What Changed After the U.S.-China Summit?

Our Deputy Global Head of Research Michael Zezas explains why the recent U.S.-China summit may have eased near-term risks, without changing the bigger picture for investors. Read more insights from Morgan Stanley. ----- Transcript ----- Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's Deputy Global Head of Research.  Today, we're talking about what investors should take away from the recent U.S.-China summit.  It's Thursday, May 28th at 10:30am in New York.  It's been two weeks since the much-anticipated U.S.-China summit, where Presidents Trump and Xi met to discuss a wide array of issues in their relationship. Understandably, investors were watching carefully. The relationship between the two countries and its potential impact on global economic conditions has been a driver of markets at key intervals.  Brinksmanship around the trade relationship has been particularly noteworthy. In 2025, the level of tariffs substantially influenced macro markets, and export restrictions for semiconductors and rare earths drove volatility in key equity sectors such as tech hardware. Coming into the summit, the two countries had found a tenuous equilibrium, with the policy volatility of last year giving way to an uneasy calm this year.  So, did the summit change anything?  As best we can tell, not really. Some modest progress was made in lower sensitivity areas, but investors shouldn't confuse that with a durable reset in relations. The summit, in our view, points to a more managed relationship, not a fundamentally stable one.  Here's what investors should keep in mind. At the risk of stating the obvious, the concrete public policy choices of each country matter a lot from here. President Trump emphasized renewed investment in the U.S.-China relationship. That's good. Talking beats not talking. But the bigger issue is what happens next.  So far, we haven't seen broad language around joint efforts to establish trade and investment cooperation boards translated into workable arrangements; which if they materialized might hint at a more stable relationship So, net-net for investors, the summit is best understood as a continuation of the status quo, not a pivot. It may reduce near-term tail risks, which is sufficient to support the many other positive drivers pushing equity markets higher.  But it does not eliminate the structural forces behind U.S.-China competition.  That means we'll keep tracking this relationship as an economic and markets catalyst and keep you in the loop.  Thanks for listening. If you enjoy the show, please take a moment to rate and review us wherever you listen. And share Thoughts on the Market with a friend or colleague today.