Chips Out, Magnets In: Why Xi Is Coming to Washington
The first Chinese state visit in 11 years, on 24 September, exists to extend a trade truce that expires in November. Its currency is the AI supply chain: Nvidia silicon licensed east, rare-earth licenses dangled west, and a US mining trade that sells off when peace breaks out.
Vincent Jiangfour-minute read
A dinner table with the whole AI boom on it
Xi Jinping lands in Washington on Wednesday for a Thursday summit with Donald Trump, the first state visit by a Chinese leader in 11 years 1. The reported guest list for Thursday's East Room dinner is the story in one line: Elon Musk, Sam Altman, Tim Cook, Jeff Bezos, Jensen Huang and Sundar Pichai, alongside a Chinese trade delegation 2. The owners of the models, the clouds, the devices and the silicon, dining with the state that processes about 90 percent of the world's rare earths 3.
Both men need a truce more than a deal
Why Xi is here: the trade truce struck in late 2025 expires in November, and whether the leaders signal an extension is the summit's main business 4.
Xi arrives strong. China's global trade surplus is pacing above $1 trillion for a second straight year, more than half of the roughly 6,500 product categories China sells into the US have grown since 2025, and the 2025 US trade deficit with China was $202.1 billion 45. "Xi is not really looking for anything tangible," said Jon Czin, a Brookings analyst and former National Security Council China director. "He wants to extend the gentleman's agreement with Trump so that China has time to fortify itself" 4.
Trump, less than six weeks from midterms and at the lowest approval rating of his career, wants countable wins: Boeing orders and farm purchases 14. Treasury Secretary Scott Bessent called preparatory New York talks with Vice Premier He Lifeng on AI guardrails and non-sensitive goods "very successful," and a framework cutting tariffs on roughly $30 billion of trade is in play 42.
Chips go east, magnets come west
In late August, Trump opened a licensed path for Nvidia's−3.21% — Nvidia, down 3.21 percent today H200 to reach approved Chinese buyers, with Washington taking 25 percent of the sales revenue 6. ByteDance and Tencent have reportedly taken about 10,000 chips each, against reported demand potential of up to a million, while Blackwell and Rubin stay restricted and Beijing must still approve each purchase 6.
The minerals run the other way. China's rare-earth magnet exports to the US fell 21 percent in August to 512 tons, and are averaging about 504 tons a month this year against 621 in 2024, before Beijing imposed controls in April 2025 7. China hopes to offer more generous export licenses as a bargaining chip, people familiar with the matter said 7.
Peace, in this corner of the market, is a selloff
US rare earth equities price Chinese scarcity, so a thaw removes part of the reason to pay a premium for a Western substitute 8. On 4 September, MP Materials rose 4 percent on reports Chinese suppliers were refusing US shipments 9. On 10 September, thaw headlines knocked MP down 5 percent and USA Rare Earth 4 percent while the S&P 500 slipped half a percent 8.
Data
| Value | |
|---|---|
| MP Materials | -5% |
| Rare-earth ETF (REMX) | -5% |
| USA Rare Earth | -4% |
| S&P 500 (SPY) | -0.57% |
On 14 September, Beijing's threat to cancel the summit over an unsigned $14 billion Taiwan arms package took between 0.8 and nearly 2 percent off the group 3. The business underneath is real: MP's second-quarter revenue rose 89 percent to $108.5 million, and USA Rare Earth just broke ground on a $1.2 billion South Carolina magnet plant 8.
The ratchet a dinner cannot unwind
Chinese equities have drifted up into the visit, with the large-cap China ETFs FXI and MCHI each gaining about 1.5 percent 10. A truce extension lifts ADRs the way it lifts everything else, by removing the November cliff. What it cannot fix is the security ratchet: the FCC's covered list, the Pentagon's 1260H roster and the Entity List's 50 percent ownership rule keep expanding regardless of the toasts, and a former senior FCC lawyer argues the era of automatic access to the American market is already over 11.
Watch the arms package, not the toasts
Three tells. Whether a truce extension is announced before November 4. Whether H200 licenses ship at scale, which needs Beijing's sign-off purchase by purchase 6. And whether Trump signs the Taiwan arms package Congress authorized in January, the tripwire Beijing named for walking out 3. The rare earth tickers will read the outcome faster than any communique.
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More about NVIDIA
NVDAFiscal Q2 2027Revenue rose 106% to $96.2B, 92.5% of it from Data Center, “driven by the ramp of our Blackwell Ultra infrastructure”. Gains on equity stakes of $7.8B lifted net income to $59.7B.
Show as a table
| Line | Value |
|---|---|
| Revenue | $96.2B |
| Gross margin | 75.0% |
| Operating margin | 66.2% |
| Net income | $59.7B |
| Hyperscale | $48.7B |
| AI clouds & enterprise | $40.3B |
| Data Center | $89.0B |
| Edge Computing | $7.2B |
| Gross profit | $72.1B |
| Cost of revenue | $24.1B |
| Other income | $7.8B |
| Operating income | $63.7B |
| Operating expenses | $8.4B |
| Tax | $11.8B |
| R&D | $7.1B |
| SG&A | $1.4B |
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