The summit between President Donald Trump and President Xi Jinping delivered what both sides wanted: pageantry, positive rhetoric, and the appearance of a reset in the relations between the United States and China. Beyond the carefully stage-managed proceedings, the Beijing summit revealed something more striking: it underscored how narrow the ambitions of both parties have become.
The centerpiece appears to be the establishment of a bilateral “Board of Trade” to boost commerce in a relatively small basket of non-sensitive goods. Initial discussionsreportedly cover roughly $30 billion worth of trade, a strikingly modest figure given a relationship that once involved more than$650 billion in annual bilateral goods trade.
To put that in perspective, after Washington and Beijing signed the so-calledPhase One trade agreement in 2020, China committed to purchasing additional American goods and services worth $200 billion over 2020 and 2021, nearly seven times the $30 billion now under discussion. Even then, China did not fully meet that target.
Now, China is expected to increase imports of American agricultural products, energy, and aircraft, though the purchase commitments remain far more limited than anticipated. Beijing has agreed to buy 200 Boeing planes, well short of the 500 reported to be under discussion ahead of the summit.
On the Chinese side, the likely beneficiaries of the so-called “Board of Trade” are producers of low-tech consumer goods—clothing, furniture, shoes, and toys—products that Washington no longer considers strategically significant. More sensitive sectors are expected to remain effectively off limits.
That distinction matters, as it reveals the source of the strain between the two powers. Neither Washington nor Beijing want meaningful economic dependence on the other in areas they consider critical. And for all the soaring rhetoric about openness and engagement, both countriesincreasingly consider a growing share of economic activity to bea matter of national security.
A strange coexistence
The Beijing summit offered few signs of meaningful progress on the most consequential disputes at the heart of economic security: semiconductors, advanced manufacturing equipment, and artificial intelligence. American export controls on everything from the most advanced semiconductors to quantum computing technology remain in place. China has yet to approve imports of Nvidia chips that Washington previously cleared for sale.
And both countries continue to invest in developing alternative sources of production for strategically important goods that they currently rely on each other to supply.
China’s latest Five-Year Plan, which lays out the economic objectives and developmental trajectory of the country,places technological self-sufficiency at the center of national policy. Washington continues to pass legislation explicitly designed to reduce dependence on Chinese supply chains. Even as Trump talks up his personal relationship with Xi, a broader bipartisan consensus in Washington holds firm: China remains the principal geopolitical competitor of the United States.
The result is a strange form of coexistence: both sides want stability, but neither wants renewed integration. As I argue in The Fractured Age, this is no accident. The economic relationship between the U.S. and China is increasingly shaped by strategic rivalry. This helps to explain why the summit’s ambitions were so limited. A more fundamental reset would require confronting the underlying sources of friction. Neither side appears willing to do that.
One often overlooked factor looms over any optimism about a lasting détente: the economic imbalances fueling tension between America and China remain fundamentally unresolved. America continues to run large external deficits; China continues to run large surpluses. Tariffs have done little to alter that dynamic, because the imbalance reflects deeper structural realities. America consumes too much and saves too little. China saves too much and consumes too little.
Narrowing the trade imbalance between the world’s two superpowers would require politically difficult domestic reforms in both countries. Washington would need to undertake substantial fiscal tightening. Beijing would need to shift income toward households, strengthen its social safety net, and rebalance its economy away from exports and investment toward household consumption. None of that appears remotely likely.
Geopolitics, if anything, are increasingly reinforcing the imbalance. China’s drive for technological self-sufficiency channels ever more resources into expanding industrial capacity, which, against a backdrop of weak domestic demand, only increases its dependence on exports. Rising Chinese surpluses then fuel protectionist pressure abroad, and the subsequent pushback encourages Beijing to take further steps to increase its self-sufficiency. And the cycle repeats.
This dynamic also suggests that the current truce may ultimately prove fragile. During Trump’s first term, the breakdown in relations came quickly. He visited Beijing in late 2017 amid similarly optimistic rhetoric, only to impose fresh tariffs within months. Many of the agreements announced at the time never materialized.
Codependent superpowers
The truce between Beijing and Washington might be more durable this time as both sides now possess more credible economic deterrents against each other. China’s restrictions on rare earth exports during the tariff standoff in 2025 were particularly significant and revealing. They demonstrated that economic interdependence cuts both ways.
America discovered that China holds significant leverage over strategically important supply chains. Meanwhile, despite its push toward greater self-sufficiency, China remains heavily dependent on Western technology and the dollar-based global financial system.
That mutual vulnerability has created incentives for restraint. But it has also given both sides strong reasons to reduce those vulnerabilities over time. America is investing in alternative rare earth supply chains and domestic manufacturing. China, for its part, is accelerating its efforts to reduce dependence on Western semiconductors, software, and financial infrastructure.
There is a paradox at work here: the current truce is being sustained precisely because both sides are actively working to prepare for a future in which they need each other less. That is why Xi’s promise to American corporate leaders traveling with Trump—that the door to business in China will “open wider”—should be interpreted cautiously.
China may indeed grant selective market access in non-sensitive areas. It may buy more soybeans, aircraft, or energy products. It may even modestly improve the operating environment for some foreign firms. But none of that changes the broader trajectory.
The Beijing summit may therefore succeed on its own narrow terms. It probably reduces the near-term risk of another tariff shock. It may extend the current trade truce for a while longer. And in an increasingly dangerous geopolitical environment, dialogue is clearly preferable to open confrontation. But investors and businesses should not mistake tactical stabilization for strategic reconciliation.
The smiles in Beijing were real enough. The superpower rivalry beneath the surface is, too.
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