This is One Thing, I'm David Reind, and President Donald Trump is heading to a changed China, changed in part thanks to him.

Chinese people see Trump as actually helping to build China.

The war with Iran could complicate things even further. That's after a quick break. Stick with us.

So, if you look at that, China, first row. China, 67 percent. That's tariffs charged to the USA, including currency manipulation and trade barriers. So, 67 per cent, I think, of the U.S.

'This was from April of last year, so-called Liberation Day, where President Trump raised tariffs on nearly every trading partner to historic highs. Trump said the massive tariffs he was announcing were in response to what other countries were doing to the U.S.

They never paid ten cents to any other president

And there was no bigger culprit in Trump's eyes than China.

I have great respect for President Xi of China, great respect for China, but they were taking tremendous advantage of them, of us, and I commend them for that. I say, hey, if you can get away with it.

The Supreme Court eventually struck down these tariffs and the White House eventually reached something of an economic truce with China during a meeting between Trump and Chinese leader Xi Jinping last October. Well, President Trump is meeting with Xi again this week, this time in China. And there are tons of pain points to discuss. Artificial intelligence regulations, semiconductor access, rare earth minerals, tensions with Taiwan. But the question is... Will any of those topics be top of mind with a Mideast war going on?

But I think that a discussion will be a little bit about energy and about the very beautiful country of Iran.

In fact, Defense Secretary Pete Hexess says he'll be accompanying Trump on the trip amidst a tenuous ceasefire. And the war with Iran has sent energy shocks throughout the entire world and further weakened President Trump politically at home. In fact a new CNN poll out just this week found that 77% of Americans, including a majority of Republicans, say that Trump's policies have increased the cost of living in their own community.

A woman in Ohio describes herself as a Republican and told CNN, quote, Me and my husband work 12 hour days, five to six days a week. And we have to decide if we're going to buy groceries or pay for gas. And a twenty something Republican in Georgia put it this way. I don't know how anyone from my generation will ever do anything except rent.

So what do both sides want out of this? And how will Trump be received in his first trip to China since 2017? Let's talk about how this is going to go. Simone McCarthy is CNN's senior China reporter. OK, Simone, so you live in and report out of Beijing. Can you just describe the atmosphere and the vibe there ahead of this visit?

Definitely. Beijing, as the capital of China, is obviously a place that sees world leaders come in and out. So it's often one of these things where you're like, am I going to be delayed by 20, 30 minutes on my commute because there's a huge motorcade coming through? People in Beijing are used to the hassle of these visits. But I think there's something a little bit different now. I think people are definitely interested in Trump. He's such a character on the world stage. And so I've seen, you know, videos posted on social media today. Of American motorcades going by, diplomatic motorcads and things like that. So there's like a sense of anticipation. The other thing too though is that people have been burned by Trump as well and by some of his policies.

What do you mean?

Well, you know, I mean, the first trade war was really hard for a lot of people in China.

The world's two biggest economies locked in a trade war with no substantial progress toward an end from either side.

The tariffs that came down on Chinese goods really hurt a lot of factories, a lot of employees. What do you think of the trade war? I think it's wrong. It's only about politics.

It definitely has a negative impact on the Chinese economy.

And so there's still an understanding that Trump was a president who really ushered in a period of more tensions between the U S and China.

The People's Daily newspaper wrote, quote, The U.S. Is unwilling to see China develop and prosper and then surpass it. No hardship has ever stopped China from standing up, growing rich and becoming strong.

'And so if you stop people on the street and just start talking to them about Trump, yeah, they're interested in him as a character, as this kind of larger-than-life figure who's different than a lot of other politicians on the global stage. But there's also a sense that he really kicked off this U.S.-China rivalry that neither country has extricated itself from since.

Yeah, I mean, obviously the trade war and all of those tensions would have been like top of mind and I imagine will still come up in the meeting. But I just wondering how much has the war with Iran kind of upended all of this?

