveillance balloon. Communications had previously been severed by China in retaliation for then-House Speaker Nancy Pelosi's visit to Taiwan.
Businesses and markets remain watchful for any changes in the relationship between the two superpowers, with ramifications for everything from artificial intelligence to business deals.
1. Semiconductors Watch For Control Changes
Investors are watching for changes to U.S. export controls on semiconductors, advanced computing and manufacturing. The controls, implemented in October 2022, coincided with new lows for shares of chipmakers like Nvidia and companies that make the tools needed for chip development like ASML. For its part, Nvidia has found a new workaround: The company announced a new series of AI chips aimed at the Chinese market that comply with current controls.
2. Artificial Intelligence's China Exposure
The thaw in relations from the Biden-Xi meeting could also change the outcome of artificial intelligence developments. A shift in export rules for semiconductors could shape the development of new, AI-dependent technologies like ChatGPT — which requires fast, modern processors. Meanwhile, cooperation on guardrails in developing the technology could hamper the progression of generative AI trained on real-world examples.
3. Shifts In Production Centers
Companies with China exposure are also watching for whether the thaw in relations heralded by the Biden-Xi meeting is here to stay. Apple and Nike are among the major corporations forging ahead with plans to rely less on China for manufacturing. By moving production to neighboring countries like Vietnam and India, the companies hope to insulate themselves from any future shifts in the relationship between the two countries.
4. Deals With China Exposure Hope For Approval
Business deals also hang in the balance. Meta recently secured a deal in November to sell a version of its VR headset in China, marking the company's first return to the country in 14 years. Investors continue to bet on whether China will indeed resume purchases of Boeing's 737 Max after the jetliner was grounded following several fatal incidents. And Broadcom is hoping its deal to purchase VMware gets the green light from Chinese regulators.
Follow Mike Juang on X, formerly Twitter, at @mikejuangnews.
