The annual APEC Leaders Meeting will take place this year in Santiago, Chile on November 16-17^th. This would provide an opportunity for President Trump and President Xi to meet in person and formally sign the agreement just reached in Washington. This impending face-to-face meeting between the Presidents raises the stakes considerably.

Chinese officials were by all accounts stunned by the failed Hanoi Summit between President Trump and North Korean leader Kim Jong Un last year and are determined to avoid the possibility of a similar “failed” face-to-face meeting between President Xi and President Trump.

This has a couple of implications. China will dig in its heels to keep the terms (and expectations) surrounding the agreement modest. This would lower the bar for sealing the deal and subsequently achieving compliance – while also limiting the fallout if things somehow get derailed.

For example, while the US emphasizes the extremely high dollar value of anticipated Chinese agricultural purchases, China has stressed that any potential purchases would have to be in line with economic need and WTO rules which limit market distortion and trade diversion (i.e. imports from other countries such as Brazil could not be disrupted). This will be very difficult to reconcile and is just one of the many details yet to be worked out.

If terms and expectations can’t be satisfactorily managed before Santiago, China could well conclude that no deal (or a further delay) is better than a deal that could potentially – and publicly – blow up.

To this point, and perhaps tellingly, official Chinese statements have attempted to tamp down expectations by omitting any reference to President Trump’s desire to sign an agreement in Santiago. In fact, China has been reticent on specific commitments from the agreement in principle, opting instead to refer to the “substantial progress” that was made during the Washington talks.

Where does all this leave us? Under the best circumstances, we’ll have an agreement in perhaps 5 weeks’ time that accomplishes little of substance other than forestalling one round of scheduled tariff escalation, but hopefully builds confidence. Under the worst case, a deal which appeared at hand (as was the case in May) will once again slip away, further eroding trust and momentum. Either way, the hard work of resolving the structural frictions between the US and China will continue to be a long-term endeavor.