'Yeah, the war is going to cast a long shadow over these meetings. And, you know, of course you remember that the meeting was originally postponed, right? So it was supposed to be at the end of March and then Trump postponed it as a result of focusing on the war. But I think for China at that time, it would have also been a little bit awkward to host this leader who has actively attacked a country that China is a really close partner with. I mean, China and Iran. A long-standing economic partnership, diplomatic partnership. China has basically ushered Iran into these international organizations that Xi Jinping has promoted on the global stage. It's very much part of this alternative world order of countries that are China-friendly that Xi has really carefully cultivated during his more than decade in power. And so kind of rolling out the red carpet at that time would have been a little bit awkward in terms of the optics for China. And I think it's really changed now. Of course, we're in a ceasefire. The conflict is not in the same kind of mode as it was at that time. But there's this sense that the United States has gotten itself involved in this conflict, which there's no clear end in sight, and it's caused this tremendous amount of turmoil on the global stage in terms of oil prices, real economic hardships, especially here in Asia among China's neighbors. And so I think the optics have changed a little bit because Beijing has that viewpoint and then. They're seeing that perhaps they actually have more leverage as a result of those optics and as a results of the fact that Trump is now in this difficult situation of how is this war going to end?

Yeah. Explain that to me. If China has been an ally of Iran now, is this a moment where Trump is going to be coming to China asking for their help to kind of get Iran to the table and really put this to bed? Like, how are both sides approaching this?

'You know, China certainly wants to posit itself as a potential peace broker in being a responsible major power. But at the same time, China is threading a difficult needle here because it has a lot of friends in the Gulf that are not Iran. Iran is a long-standing partner. And then there's also the US, which it wants to have goodwill. And it wants Trump to see that it's trying to make an effort towards this if that suits China's needs. But China's always playing quite a long game and they're not necessarily going to upend their own policy. In order to fix something that, in Beijing's view, the US is the one that broke.

It really has weakened Trump politically at home, especially on the economic side. So I could see it being beneficial for China to have the war continue and have Trump weakened. Like, is that part of the calculation too?

I think that's a little bit of both sides of that, David, because on the one hand, there is this sort of conventional Western wisdom that every time that the United States is tied up somewhere else in the world militarily, that that's beneficial for China because that means that the U.S. Resources are diverted, U. S. Doesn't have as much attention on Asia. And China very much does not want the U S in what it sees as its backyard in this part of the world. At the same time, China has its own reasons for wanting to see the war end. I mean, it's a massive export economy. And so, even if China's own preparations have made its energy security quite high, and it's not feeling the same level of shortages that other places around the region especially are seeing, it still very much has an eye on whether or not there's a major global economic slowdown as a result of this war. And then it's also dealing with rising fuel prices at home. So. I think it's pragmatic in how it's looking at this as well. And if I can just add one more thing, I mean, it's also that China's already kind of scored the win in the sense of the optics here. It wants people around the world to see it as a responsible global player and the U.S. As a bully. And that's been its line for years. And now, I think at least in Beijing, there's a sense that there might be a bit more openness to those optics, to that kind of messaging around the word.

Gotta take a break. When we come back, both sides have leverage in these talks. We'll talk about what that is. Stick around. Say more about how China has kind of dealt with the energy shocks from this war because we've heard about shortages in a lot of Asian countries and how that's really hitting people hard. Has it been as hard in China? And if not, why is that?

