Xi-Trump summit: China gains diplomatic leverage as US-China trade truce extends, Taiwan tensions persist

The Trump-Xi summit was a joust among equals. But China played more equal than the US. It was also a management class on how to maintain a low-level détente while both sides reduce vulnerabilities and gather leverage against each other.

Modest progress was made on trade issues, which helps Trump with the midterms and makes Xi look reasonable. The two agreed to reduce tariffs on $30 bn worth of goods, extend a trade truce by two months, set up a channel on AI safety issues, address rare earth supply chain issues and establish a Board of Investment. China will buy 10 mn tonnes of coal. The leaders also discussed Ukraine, Iran and Russia, but to what end is unclear.

Outcomes were thin — unless you count the weight of the pandas coming to Atlanta Zoo. In fact, so thin that the White House waited more than 24 hours to send a one-line readout. The Chinese readout, dense with details and laden with directives, was prompt. Cooperation should be the mainstay of the relationship, differences should be managed and competition kept within bounds for (what else?) win-win results. As they say, he who speaks first sets the tone, and he did.


Optics were important. Xi had insisted on a ‘state visit’ with all the pomp and pageantry. That the White House agreed was a win for him, and validation as a global leader both at home and abroad. The two men also needed to create political peace — Trump for a tough midterm election which Republicans may lose thanks to his trade and Iran wars, and Xi for next year’s ‘election’ for an unprecedented 4th term. Managing the US relationship well is crucial for power plays within the Communist Party.

If Trump was overly effusive throughout the 2-day affair, Xi was like a controlled experiment in a lab where disturbances are systematically neutralised. Having set terms and terminology for a relationship of ‘constructive strategic stability’ at the May summit — phrases conjured up by Beijing are designed to steer the other side — Xi fleshed them out this time. Red lines on Taiwan were sharper. China’s attempts to stamp the US relationship with Beijing-speak is diplomatic strategy to impose and constrain bilateral discussions. It came to the fore in 2013 when Xi proposed ‘a new model of major-country relations’ to Barack Obama. In other words, a ‘G2’ by another name. It may have seemed like grasping at the time. But not anymore.

Today Xi acts like G1. Notice the language used on Taiwan. He advised Trump to ‘adhere to the correct position of opposing Taiwan independence.’ Meaning, the current US policy that allows for ambiguity was insufficient. Since Trump has already paused the second arms package to Taiwan ($14 bn) in deference to Xi, and against the wishes of the US Congress, the Chinese leader pressed for more. As Brett Fetterly of The Asia Group commented, ‘China feels pretty good about the way the Taiwan conversations are going right now...’

The age of containment is decidedly over, and the importance of the IndoPacific in US policy as a key theatre appears to be declining. But US-China competition continues to boil below the surface in a few select fields such as AI. The movie is not over. Xi wants Trump’s MAGA movement and his call for the ‘great rejuvenation of the Chinese nation’ to reinforce each other. Talk is easy for Xi. He has the upper hand, decisive leverage, monopolistic control over critical minerals, domination of key supply chains and a longer political life. He came to Washington fortified by the recently held SCO and BRICS summits where he presented China as a stable alternative to an unreliable US.

Trump, on the other hand, has fewer options to force outcomes he wants for unhappy farmers and US companies under Beijing’s pressure. He wants China to stop helping Iran and Russia with intelligence and equipment. But that’s a bridge too far. A king’s welcome was meant to soften Xi. But Chinese leaders don’t operate that way.

In his very first remarks on US soil, Xi repeated his warning about the ‘Thucydides trap,’ a theory that war can result when a rising power challenges a reigning power. He suggested their militaries hold regular dialogue and improve crisis communication and prevention mechanisms. The Pentagon will likely take him up on that.

Trump and Xi will meet again at the Apec summit in Shenzhen and for G20 in Florida. The frequency is unprecedented, and somewhat alarming for Indo-Pacific countries, including India, which neither wants a US-China confrontation, nor a condominium of the two.