Tactical stabilisation, not a reset: what Xi and Trump are actually doing
Washington is convinced it is winning. So is Beijing. Both cannot be right, and the more interesting question is what happens when one side's expectations begin to unravel. This has been the thread running through my work on US-China relations over the past year.
Read my commentary ahead of the Beijing summit here.
Managed rivalry, not a grand bargain
When the Trump administration took office in January 2025, it misread China. Beijing's restrained response to the export controls imposed in the final months of the Biden administration was taken as evidence that China was unable or unwilling to retaliate — that it held, in the President's phrase, no cards. In fact Beijing had deliberately held its most comprehensive instruments in reserve. In May 2025, within a single afternoon, the White House reversed that assessment and began to look for a truce.
That reversal explains a great deal about what followed. Trump views China in commercial and transactional terms rather than through the prism of long-term strategic competition, and Beijing has adjusted accordingly: a mix of economic inducements and coercive leverage is the most reliable way to move this American President. The Busan agreement of October 2025 eased market pressure without resolving anything. Tariffs were reduced and suspended, rare earth export controls were shelved for a year rather than withdrawn, and the underlying disputes over industrial policy, technology controls and strategic mistrust were left untouched. The suspended controls are due to return in early November 2026 unless both sides extend the arrangement.
The Beijing summit in May followed the same logic. Beijing could stage the visit to give Trump the optics of success, and Trump could describe it in superlatives. In substance it was about managing tensions. Neither side was ready for a grand bargain; neither wanted a breakdown that would damage an already fragile global economy.
What has changed is what Washington now wants from the pause it bought. The original objectives — protecting US industry, attracting investment, securing greater access to the Chinese market — have gone nowhere. The administration cannot even replicate the limited agreement of Trump's first term. Its ambition has narrowed to buying time to reduce the dependence of the American defence-industrial base on Chinese critical minerals. Even that more modest goal is unlikely to be achieved within the time available.
Two capitals, two victory narratives
Washington's confidence rests on a zero-sum reading of the competition: an economic system it considers more efficient, rapid progress in artificial intelligence and its spillover effects into manufacturing, and innovation driven by military build-up.
Beijing's confidence rests on a different calculation. It assumes the United States cannot quickly decouple from Chinese refined critical minerals or low-cost electronics manufacturing. It regards its state-directed push across everything from 6G to AI, and its competition for talent, as conferring a long-term advantage. That confidence persists despite severe domestic economic weakness — low consumer demand, high unemployment, a growth model still dependent on exports.
Increasingly, Beijing frames the contest not as a bilateral scoreboard but as a competition for support among third countries, in which the decisive variable is which side makes more mistakes. The United States is currently seen as the disruptive and revisionist power, and Chinese diplomacy has been given room to expand accordingly. There is some awareness in Beijing that Chinese overconfidence could itself become the mistake that matters.
Where Europe fits
Both capitals reach a similar conclusion about Europe from opposite directions.
In Washington there is a bipartisan view that Europe is incapable of dealing effectively with the China challenge. Cooperation to build trusted markets of scale in critical minerals and advanced technologies is considered useful in principle, but Europe is widely thought unwilling to act. What transatlantic cooperation remains realistic therefore sits below the level of headline politics — between ministries, and with Congress, on whole-of-society resilience, research security and technical standards. Ideological differences set clear limits on anything more ambitious.
In Beijing the reading is that the EU is too divided and too slow to respond to simultaneous shocks from Russia, the United States and the Middle East. The practical consequence is that coercion against Europe is seen as carrying little cost.
Neither assessment is primarily a statement about Washington or Beijing. Both are findings about Europe. The lesson is not that Europe should seek to be liked in either capital, but that credibility is built through demonstrated willingness to act, not through communiqués.
One related observation: it is tempting in Europe to read every American move through a China lens. Greenland and Venezuela are better explained by American domestic politics than by China policy. Europe has also communicated poorly. The deployment of European troops to Greenland was widely interpreted in the United States as a move directed against Washington rather than as a demonstration of European resolve to defend the Arctic — a failure of explanation, not only of perception.
What to watch
Whether the Busan truce is extended before it expires. Whether the two sides establish crisis-communication procedures for naval and air incidents, which would be the most durable outcome available. Whether consultations on AI safety open at all — the United States has shown little interest, and Europe, which shares many of the underlying concerns, lacks the trust with Beijing to substitute for it. And Russia, which remains the wild card in the choreography between the two leaders.
I have discussed these questions in a lecture at Stockholm University on 28 January 2026, at a workshop on transatlantic technology cooperation on China at the Penn Washington Centre on 14 January 2026, and in a webinar of the University of Pennsylvania on transatlantic perspectives on China on 6 February 2026.
Read my commentary ahead of the Beijing summit here.