When Chinese president Xi Jinping and his wife Peng Liyuan arrive at Andrews Air Force Base on Wednesday evening at the start of a state visit to Washington, Donald Trump will be on the tarmac to meet them. It will be the first of many gestures of respect the US president will make over the next 48 hours, including a ceremony on the White House lawn with almost 500 service personnel and a flyover by a B2 stealth bomber and four F-22 Raptors, as well as a state banquet on Thursday.
It will be an impressive display for the leader of a country that was locked in a trade war with the United States last year and which remains subject to sanctions, export controls and punitive tariffs. It reflects Trump’s recognition of China as a peer power to the US and one he cannot bend to his will.
This will be the third time Xi and Trump have met in less than a year and top of the agenda will be the trade truce they agreed last October in the Korean city of Busan, which is due to expire in November. That deal saw the two sides agree to lower tariffs, with China pledging to lift export restrictions on rare earth minerals and magnets while the US reduced the number of Chinese companies facing sanctions.
In New York this week US treasury secretary Scott Bessent and his Chinese counterpart He Lifeng had talks that both sides said were constructive, but they failed to agree on the length of an extension to the Busan truce. Beijing wants to keep it going until the end of Trump’s term in office but Washington is proposing a six-month extension because it claims the Chinese side has not made good on its side of the deal.
RM Block
When Trump announced his “Liberation Day” tariffs in April last year, he imposed the steepest on China. When Beijing reciprocated, he added an extra 100 per cent so at one stage it reached 245 per cent. But while most of Washington’s trade partners capitulated, agreeing to unequal trade deals to lower the tariff placed on them, China hit back by introducing export restrictions on rare earths and permanent magnets.
“It turns out that these permanent magnets are essential inputs that go into making a car. They’re what make your seat go backward and forward, the window go up and down, the windshield wiper go back and forth. And China supplies 90 per cent of the world’s production of these things,” said Chad Bown, chief economist at the US state department under the Biden administration and the author of How to Win a Trade War.
“When China cut the world off, that nearly shut down automotive supply chains in the rest of the world. We’re talking about potentially millions of jobs in these just-in-time supply chains in North America, western Europe and elsewhere. So potentially hugely economically damaging, and obviously it could be politically damaging as well if that had continued.”
The US and its allies are trying to find alternative sources of the critical minerals and permanent magnets they import from China but they have not yet created a new source of supply. Bown believes that China’s near-monopoly on these products means that the most the US can hope for from this week’s talks in Washington is a continuation of the status quo.
One area where the US enjoys an advantage over China is in the advanced semiconductors used for the compute power that drives artificial intelligence (AI). The Biden administration saw restricting China’s access to the technology primarily as a national security imperative to ensure that Beijing remained a step behind in AI.
Trump has taken a different approach, approving the export of some of Nvidia’s advanced chips to China on condition that the US government took a cut of the profits. The most advanced semiconductors remain off-limits but the shift in approach suggests that the restriction is more a bargaining chip than a point of principle.
Bessent said this week that the US and China had agreed to set up a formalised dialogue on AI including an “incident line” to communicate about AI risk events.
“We want to start discussing protocols so both sides can agree on what the leading AI dangers are, whether it’s uncontrollable agents, whether it’s non-state actors in cyber or non-state actors in bio weapons,” he told CNBC.
“Have they had incidents? Of course, they’ve had incidents, but because of the nature and the lack of transparency in their system, they’re not going to tell us. But the Chinese models are very powerful, even though they’re open models. They are very powerful.”
When Trump and Xi met in Beijing in May they agreed to build what they called a relationship of constructive strategic stability, although the phrase is used more by the Chinese side than by the Americans. Before that visit, Trump spoke about China and the US forming a “G2” but Beijing is wary of such an idea, not least because it could alienate its friends in the global south and elsewhere.
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Former People’s Liberation Army colonel Zhou Bo, a senior fellow at the Centre for International Security and Strategy at Beijing’s Tsinghua University, is also sceptical about talk of a grand bargain between the US and China.
“If China and the US could have a grand bargain, on what issue? For the Chinese, of course, it’s the Taiwan issue. This is what we think about the most,” he said.
“But could China and the US really make a grand bargain on this issue? For China, this is an issue of principle. How can you bargain with the United States on an issue of principle? So this is a little bit difficult. And besides, there is a big trap here.”
Washington already says it does not support independence for Taiwan and many in China would like Trump to go further by declaring that the US opposes it. But Zhou argues that, even if the US president said he supported Taiwan’s reunification with mainland China, Beijing should be sceptical.
“But the question is, even if the American president is saying that, would that be reality? Congress, first of all, could do something to push back,” he said.
“And then after this president is gone, the next president could change his mind. So in the worst scenario, the United States could say to China, ‘I’ll give you more than what you want right now. What are you going to give me in return?’ So I don’t believe there is a realistic possibility for us to have this kind of grand reconciliation.”
During Trump’s meetings with Xi in May, he was careful to say little about Taiwan but speaking to reporters in Beijing and on his way home on Air Force One, he became expansive on the subject. He mused that the last thing the US needed was a war 9,500 miles away, noting that Taiwan was only 59 miles off the Chinese mainland, and he said he had not made up his mind about the next sale of weapons to the island.
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“No American president has said anything like that before and it’s not because Trump is simply exceptional. It’s because of the growth of Chinese strength,” Zhou said.
“Chinese strength has grown to the extent that for the first time an American president is asking himself this question, why? Why should I send troops to fight another country so far away?”
Trump has delayed approval of a $14 billion arms sale to Taiwan and Zhou believes Washington’s strategy is for fewer packages of weapons but bigger ones. But he warns that China, now almost equal to the US in many respects, has more means at its disposal to retaliate, including economic measures and more elaborate and intrusive military exercises around Taiwan.
“Eventually the United States will have to think about this. Is it really worthwhile, no matter how lucrative these arms sales are, if they would just invite the consequences that nobody wants to face,” he said.
Zhou believes that one of the ways in which the rivalry between Washington and Beijing is less dangerous than the cold war with the Soviet Union is that China and the US operate within the same international system. They are members of most of the same international organisations and despite the retreat of globalisation in recent years, both operate within the same global economic and financial system.
“At the moment, I don’t believe we have an ideological rivalry. Biden was the last president who championed this kind of ideological rivalry with his slogan, democracy versus autocracy. Trump would not give a damn for this kind of slogan, and no others would really follow that. So now that Biden is gone, which American president to come would talk about ideology as a rallying point?” he said.
“China talks about global governance and so on and so forth but we always stress that they are in line with the UN Charter. So China is not promoting any ideology or its own values overseas.”
