Beijing
—
For Chinese leader Xi Jinping, a landmark meeting with Donald Trump scheduled for this week is an opportunity to demonstrate what China has long sought: that it is on equal footing with the United States on the world stage.
The U.S. president’s trade war with China is challenging President Xi’s growth and innovation agenda, but it is also giving Beijing the unexpected gift of a bright spotlight to project its economic power.
While many countries around the world were trying to flatter President Trump and get excited about the global tariff reduction negotiations he launched this spring, China fought back with its own means until the two countries came to a truce table.
In recent weeks, China hit back by announcing a sweeping expansion of export restrictions on critical rare earth minerals after U.S. rules hit China’s access to U.S. technology and targeted the country’s shipping industry. The move upset the United States, prompting President Trump to threaten to impose 100% tariffs on Chinese goods.
Following 11 hours of trade talks between top negotiators in Malaysia this weekend, both countries appear to have moved on from recent escalations.
Mr Xi and Mr Trump are scheduled to meet on the sidelines of an international summit in South Korea on Thursday, the first face-to-face meeting of Trump’s second term, and are expected to agree on a framework to govern economic relations. (However, unlike Washington, Beijing has not yet confirmed the talks.)
It is not yet clear what concessions both sides have agreed to make to reach that point, but this is just one touchstone in the complex and volatile competition between the superpowers.
But it is also the moment when Mr. Xi enters the room, having solidified the new reality of U.S.-China relations: China will negotiate but not be intimidated.
That doesn’t mean the stakes aren’t high for Mr. Xi.
Rather than cooperating against global threats as the G2, the world’s most powerful economies, Beijing sees the United States trying to thwart its rise through tariffs, high-tech export controls and political friction.
Current U.S. tariffs on Chinese goods average more than 50%, putting pressure on the country’s already slowing economy, and could more than double if the two leaders fail to find common ground.
But as U.S. officials tout President Trump’s ability to “generate influence” to pressure China against half of Beijing’s divided screen, China also sees the strategy as a success.
The conventional wisdom there is that China is ready for this competition. China has created natural influence through its strategic advantage over the global rare earth supply chain. It is pushing to diversify trade to reduce dependence on the U.S. market and accelerate innovation that will allow it to move away from American products such as high-end semiconductors.
Wang Yiwei, director of the Institute of International Studies at Renmin University in Beijing, said the Chinese government was “well prepared” for how Trump would behave towards China as he begins his second term.
“But from the US side, any tariffs or measures taken by the Chinese side have helped President Trump himself see that China’s capabilities are different than they were eight years ago…And what has changed is that President Trump understands that the US is no longer the dominant power,” Wang said.
The Chinese government also continues to work to protect itself from future shocks, including with its next five-year plan aimed at deepening its top-down push towards technological and industrial self-sufficiency.
“China is handling all these conflicts and difficulties initiated by the United States very calmly,” Wang Wen, director of Chongyang Financial Research Institute, a think tank at Beijing’s Renmin University, told reporters in Beijing last week.
“The United States remains a major partner, but its importance to China is waning,” Wang added.
The two countries issued positive signals after trade talks over the weekend, with US Treasury Secretary Scott Bessent suggesting that Beijing would postpone rare earth regulations while the US would withdraw its threat of 100% tariffs and extend an earlier tariff truce.
However, China has not issued such a statement, and there remains a risk that the two powers will not be able to see eye to eye or that unwarranted comments will derail the delicate détente. And as is often the case with Trump diplomacy, a lot may come down to the chemistry on the day between the two leaders, who last met in 2019. Such dynamics were on display in Japan on Tuesday, when President Trump hit it off with Japan’s new conservative prime minister, Sanae Takaishi, and promised that the United States would cooperate if Japan needed any favors.
Analysts say Xi’s top priority in talks with Trump will be to get the U.S. to lower tariffs and lift export restrictions. To achieve that, he may be willing to ease or postpone China’s latest rare earth export restrictions.
Shen Dingli, a Shanghai-based foreign policy analyst, said China imposed these restrictions “to force the United States not to impose blanket sanctions against China,” but rather to limit sanctions to “a very small number of national security areas.”
Thursday’s meeting will test whether that actually works, but Beijing hopes Trump will treat Xi with the respect and warmth he has promised for the Chinese leader in recent months and on the campaign trail.
Mr. Wang, China’s top diplomat, subtly reminded Mr. Rubio of that in a phone call on Monday.
Mr. Xi and Mr. Trump “are both world-class leaders and have cooperated with each other for a long time with mutual respect,” Mr. Wang said in a statement. It added that “maintaining the spirit of equality, respect and mutual benefit” was a key condition for “advancing bilateral relations”.
