World leaders are arriving in San Francisco for the ongoing summit of the Asia-Pacific Economic Cooperation, or APEC for short. But all eyes will be on the US President, Joe Biden, and his Chinese counterpart, Xi, Xi. They are set to meet for talks on the sidelines. The leaders of the world's two biggest economies have a lot to discuss, not least their ongoing disputes over trade, technology, Taiwan, and the drug fentanyl. The BBC's James Clayton is in San Francisco and sent us the very latest.

Well, APAC has started here, and it's really a huge moment for the city of San Francisco. It's the biggest summit to be held here, since the United Nations Charter was signed here in 1945. This is really a huge economic summit. You're talking about more than 50 % of all of the world's trade belongs to the 21 nations who will be attending here this week. And we're talking about 40 % of the world's population, by the way. So it's a big economic conference, but by far the biggest ticket item here is the meeting between Joe Biden, President Biden, and his counterpart in China, President Xi-Jin-Ping. Now, relations between those two nations have not been particularly good of late. They last met last year in Indonesia, and since then, you had that moment where the American government shot down a Chinese spy balloon. You've had flaming tensions in the South China Sea, and you've also had Joe Biden ramping up a ban on high-level chips, which really hurts the Chinese economy. So diplomatic tensions between those two countries, but there has been a thawing in recent times, and there have been a number of discussions recently. Now, there is no real indication that any high-level agreements will be made here this week, but there are hopes that at least the country's militaries between China and America will actually begin speaking again.

And there might be some announcements around things like artificial intelligence and the production of fentanyl. A lot of the fentanyl on the streets of San Francisco actually comes from China through Mexico, and across the border. There might be a few things that the two countries can agree on, but I think there isn't much hope from what I can see that there's going to be any high-level diplomatic agreement here.

James Clayton there in San Francisco. Well, after months of buildup at lower-level meetings, but disputes rumbling on in the background, this is quite a moment. Katie Russ is professor and chair of economics at the University of California, Davis. She told me there is a lot on the table to discuss.

I think we saw the beginning of a thought with Secretary Yellen's visit to China in July, and hopefully this meeting will build on that. It's four hours long as opposed to the last meeting between the two leaders, which is three hours long. So all of this bodes well.

Even so, though, on the eve of it, we heard comments from Joe Biden saying China has real problems. That feels like it's not off to a great start before they've even sat down.

Yes, there's always some posturing. But I think at this point, China is still suffering from a hangover, an economic hangover, I should say, after the prolonged lockdowns and is really looking for ways to stimulate their economy. The US is overheating to some degree. I mean, we actually nearly hit China's own growth target ourselves with 4.9 % growth in the last quarter this year. I think there are some opportunities here for both countries to seize on a thought. It would be helpful if the US were able to use some of these economic levers to try to gain additional partnership for at least less confrontation from China in issues such as the conflict in the Middle East and the Russian invasion of Ukraine.

Well, of course, the two superpowers do have that influence, the responsibility on the global stage as well. As you touched on there, I'd imagine those topics will come up, and they are very important, too.

Absolutely. We're already seeing talk of an agreement to limit use of AI in military applications, especially controlled nuclear weapons. There's talk of a deal on fentanyl trade to cut down on that. You just heard an announcement in the last few hours about agreement to resume climate talks. All of this occurs in the context of continuing trade tensions. As was mentioned, the US has not lifted the Section 301 tariffs on Chinese goods. We continue to limit exports of semiconductors to China in some key ways. So it's not a panacea, but just this thawing, this continued conversation about this warming of talk about the economy, climate and other issues is a significant advance, I think.