Specialty · U.S.–China Diplomacy

U.S.-China Diplomacy Is Alive With “The Sound of Music”

At Xi’s state banquet last week, Trump heard the Chinese military band play “Y.M.C.A.” Then it played “Edelweiss.” The Sound of Music has been a fixture of U.S.-China diplomacy for decades. What that signals about the actual trade deal.

Hannah Miao / WSJ · Reframed for the CW book

Hannah Miao wrote one of the more unexpected front-page pieces of the week: songs from “The Sound of Music” are a standard of U.S.-China diplomatic protocol. At Xi Jinping’s state banquet for President Trump last week, the Chinese military band played both “Y.M.C.A.” (apparently a Trump favorite) and “Edelweiss.” Trump, more of a “Phantom of the Opera” fan, didn’t react.

The cultural detail matters more than it sounds. “Edelweiss” is taught in Chinese schools, sung in karaoke bars, and played at state functions. It’s also written in the style of an Austrian folk song that the Chinese diplomatic corps has decided is a safe, mutually understood reference point.

What The Summit Actually Delivered

Underneath the cultural detail, the Trump-Xi summit produced real deliverables:

China agreed to buy 200 Boeing (BA) aircraft.
China is resuming imports of some U.S. beef products.
Both sides agreed to a framework for reciprocal tariff reductions, covering at least $30 billion of goods on each side.
The EU separately advanced its own U.S. trade pact this week, removing some tariffs on U.S. imports.
Tesla (TSLA) just received approval to launch Full Self-Driving in China — an unlock that came directly out of the diplomatic thaw.

Those are concrete numbers, not narrative. Boeing (BA) is in our book. Tesla (TSLA) is in our book. We benefited.

The China-Exposure Read-Through

The China-thaw is at the same time being matched with a Russia-China alignment story (Putin visited Beijing the week after Trump’s trip), which is a defense-positive setup, and a Cuba-confrontation story (the U.S. is calling Cuba an “unusual and extraordinary threat”), which is a Latin-America-volatility story.

Our defense sleeve — Lockheed (LMT), Northrop (NOC), General Dynamics (GD), Raytheon (RTX), Boeing (BA), Palantir (PLTR) — benefits from both stories simultaneously. The China-thaw doesn’t reduce defense spending. It just gives us better Boeing earnings.

For Clients Watching China

For accounts with explicit international or emerging-markets exposure, the China sub-thesis is improving. We don’t hold mainland Chinese securities directly. We hold the ADRs and single-country ETFs that give us cleaner governance — Taiwan Semiconductor (TSM), ASML in the Netherlands, Coupang (CPNG) in Korea. That stays unchanged.

If you’re a CalSTRS or CalPERS member with a 403(b) Vanguard menu, the international index allocation (typically VTIAX or similar) has 30%+ China exposure. That’s indirect China. Most clients have more China exposure in retirement accounts than they realize. We talk through it every Q1 review.

Book Impact · What It Means For The Portfolios

The Trump-Xi summit deliverables flow directly into our book: BA gets a 200-jet China order, TSLA gets FSD approval in China, and the broader EU-US trade detente reduces tariff-risk on EU multinationals we already hold (ASML, NVO, SAP). Defense remains overweight because the Russia-China alignment story is separate from the U.S.-China trade detente. Both can be true at once — and our book is positioned for it.

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