Blain’s Morning Porridge, May 15^th 2026 – What did we learn from the Beijing show?

“He was a gentleman on whom I built an absolute trust.”

Trump has told us how fantastic the Beijing summit was – but what is the truth? China and the US agreeing on trade and growth over conflict is positive. They will remain polite to each other, but the struggle for hegemonic power will continue. Xi may be betting the state of the US economy, and the mistakes in Iran, means Trump will become less relevant from November.

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Who won?

While Trump and Xi, the two most powerful men in global history, mansplained their visions of new World order to each other, and their supporting casts of minions, (lots of US business leaders expecting to go home with deals), bobbed their heads up and down in agreement… the UK’s Guardian newspaper noted not a single woman was sat at the negotiating table in Beijing. She-who-is-Mrs-Blain rolled her eyes in surprise that I thought it even worth mentioning… she’s a true-blue conservative, but can’t understand why any American woman would vote for THAT man.

What did the market make of it all?

The US stock market soared on AI IPO expectations while bonds crashed on rising inflation concerns due to the Iran war. Boeing, apparently according to Trump, clinched an order for 200 planes, its first China order in 9 years. The stock promptly slid 4% – because 200 planes is a smaller number than the 500 mega-order the President had been touting. It’s the kind of order a second tier Gulf State might wave around as proof of its adoration of the US regime’s benevolent leader. 200 planes that won’t be delivered for years is not a game changer.

Trump and his entourage were hoping to come away with a raft of “deals” to boost the president’s reputation ahead of the mid-terms. No doubt deals to export more soyabeans and maybe some oil will follow to ease the road to a Washington summit later this year. That’s one way to keep the peace – keep the leaders dancing round each other.

The bottom line is it’s too early to say what the summit achieved. It was stage-managed to the Nth degree. Trump behaved himself and did not react to the Emperor Xi presenting himself and China as not only the USA’s equals, but in many cases treating Trump as the supplicant in need of guidance. Trump did not cave to Chinese pressure to back away from implied support for Taiwan, and Xi said positive things about Iran. (No doubt he was thinking to himself – there was no Hormuz problem till this FF declared an unwinnable war.)

The bottom line is both China and the USA needed the Potemkin summit to look like a massive success.

Xi needs global trade to drive stuttering domestic employment to avoid the Iron Rice Bowl construct unravelling – whereby the Chinese people expect Peace, Prosperity and Full Bellies in return for allowing the CCP to rule them. China has been described as the ultimate Ponzi – its needs global trade to thrive, it needs to thrive to avoid internal dissent, but every trade costs the state more to subsidise, and makes its trade counterparties weaker. The collapse of the housing bubble has dented confidence. To realign the China machine to domestic consumption before its export economy consumes itself would require massive investment in a welfare state – which China’s broken and enormous regional debt model can’t finance – except by expanding global trade. Doh.

The strength of the US is its mastery of technological evolution and capital markets to finance growth. For decades as the global hegemon US success came on the back of its all powerful tech firms and banks exploiting markets to supply its raw materials and adopted its methodology, structures, and culture – its allies and adulators adopted US market capitalism. Today US firms are worth multiples of the rest of the world – and own much of it. But the US model is in danger because wealth has chased production from its shores, resulting in divisive political polarisation and inequality exposing just how venal and unjust an economy the USA is in danger of becoming.

That was one aspect of the Beijing summit – watching the world’s most powerful autocrat wondering how his nation becomes as powerful economically as America, while the world’s most wantabe Autocrat wonders how to become as powerful as Xi.

There was clearly calculation at play. Xi can’t afford the economic damage an invasion of Taiwan could do to the Chinese economy. Trump can’t afford military engagement – US forces performed well in Iran, but their armoury is depleted and much of their hardware is tired and need in of service. Finding two carrier groups to defend Taiwan today would be an enormous ask.

It leaves the rest of the world wondering where to turn – and how this plays out. And that’s where the US economy and the November Mid-terms get interesting.

We always thought the truth of US elections is “it’s about the economy – stupid”. The classic Jimmy Carville quote is about how individual voters respond to the financial situation around them, and who they blame.

At the moment, Donald Trump is in a horrible place from any economic perspective. At $4.50 a gallon US gas prices are 50% higher than they were pre-Iran ($3.00). That means the average American is paging $50 more every time they fill up their Ford F-series. Food inflation in the US is running close to 4% – the highest since the Ukraine shock. Energy and utilities inflation is nearly 5.5% since the start of the Iran war. These things matter to the average voter because 67% of American’s live pay-check to pay-check to pay of debts, loans, housing and food (according to Investopedia), and now have to find more to pay for healthcare. There is the widespread expectation that AI is about to trigger a massive series of job losses across professional classes in the US.

Yet, there is also enormous political polarisation. At the moment the biggest debate in the US is around the Gerrymandering of Congressional seats ahead of the Midterms in November. It means redrawing electoral districts to ensure minorities don’t win representation – both Democrats and Republicans are doing it… Being Americans they scream loudly when the other side does it, but that justifies them doing it as well. An American chum reckons the current Gerrymandering of Virgina seats is creating such political bitterness it could trigger Civil War in the state!

There are a large number of Americans who profoundly believe that Trump is doing the right thing by shaking up the conventions of the state. Getting things done by bypassing the procedural gloop of the legislature has been “invigorating”, but as we’ve seen in the economic consequences of the War in Iran, dangerous when done without forethought.

At present Trump is struggling in the polls. There is at least a 50/50 chance he loses majorities in both House and Senate – meaning he becomes a lame-duck for his final two years in office. Voters give him massive negative marks on inflation, the economy, immigration, Iran, the breaking of alliances, and healthcare.

I wonder what Xi was really thinking in Beijing? Patience is not a Trumpian virtue. Was Xi thinking about Sun Tzu who said: “he who is prudent and waits for an enemy who is not, will be victorious.”

Out of time, and have a great weekend

Bill Blain

Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital

The Battle For Hamble is a proper grown-up examination of how bureaucracy has failed: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It explains how a wholly unnecessary Gravel Quarry will be dug in middle of a prosperous village – putting 6000 jobs at risk. The truth is no one wants gravel, and the quarry company understands it’s not what you dig out, but what you stuff back into a hole in the ground that matters. Gravel sells for £30 a tonne – Landfill earns £150 a tonne to bury. Go figure.