Paulson: U.S.-China Summit in May Could Be Canceled Over Iran Tensions

Former U.S. Treasury Secretary Hank Paulson stated that a planned May meeting between U.S. President Donald Trump and Chinese President Xi Jinping may not occur if the conflict in Iran continues.

In an interview with FOX Business anchor Liz Claman, Paulson described the U.S.-China relationship as the most consequential bilateral relationship but noted a "huge trust deficit" exists between the two nations.

Context of the Remarks

Paulson, who served as Treasury Secretary from 2006 to 2009, made the comments during a televised interview. He indicated that the planned May meeting would hopefully be the first of four meetings between the two leaders.

Potential Impact of Iran Conflict

Paulson linked the potential cancellation of the meeting to the ongoing situation in Iran. He stated that Beijing has expressed increasing dissatisfaction with U.S. military actions in the region, suggesting this could affect diplomatic scheduling.

Assessment of U.S.-China Relations

Paulson provided an analysis of the current state of relations between the two countries:

• He characterized the nations as "intense competitors" in economic matters and "adversaries" on military issues.
• He described the economic relationship as one of "mutually assured economic disruption," noting that each country knows the other has the capability to take actions that would significantly disrupt its economy.
• Paulson stated that neither country can currently afford a trade war and that economic consequences would be widespread if tensions escalated.

"The economic relationship is one of mutually assured economic disruption."

Expectations for the Planned Meeting

Should the meeting proceed, Paulson predicted its focus and potential outcomes:

• Focus: He predicted the emphasis would be on stability rather than achieving a major diplomatic breakthrough.
• Format: Paulson suggested the meeting would likely include ceremonial welcomes and symbolic gestures from the Chinese side.
• Proposed Mechanisms: He stated the discussions would likely center on establishing practical mechanisms in three areas:
  1. Managing trade to prevent escalation.
  2. Facilitating cross-border investment.
  3. Creating what he termed "guardrails" to help each country understand the other's limits or "red lines," with the goal of enabling competition while avoiding a trade war.