Trump and Xi set to meet with unaligned priorities over handling of Iran war

China’s UN diplomat, Fu Cong, has said upcoming Trump-Xi talks will heavily focus on the Strait of Hormuz. He said it was “urgent” to get the strait open and running.

Fu Cong addressed the media after China took over the presidency of the UN Security Council for the month of May. He said the Middle East is the hot spot of issues and a top priority for the council.

On the Iran war, he said: “The most urgent issue is to keep the ceasefire. And the ceasefire needs to last, and there has to be a good-faith negotiation between the two sides”.

He said he was sure Hormuz would still be blocked when Trump visits China. Therefore, it “will be high on the agenda of the bilateral talks”.

Trump will visit China on May 14-15 if the passage stays shut. The plan was confirmed by the White House. It will be POTUS’s first visit to the People’s Republic of China in eight years. The talks would have transpired earlier, but got delayed due to the Iran war mess.

It’s unlikely the meeting would solve all the problems between Washington and Beijing. What matters more is whether it can help both sides handle their competition without things spiraling out of control.

Energy shocks hit global economy

The Hormuz shutdown has hit the global economy hard. About 20% percent of the world’s oil and gas normally moves through that narrow waterway. When the crisis peaked, it blocked around 13 million barrels of crude oil per day. Markets had to tap into reserves, and prices shot up fast.

The World Bank now thinks energy prices will jump 24% in 2026. Fertilizer costs are expected to climb 31%. That’s making inflation worse and slowing down growth in poorer countries.

For this reason, buyers are going toward alternatives benefitting China. Chinese energy products sales made $26 billion in March 2026. It is more than half of how it performed last year.

Trade fights between the U.S. and China have gotten worse over the past year. Tariffs on some goods reached 145%. Trade between the two countries dropped about 30%, and $130 billion worth of Chinese exports to America vanished.

China dealt with the hit by sending goods elsewhere. The country redirected about $55 billion in exports to Europe and other markets in Asia, the Middle East, and Africa.

The competition has spread to technology

A survey by the Center for Strategic and International Studies in March 2026 found that 56% of chip and tech companies now wait more than 180 days for export licenses.

A third of them wait over 300 days. More than half said they lost business because of the delays. About 62% saw relationships with customers suffer, and 58% lost clients to foreign competitors.

A survey by the CSIS China Power Project in 2026, led by Bonny Lin, found 57% of U.S. experts don’t think the relationship is getting more stable. Only 26% see improvement. Just 3% believe both countries will fully stick to their agreements.

Economist predicts pressure will force deal

Daniel Lacalle, a Spanish economist who manages almost €1 billion at Tressis Gestion, thinks the pressure on all sides will force a deal. Speaking on the MacroVoices podcast Thursday, he called it a “three-way standoff” between the U.S., Iran, and China.

Lacalle says Trump believes America can handle high gas prices because it exports oil. Iran’s Revolutionary Guard doesn’t care about hurting regular Iranians. China thinks its stockpiles of raw materials will protect it.

But the costs will eventually push everyone toward “an agreement that wraps the trade war and the Iran war” together.

When that happens and the strait opens, Lacalle predicts the dollar index will fall to 96. He also thinks oil prices have already hit their peak and will drop gradually, though they won’t return to pre-war levels.

Gold has fallen about 20% from its high earlier this year. Lacalle says that’s because traders unwound bets against the dollar when it started recovering as fighting began in the Gulf.

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