Supply Chains, AI, Hormuz, Taiwan: What's at Stake as Trump Meets Xi in Beijing? |
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New Delhi: US President Donald Trump will arrive in Beijing on Wednesday (May 13) for a state visit that runs through May 15, the first by a sitting US president to China in almost nine years.
Originally scheduled for late March, the trip was delayed by the US-led war against Iran, which has upended global energy markets and reshaped the diplomatic terrain on which the two leaders will meet.
Trump and Chinese President Xi Jinping will hold formal talks at the Great Hall of the People on May 14, followed by a tour of the Temple of Heaven UNESCO heritage site, a state banquet and a working lunch on May 15. A business delegation including Tesla’s Elon Musk and Apple’s Tim Cook will accompany Trump, though it is smaller than the one that travelled with him when he last visited Beijing in 2017.
Both sides have set low expectations for deliverables. But the summit takes place at a moment when the US-China relationship has been fundamentally altered by the events of the past year, and when the questions it raises extend well beyond the two countries to the energy security, supply chain resilience and strategic calculations of nations across Asia, including India.
How the 2025 trade war changed the game
To understand what is at stake in Beijing this week, it is necessary to understand how the US-China trade war of 2025 transformed the relationship between the world’s two largest economies.
In an essay published in Asia Policy this April, former National Security Council official Evan Medeiros argued that the confrontation marked a turning point in US-China competition, shifting it from a tariff dispute into what he described as a “supply chain war”.
The escalation began soon after Trump’s return to office in January 2025, with tariffs eventually rising to 145% on Chinese goods entering the US and 125% on US exports to China. But the defining shift came when Beijing imposed export controls on rare earth elements and permanent magnets critical to US defence systems, electric vehicles and advanced electronics. Washington responded with restrictions on semiconductor design tools, industrial gases and jet engine technology needed for Chinese aircraft production.
Both sides discovered that they could inflict serious pain on the other by cutting off single-source chokepoint items.
The confrontation eventually forced both governments into a temporary retreat. At the Trump-Xi summit in Busan in October 2025, Washington suspended enforcement of the Affiliates Rule for one year, while Beijing paused its expanded rare earth export controls. The two sides also agreed to extend tariff reductions and China pledged additional purchases of US agricultural goods.
But the Busan framework resolved little beyond the immediate crisis. Medeiros argued that the relationship has now become “a race by each side to gain leverage over and reduce exposure to the other”. China is trying to reduce dependence on Western semiconductor supply chains while the US is attempting to loosen China’s grip over rare earths and critical minerals.
Since Busan, Washington has invested in alternative supply chains through Pentagon-backed rare earth projects, G7 coordination and a new coalition called Pax Silica. Beijing’s latest Five-Year Plan similarly called for “extraordinary measures” to overcome vulnerabilities in advanced semiconductors.
The scale of the disruption to bilateral commerce is visible in the data. Jin Xu, president of the China Association of International Trade and a former commerce ministry official, told a roundtable organised by the Centre for China and Globalisation (CCG) in Beijing on April 26 that bilateral trade reached roughly $550 billion in 2025, a decline of nearly 19%. Chinese FDI into the US collapsed from a peak of $27.4 billion in 2016 to about $589 million in 2024, a drop of over 90%. Jin compared the relationship to a married couple who cannot divorce but cannot live well together.
China is trying to reduce dependence on Western semiconductor supply chains while the US is attempting to loosen China’s grip over rare earths and critical minerals. File: Workers use machinery to dig at a rare earth mine in China’s Jiangxi province in 2010. Photo: Chinatopix via AP.
What Washington wants
The Trump administration’s economic focus is reflected in the fact that preparations have been led primarily by treasury secretary Scott Bessent rather than secretary of state Marco Rubio or the national security adviser.
Nicholas Burns, the former US ambassador to China who served in Beijing until January 2025, said in a Foreign Affairs interview that he could not recall a time in decades when Treasury rather than State had been the driving force behind a presidential summit with China.
Even on the eve of Trump’s arrival, negotiations over deliverables appeared to be continuing. Chinese Vice Premier He Lifeng is meeting Bessent in South Korea on Wednesday for last-minute economic and trade consultations.
The expected deliverables are modest. Both sides are likely to announce Chinese purchase commitments for US agricultural products, particularly soybeans, along with a possible Boeing aircraft order.
They may also announce a “Board of Trade”, a standing bilateral body first floated by US Trade Representative Jamieson Greer after........