'It hasn't been as hard in China. And the reason for that is incredibly careful preparation on the part of the Chinese government. They are very concerned about energy security. That's been a real cornerstone issue for Chinese leader Xi Jinping. And so they've done a lot in order to diversify their imported oil, as well as ensure that they have more domestic supply. But it's really been about this early and major push into renewables. And so, I mean... Wind farms are sprawling across China, solar farms. I mean, it's just the level of renewable energy here and the production of renewable-energy capacity as well as hydropower is world-leading. But at the same time, oil from Iran actually makes up a very important part of China's energy mix. And that's also another feature in this larger nexus that we're talking about here, David, of what are China's interests when it comes to seeing the war end. And China really relies on that oil last year, made of about 13% of China's seaborne imports, but it's actually gone up in the past couple of months, analysts are telling me, as a result of the fact that crude from other parts of the world along the Persian Gulf is not getting through. And so basically China has a system where there's a number of independent refineries. Many of these are called so-called teapot refinerys because they're smaller and more basic. They're running in a province called Shandong, which is... A few hundred miles from here in Beijing. Security here is really tight. This is a facility which is sanctioned by the U.S. Government for allegedly importing Iranian oil. We did take a trip down to that part of the country just over the border in Hubei province to visit one of these sanctioned refineries recently.

They're just trying to block the camera, but it's...

The second we got there, there was just so much security on us and you could just really feel how much these sanction entities are aware that there's a spotlight on them right now.

Multiple ports south of me here, as well as across the ocean this direction, are believed to have continued to import Iranian oil throughout the course of the war.

And, you know, it was this specific facility that we visited was sanctioned last year and by all signs it was still operating. Now, I don't know what oil it was processing, where the source of that oil was coming from, but certainly what was clear was that the sanctions had not shut down that facility. And that's very much by design. These independent refiners actually run on, you now, broadly across this industry, they run on sanctioned crude. And that's coming from Venezuela, that's coming from Russia, that coming from Iran. They operate on super thin margins, but because they're able to get that oil at a discount, they're about to produce a tremendous amount of gas, of diesel that's going into the Chinese economy. And those are largely serving the domestic market. They're largely not plugged into the international financial system, unlike the major energy companies in China. And so that's how they're able to be somewhat shielded from the ramifications of these sanctions. But Certainly this is another lever that the US is using because we've seen them ramping up sanctions on a number of these entities in the lead up to this trip. And so I think that's another element that's really gonna be on the table that the U.S. Is trying to use as leverage against China, perhaps in order to make Xi Jinping more interested in talking to Iran and pushing forward a deal.

Oh, so it's like they come in and say, hey, we know that you have this sanctioned oil coming in. We don't like that. You got to help us out.

'I'm sure that that's a dynamic that Beijing is watching because, I mean, we even just saw on the eve of Trump's departure to come to China, another 12 entities and individuals were sanctioned in relation to the China-Iran oil trade.

What about the other issues that might have been really top of mind than the other time? Tariffs, artificial intelligence, the issue of Taiwan, are those still going to come up?

I think definitely. China doesn't wanna have this meeting overshadowed by Iran. Certainly China is happy to present itself as a peacemaker on the global stage and potentially they're interested in being involved in whatever kinds of negotiations go forward in terms of peace, but they really want stability with the US. I mean, that is a top priority for Chinese officials. This is the world's biggest economy. It's a major source of technology that China wants. It's the huge market that China wants to send its products to, including items like electric vehicles, which are currently blocked from the market. And so China will definitely look to keep issues like tariffs, issues like the technology controls that the U.S. Currently has on sending certain sensitive high tech to China. They will certainly look to keep those in the spotlight in the conversation. And for good reason, these are essential issues that China sees as important to ensuring its own rise.

And just to level set where we are in the tariffs trade discussion, where do things stand in that right now?

'Well, there was a major come down after she and Trump met in South Korea at the end of October. Now, I mean, it's just fascinating to me because as I was thinking about this conversation earlier today, I was like, if we'd been having this conversation a year ago, it would just be so different. Because if you remember at that time, it was like post-liberation day tariffs and China and the US were going tit for tat. And then China was. Ramping up their controls on critical minerals. And it was just, I mean, it seemed like a tinderbox where it just kept exploding when you thought it had stopped exploding.

We're in agreement on so many elements, large amounts, tremendous amounts of the soybeans and other farm products are going to be purchased immediately starting in May.

