CNBC’s The China Connection publication: U.S.-China reset in 2026?

This report is from this week’s CNBC’s The China Connection publication, which brings you insights and evaluation on what’s driving the world’s second-largest financial system. You’ll be able to subscribe right here.

For somebody who’s witnessed the ups and downs of U.S.-China tensions for the reason that Nineteen Nineties, James Zimmerman is unexpectedly hopeful about 2026.

This yr, he is again for a fifth time period as chairman of the American Chamber of Commerce in China, whose members embrace Boeing and Cargill. His first stint got here in 2007 and 2008, when Beijing hosted its first Olympic Video games, and the monetary disaster hit a lot of the world. He later served once more in 2015 and 2016, as populist actions rose globally and gave Donald Trump his first time period as U.S. President.

Quick ahead a decade, and U.S. companies have endured every part from the pandemic to escalating tariffs. However the previous decade of what Zimmerman calls “experimenting with competitors” may now give method to one thing new, with Trump anticipated to go to China in April.

Listed below are the highlights of our dialog, with responses condensed for readability:

Why are you staying engaged at such a excessive stage, after almost 30 years in China?

The explanation I am concerned is as a result of I feel it is a essential yr.

2026 is essential, not simply because [it’s] the 250th anniversary of the U.S., however the U.S. and China have had 10 years of experimenting with competitors, experimenting with requires decoupling and de-risking.

Has that labored? Not likely. So it is now time to return and, in a manner that could be visionary, to get us again on observe to have ongoing dialogues, ongoing engagement, as a result of I feel, on the finish of the day, that will probably be in the perfect curiosity of the U.S. and China.

Are many U.S. firms decoupling from China?

No. We’re seeing an evolution. Persons are beginning to modify. For a lot of sectors, China continues to be a vital market. But it surely’s additionally a vital a part of the worldwide provide chain.

American firms are adjusting to this new regular inside the U.S.-China relationship. However there was some diversifying, and that is a wholesome technique that firms are , however we aren’t seeing wholesale decoupling in any respect.

It is essential that now we have senior–stage conferences that convey some readability, some certainty, some continuity to the connection.

Dialogue issues — even the smallest, optimistic alerts, on the presidential stage, on engagement are very, essential. Common, ongoing engagement helps cut back any potential misunderstandings and lowers the danger of sudden coverage shocks, just like the back-and-forth over tariffs.

What sort of alternative do U.S. companies have in China as home competitors rises?

We have now our white paper, which, in a manner, permits us to have interaction with the Chinese language authorities to hunt modifications which can be optimistic.

Safety of mental property is not only a difficulty for overseas firms. It is also a difficulty for Chinese language firms.

Each side must tone down the nationwide safety points and never view each slight as a nationwide safety matter.

We will not have an atmosphere the place each foreigner is focused as a possible risk. And that goes each methods: when Chinese language firms go to the U.S., we won’t take the view that it is a risk to the communities they need to function in.

Is the CEO of the China operations dropping affect on headquarters within the U.S.?

It is one thing that wants additional consideration post-pandemic. However that is one thing that’s only a circumstance, particularly given what came about throughout the pandemic, when journey got here to a halt.

However while you have a look at AmCham, the U.S.-China Enterprise Council and the Nationwide Committee for U.S.-China Relations, there’s now elevated curiosity in ensuring CEOs, educational leaders, in addition to congressional leaders, journey to [China to] perceive what the atmosphere is all about.

We attempt to encourage extra people-to-people exchanges. I will be out and about in the neighborhood, emphasizing the significance of training in addition to the humanities. For instance, I will a live performance on the Juilliard Faculty in Tianjin.

What’s in your agenda at AmCham China for 2026?

In some respects, we’re centered on April when President Trump is planning to return to China. We’re hopeful that AmCham will be capable to play a task in that. There’s a give attention to that, and I am certain there’s going to be a whole lot of work main as much as that go to.

There will be some agreements, some understanding, perhaps a memorandum of understanding that will come out of that.

We’re not anticipating a grand cut price. There simply is not sufficient time. It was final summer time, and we had been in the course of a commerce struggle. And solely since October, President Xi, in addition to President Trump, met in South Korea, have we began a course of [around] let’s meet, let’s discuss, let’s preserve partaking.

So I feel we’re heading in the right direction, however we’ll simply should see the progress between now and April. However we’re optimistic the alerts will come out optimistic. And once more, any stage of confidence that may be obtained from these conferences, I feel, is essential to the enterprise neighborhood.

A number of President Trump’s predecessors had been very visionary about what they seen as the way forward for U.S.-China relations.

And so, this yr, we’re hoping that President Trump may also be visionary and search to maneuver the connection ahead in a manner that mutually advantages each the USA and China, its firms, shoppers, employees and farmers.

Eurasia Group’s Xiaomeng Lu defined why China’s tech competitors with the U.S. stays intense, however argued that tech co-dependence might develop in 2026, pushed by easing export controls, cross-border offers, and the worldwide uptake of Chinese language open-source AI fashions.

John Lam, head of China and Hong Kong property analysis at UBS Funding Financial institution, defined why he sees a ten% decline in property costs and new house gross sales in China for 2026.

Evan Feigenbaum from the Carnegie Endowment for Worldwide Peace mentioned Venezuela is not a core curiosity for China, but when the U.S. had been to launch a second strike or a full-scale invasion, China would make “a whole lot of hay rhetorically about worldwide legislation.”

China condemns U.S. assault on Venezuela. Beijing mentioned it was “deeply shocked” by the U.S. strike on Venezuela Saturday and known as for the discharge of chief Nicolas Maduro and his spouse.

BYD tops Tesla worldwide. The Chinese language automaker formally offered extra battery-powered electrical vehicles than Tesla in 2025 — at 2.26 million items.

Chinese language firms hit Vegas. Many Chinese language humanoid robotic and client electronics firms are in Las Vegas this week to showcase their merchandise on the Client Electronics Present.

Onshore Chinese language shares edged larger Wednesday, holding close to four-year highs as Beijing continues to push growth of its synthetic intelligence sector.

Goldman Sachs expects China’s fairness rally to proceed into 2026, although at a slower tempo. The financial institution forecasts the MSCI China Index will rise 20%, whereas the CSI 300 is seen gaining 12%, after final yr’s 20% to 30% advance pushed largely by valuation enlargement.

Hong Kong’s Dangle Seng Index slid over 1%, pressured by losses in expertise and power shares. Alibaba fell 4%, BYD was down 3.38% whereas PetroChina retreated 3.15%.

Jan. 8: Chinese language AI firm Z.ai, previously Zhipu AI, to record in Hong Kong

Jan. 9: CPI and PPI for December

Jan. 14: Commerce information for December (anticipated)