US Public Policy / China Economics & Equity Strategy: US/China Summit: Managing the Relationship

Research evidence excerpt

US Public Policy / China Economics & Equity Strategy: US/China Summit: Managing the Relationship

Global Idea

May 18, 2026 12:36 AM GMT

Morgan Stanley & Co. LLCMUS Public Policy / China Economics & Equity Strategy Ariana Salvatore

Equity Strategist

US/China Summit: Managing the Ariana.Salvatore@morganstanley.comMorgan Stanley Asia Limited+

Laura Wang

Equity StrategistRelationship Laura.Wang@morganstanley.com +852 2848-6853

Robin Xing

The Summit yielded the “Limited Truce+” outcome with modest Chief China Economist

Robin.Xing@morganstanley.com +852 2848-6511

trade, investment measures, and selective cooperation in low- Zhipeng Cai

sensitive areas agreed. The multi-year framework helps anchor Economist

Zhipeng.Cai@morganstanley.com +852 2239-7820

investor sentiment and benefits certain industry exposure.

External uncertainty reduced but growth upside limited.

US Public Policy: The Summit resulted in a “Limited Truce+” scenario,

characterized by selective and structured cooperation between the US and China.

While the agreement included incremental trade and investment steps, such as the

establishment of Boards of Trade and Investment, it fell short of a comprehensive

settlement in line with our expectations prior to the summit. Deeper structural

issues remain unresolved in the near-term, as we expect both sides continue to

manage the relationship's mutual supply chain dependencies. Ongoing consultation

and future technical work were emphasized, highlighting managed competition and

controlled disagreements rather than explicit resolutions to harder issues.

China Equity Strategy: The Summit's outcome provided procedural upgrades that

suggest more stability but do not represent a transformative breakthrough that

could bring significant geopolitical risk premium down.