A Trump-Xi Summit Won’t Defrost the US-China Cold War

No word, though, as to whether the idea has support from the administration’s China hawks, trade representative Robert Lighthizer and economic adviser Peter Navarro.

China, for its part, hopes the encounter will “provide an opportunity for both sides to ease…escalating trade tensions,” according to the Journal. Beijing may be betting Trump will be in a weaker bargaining position by late November if, as expected, the Republican Party loses its majority in the House of Representatives in upcoming mid-term elections.

China could be in a more vulnerable position then as well. Chinese exports surged to $34 billion in September, a new record. But many economists believe the increase was an aberration reflecting efforts to front-load deals ahead of trade tariffs, and expect China’s foreign trade—and its broader economy—to slow dramatically in the fourth quarter.

Already the trade war is claiming US casualties. Ford Motor Corp., whose CEO Jim Hackett said last week that Trump’s tariffs on imported metals have cost the company $1 billion, is reportedly preparing to layoff tens of thousands of US workers. In an interview with Fortune‘s Susie Gharib, United Technologies CEO Gregory Hayes had some blunt words of advice for Trump on the subject of tariffs. “Mr. President, these are a bad idea,” he said. “Tit-for-tat trade wars, nobody wins.”

Tensions between Washington and Beijing are roiling stock markets on both sides of the Pacific. A report released this week by Bain & Company finds that, in the first half of 2018, China’s outbound mergers and acquisitions plunged 61%, to $22 billion, down from $56.7 billion the same period last year.

It’s impossible to predict whether a Trump-Xi summit will lead to an abrupt thaw in the US-China Cold War. But given the length and breadth of grievances with China articulated by Trump and his advisors, such a breakthrough seems unlikely.

More China news below.

Economy and Trade

Stock reduction. As this week’s rout on Wall Street spread to global markets, China might have come off the worst. The Shanghai Composite index dropped 7.6%, plumbing depths not even reached during China’s 2015 crash. On Thursday, the tech-heavy Shenzhen exchange fell 6.5% while across China more than 1,000 companies dropped by the 10% intraday trading limit. Tencent ran a 10-day losing streak, possibly prompting it to delay the IPO of its music division. Meanwhile the yuan weakened to below 6.9 per dollar. Bloomberg

Nuclear fallout. The Trump administration has imposed stricter controls on the export of nuclear technology to China, having concluded that Beijing is attempting to appropriate the tech for military uses. U.S. officials claim recent actions by the Chinese government prompted a National Security Council-led review U.S. nuclear policy. The new rules include a presumption of denial for exports to state-backed China General Nuclear Power, China’s largest nuclear power company. Wall Street Journal

Too big to fail. China plans to add more name to a list of financial institutions it considers ‘too big to fail’ in a bid to prevent an economic crisis as the nation’s debt swells. Regulators will initially shortlist 50 of the country’s largest lenders, insurers and brokerages to designate as ‘systemically important financial institutions’. Firms on the list are subject to extra capital requirements and tighter rules on leverage. Bloomberg

CFIUS vs. China. As U.S.-Sino tensions escalate, the U.S. has moved to strengthen the powers of the Committee on Foreign Investment in the United States (CFIUS). Currently, CFIUS can only review and block proposed acquisitions of American companies. Under the new pilot scheme, to launch in November, CFIUS will be able to review any foreign investment in U.S. companies deemed relevant to national security. Reuters

Innovation and Tech

Hacking away. Last week Bloomberg published a sensational article alleging that Chinese spies had compromised a major supply chain of tech components in the U.S. by planting minuscule chips on equipment assembled for Supermicro. Companies implicated in the report, including Amazon and Apple, denied the claims. Bloomberg has stood by its reporting and this week detailed ‘new evidence’ supporting its original article. Meanwhile, U.S. senators have requested briefings on the matter from Apple, Amazon and Supermicro. Bloomberg

Blockchain by the sea. China’s first blockchain pilot zone was launched Monday at the Hainan Resort Software Community (RSC) industrial complex, in China’s coastal Hainan province. The zone aims to attract international industry talent and explore how blockchain can be applied to cross border commerce and other financial services. The RSC and the University of Oxford have opened a blockchain research institute in the special zone. TechNode

Rio dinheiro. Tencent is investing $200 million in Brazil’s fintech startup Nubank, valuing the company at around $4 billion and marking Tencent’s debut investment in Brazil. Nubank, founded in 2013, has issued 5 million credit cards and has registered 2.5 million customers to digital payment accounts. The Information

Alipay pilfered. Ant Financial says hackers have used identity data stolen from Apple to loot an undisclosed amount of money from Alipay accounts. Some Alipay users link their accounts to their Apple IDs, which is how the data breach has impacted both companies. Ant claims it is Apple’s responsibility to resolve the issue has warned users to lower their transaction limits. TechNode

In Case You Missed It

Exclusive: China taps brakes on outbound investment, betrays capital flow fears Reuters

Birth tourism: A suicidal nanny, an underground industry and three babies stabbed NYT

How the U.S. forced China to quit stealing – using a Chinese spy WIRED

Niu Technologies Files For $150 Million US IPO Seeking Alpha

Wife of Ex-Interpol President Says She's 'in Great Danger'  TIME

Hong Kong’s move against free speech Financial Times

Politics and policy

Trading blows. Secretary of State Mike Pompeo met with China’s Foreign Minister Wang Yi in Beijing on Monday, off the back of a trip to Pyongyang. At a press conference, the two diplomats traded unusually direct criticisms, demonstrating the dramatic deterioration of ties between China and the U.S. Wang Yi chastised the U.S. for “escalating trade friction” with China and rebuked it for engaging with Taiwan and criticising China’s human rights abuses. Pompeo told Wang Yi that the U.S. has “great concerns” about China’s recent actions. Reuters

Trump to meet Xi. The White House is arranging a meeting between President Trump and Xi Jinping on the sidelines of the G20 summit in November, with hopes of putting the spiralling trade war to bed. Wall Street Journal

New laws, old rule. Throughout the year, reports have emerged detailing how China is forcibly detaining members of the Uighur ethnic minority in “re-education centres” across Xinjiang, the semi-autonomous province in West China. This week, authorities in the province amended local laws to explicitly permit the government to “educate and transform” people in “vocational training centres”. China maintains its heavy-handed measures in Xinjiang are designed to tackle religious extremism and outbreaks of terrorism. SCMP

A spy on trial. Yanjun Xu, a Chinese intelligence officer, was arrested in Belgium and extradited to the U.S. to stand trial for economic espionage. Xu is accused of attempting to steal trade secrets from numerous companies in the U.S., including an aviation division of General Electric. The trial will be the first time a Chinese spy has been brought to the U.S. to stand trial in an open court. The proceedings could unveil more details about China’s methods for stealing trade secrets. New York Times

This edition of CEO Daily was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here.