Now we're in a completely different dynamic where the two leaders came together on the sidelines of the APEC summit in Busan and South Korea.

And as you know, I put a 20% tariff on China because of the fentanyl coming in, which is a big tariff. And based on his statements today, I reduced it by 10%. So it's 10% instead of 20% effective immediately.

They came to an agreement to really dial down those tariffs as well as some of the controls that the US wanted to, the expansion of sanctions that the U.S. Wanted to put on Chinese companies. China also dialed back some of its more stringent rare earths controls, critical minerals controls. And so we've come to this more level playing field, this kind of detente, if you will. I mean, I think what happened was the United States didn't necessarily realize how... Significant of a Trump card China had when it came to the rare earths. And so China controls a vast amount of this supply chain. And so if you wanna negotiate with China and you wanna be elevating tariffs, then now the United States knows that China is very willing to play this card and other countries are aware of that too. And so, China I think came out of that feeling a lot more confident. And that confidence is something that China will definitely be bringing into the meeting this time around.

'And talking about investment and just broader relations between the two countries, the White House is inviting more than a dozen top business executives on the trip, like Elon Musk and Tim Cook, your mates-to-be-seen-if, you know, they'll all come. Is that a normal kind of situation for something like this?

I think there's more heavy hitters on that list than we're used to seeing, but you could look at it two ways. On the one hand, it's a sense of tech is an opportunity between these two countries. And I was looking through some of the Chinese media today and that was really how it was being spun there, the sense that, oh, the United States really wants to emphasize a tech relationship with China. And part of that is, oh, they see that we're making such significant advancements in technology, and so they want to make sure that they're able to partner with us. So that's kind of the read from some of the Chinese pundits. But on the other hand, it's also a show of force. It's interesting, too, that some of the players on that list are those that have significant business interests in China, like Elon Musk, who has his Tesla factory outside of Shanghai. So it's certainly a sign of... How closely related these two countries have been in past years and past decades on the business front.

I guess as we look at the totality of this relationship, Trump has certainly talked a tough game when it comes to China, but he's also, you know, really bragged about his relationship and his ability to kind of massage some of those tensions and be a deal maker like we know he likes to promote. I guess I'm wondering, how does China view Trump at this point? A friend, enemy, frenemy, something else?

'That's a great question. There is a phrase in China, which has been around since the first trade war, which is Chen Jingguo, which basically means Trump, the nation builder. And so Chinese people see Trump as actually helping to build China. And if you look at that, that's one of the things I've also been thinking about a lot with Trump coming this week is that he's really landing in a very different China than when he was here almost a decade ago. And the reason for that is that China has had incredible technological developments in that time. The country is a lot more self-assured in its place on the global stage and its cultural status globally. We also see kind of a more positive turn of public opinion in certain corners of the world, including the United States, according to certain surveys, towards China. And so it's really this sense that Trump in a way pushed China to do some of these things. If there hadn't been the trade war. If there hadn't been this tech war, then would China have really spurred its technological development so quickly? Would they have ramped up their export machine and diversified it in the same way? And those are really the pillars that are so critical to China right now and to its economic growth. And in some ways, you can link that back to the pressure that the first Trump administration put on the country.

I mean, that's really, really interesting. And I imagine if you put that framing to Trump and some of the China hawks in the Republican Party, they would not be too thrilled with that, right?

Yeah, probably not. But, you know, China loves a challenge and I think they really feel as though they've met that challenge. And we were starting this conversation talking about what's the mood on the ground. And if I had to summarize it in one word, I would say confidence.

Well, Simone, busy week ahead. Thank you so much for taking some time. I appreciate it.

Thanks so much for having me, David. It was such a pleasure.

That's all for us today. We're going to have up to the minute coverage of Trump's trip to China over at CNN.com. Go check it out. We'll be back with another episode on Sunday. I'll talk to you later.