While the US-Iran conflict is still the main event for markets, this week will feature a bit of a sideshow and distraction. That as US president Trump is to make a trip to China from 13 to 15 May, at the invitation of China president Xi Jinping.

The trip will mark the first visit to China by a US president since 2017 and comes after heightened trade tensions between the two countries after the tariffs war last year. The visit was supposed to take place earlier this year but was delayed a fair bit by the war in the Middle East.

The US camp has called this a “visit of tremendous symbolic significance”, as Trump will be greeted with a welcome ceremony on Wednesday evening before a bilateral meeting with Xi on Thursday. After that, the US president will be visiting the Temple of Heaven in Beijing before attending a state banquet. And then on Friday, Trump and Xi will meet again for a working lunch.

The backdrop ahead of the summit is still one that reflects more cautious and nervous energy for the most part.

As a reminder, we’re still coming off the back of an intense tit-for-tat spat between the two countries on the trade front last year. That came after Trump decided to ramp up tariffs against China, which caused Beijing to retaliate to the point where trade conditions came to a brief halt at one point.

So if you’re expecting some grand trade deal between the two sides this time around, you’d probably not want to hold your breath in waiting on that. Any big gestures from either side will be one largely for show, with the meeting this time around set to be one to reflect more stabilisation in geopolitical ties between the US and China.

There will be plenty of things up for discussion, ranging from trade issues to rare earth minerals and then to geopolitical concerns involving Taiwan and of course the situation with Iran right now. You can bet that Trump will want to try and push Xi to force Iran to turn the other cheek. However, I can imagine Xi just nodding to appease Trump but then letting things be for the most part.

Besides that, there should be some arm twisting on key technology and AI as well as push for Beijing to step up agricultural purchases (and maybe Boeing airplanes). The latter will of course be part of a goodwill gesture of sorts to put a bow tie on the meeting, but don’t expect that to change the current trade dynamics in the big picture.

In short, there will be a lot of “winning” to come from the summit but it is very much just a facade. Come what may, the fact that there won’t be any further escalation to trade tensions will be the key takeaway for markets. And it is one that I reckon traders and investors will be happy to come to terms with for now.

That considering the US-Iran conflict is still brewing and looks set to continue for another few more weeks at the very least.

This article was written by Justin Low at investinglive.com.