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Welcome to The Geopolity’s What We’re Watching (3W), our daily look at the interconnected worlds of Geopolitics, Economics and Energy. Curated from the world’s leading sources of information, our analysis and commentary is designed to help you make sense of the events driving the major developments in the world.
Chinese president Xi Jinping concluded a high-profile, 3-day visit to US president Trump on Friday. Before reviewing the outcomes of the meeting, 3W notes that the major subjects, as far as the US – China relation is concerned, are: US trade policy, in particular its tariffs policy designed to limit China’s ability to export to the US market; US semiconductors sanctions policy, designed to limit China’s access to US designed chips; rare earth minerals, in particular China’s restrictions on their export, which is a response to the US trade and sanctions policies; Taiwan, which China sees as part of “Mainland China” and wants to see return to the fold while the US sees it as a key element of its military containment strategy for China; and the War on Iran, launched by the US, and the Middle East more broadly, mostly launched by Israel with US support, due to the resulting disruption of international trade including energy that affect China.
On these topics, Xi’s most urgent goal was to extend a trade truce that the two leaders sealed in the South Korean city of Busan last October after a brief but fierce tariff war. But his most important was to preserve the détente between China and the US, writes The Financial Times.
The fact sheet released by the US White House on Friday stated that the two parties had agreed to extend the trade deal by two months, writes Reuters. The US also said it had agreed with China to manage a dialogue on AI safety, and had received from China assurances that it would manage the export of medical opioid-components to the US. The Financial Times adds that the US factsheet said the countries will “continue to work on US concerns regarding supply-chain shortages related to rare earths and other critical minerals”, and that Trump urged China to boost its production of refined petroleum products in order to stabilise global supplies.
The US factsheet did not mention Taiwan, writes The Financial Times. However, according to the US ambassador to China, Trump made it clear that the US would not change its stance on Taiwan, as defined by “the Taiwan Relations Act, the three communiques, and the six assurances”, writes CBS News. The ambassador further said Trump pressed China on its support for Iran, saying any support is deemed unacceptable by the US.
China issued a readout after the meeting, and according to that document, Xi stressed Beijing’s position on territorial integrity, urging the US to oppose “Taiwan independence”, agreed with Trump to continue dialogue on a permanent trade deal, and collaboration on AI safety.
In two areas the two statements explicitly diverged. China said the US and Chinese militaries had agreed to “conclude a memorandum of understanding on crisis communication”, but the Trump administration said that was not true, writes The Financial Times. Also, the US statement said Trump had called for the US, China and Russia to engage in trilateral arms control negotiations, but China did not mention this, writes The Financial Times.
Therefore, what the meeting really produced, it seems, is a continuation of the current status quo, writes CNN. Trump and Xi agreed to meet two more times this year, once at the Asia-Pacific Economic Cooperation forum in Shenzhen in November, and once at the G20 in Miami in December, writes The Financial Times.
The fact that there were no further US actions to rock the “ship” of bilateral relations could be considered a win for Beijing, writes The Strait Times. The US has been unable to achieve its objectives with its trade tariff and sanctions policy on China, namely, notes The Peterson Institute for International Economics. While China’s share of bilateral US imports fell by 7 percentage points from 2017 to 2024, its share of value added in US imports—which also includes Chinese products, parts, and other content shipped from other countries—fell just 2 percentage points, it writes.
This means, 3W notes, that time is on China’s side. Not the US. Consequently, as long as the US does not get China to make significant concessions on the key subjects mentioned above, it does not change its geostrategic position, which means it is weakening while China is strengthening.
Bloomberg notes that during the 1930s the world’s major powers were similarly unable to effectively address the major differences between them. What this led to, is of course well known.
Therefore, as long as the US and China “kick the can down the road” on the important points of disagreement between them, the risks of worse conflict between them remains and grows, we at 3W say. Because, the thesis of the “Thucydides Trap” holds that as long as a declining hegemon refuses to make room on the international stage for a growing power, it will push to keep the growing power down. And if meetings and talks do not achieve this goal, eventually the declining hegemon will turn to military means in an attempt to achieve this.