TRUMP, XI, AND MANAGING RIVALRY / GEOPOLITICAL FUTURES

Trump, Xi, and Managing Rivalry

Washington’s challenge is to exploit its window of relative advantage without drifting into complacency or escalation.

By: Kamran Bokhari

The United States faces an imperative to establish a workable modus vivendi with China. 

For now, China is a near-peer competitor of the U.S. whose power is regionally concentrated but globally consequential. 

Washington’s strategy aims to limit Beijing’s ability to convert its economic and technological gains into military capabilities that could alter the balance of power in the Western Pacific. 

Doing so requires acknowledging the paradox at the center of Chinese power: its mounting economic strains, which are likely to slow the pace and scope of its ascent as a global actor. 

The Oct. 30 meeting between U.S. President Donald Trump and Chinese President Xi Jinping at a South Korean air base captured this uneasy dynamic. 

Beijing’s commitments on fentanyl, soybeans and rare earth exports – and Washington’s reciprocal tariff reductions – suggest a temporary easing of economic frictions rather than a redefinition of strategic intent. 

The absence of Taiwan from the agenda and Trump’s concurrent decision to resume nuclear testing underscore that neither side has changed its long-term calculus and only managed its immediate vulnerabilities.

To be sure, the vulnerabilities on both sides are considerable. 

Amid declining approval ratings, the Trump administration went into the meeting seeking tactical victories to support its strategy on both the U.S. economy and competition with China. 

Meanwhile, Xi needed to deflect attention from China’s many economic problems. 

The meeting enabled him to present China as an equal of the United States while also securing some relief, such as an agreement by both sides to suspend port fees on one another’s ships. 

According to Trump, Beijing also agreed to resume purchases of U.S. energy. 

Fundamentally, however, the relationship remains locked in systemic competition across economic, technological and security domains.

China’s economy is grappling with a structural slowdown driven by weak domestic demand, high youth unemployment and a crisis of confidence in the private sector. 

The property market – once the engine of growth – has become a drag, with overleveraged developers, unsold housing stock and collapsing local government revenues. 

Beijing’s efforts to stimulate growth through state-led investment and export promotion are running into diminishing returns and provoking a backlash in the West. 

Ultimately, China faces a transition problem: The legitimacy of its political model depends on delivering growth, yet its growth model is increasingly incompatible with global and domestic realities.

In response, China has pledged a shift toward a consumption-driven economy while maintaining technology and manufacturing as top priorities. 

At the Communist Party’s recent fourth plenum, it framed this as a necessary evolution toward “high-quality growth” supported by expanded public services, employment initiatives and targeted investment in major construction projects. 

The government has even removed electric vehicles from its 2026-2030 strategic industries list for the first time in more than a decade, signaling a selective reprioritization meant to correct overcapacity and destructive competition.

However, China’s pivot will be challenging to implement. 

Household spending remains constrained by stagnant wages, high debt and a culture of precautionary saving. 

Demographic decline and a shrinking labor force further limit the potential for robust domestic demand. 

Investment-led growth, historically the main driver of economic expansion, cannot fully offset declining export demand or compensate for the gaps in household consumption, and government-led industrial reprioritization risks misallocating capital and exacerbating sectoral imbalances. 

Coupled with ongoing U.S. and allied technology restrictions, global economic uncertainties and persistent domestic social pressures, Beijing’s attempt to reduce export dependence and transition to a consumer-driven model is unlikely to deliver the sustained growth, political stability or strategic leverage the leadership envisions.

This situation presents a profound challenge for Xi, who is undertaking a sweeping overhaul of the Chinese Communist Party and the People’s Liberation Army (PLA) to cement his personal authority. 

Serving an unprecedented third term, the 72-year-old Xi has transformed the People’s Republic – conceived of as a bureaucratic, collective-authoritarian system by Mao’s successors – into a personalized autocracy centered on his control. 

When he took office in 2013, China’s three-decade run of double-digit growth had ended, partly due to the 2008-2009 global financial crisis. 

After averaging just under 7 percent for several years, growth plunged to 2.3 percent during the 2020 COVID-19 pandemic and has since averaged roughly 5.5 percent, exposing the structural limits of Beijing’s economic power. 

Meanwhile, since 2023, Xi has intensified a sweeping purge of senior PLA officers, removing dozens to eliminate potential rivals, reinforce loyalty and ensure that the military remains a tool of his strategic ambitions rather than an independent center of power.

It is striking that Xi is simultaneously reshaping the PLA leadership and projecting military power across the Western Pacific. 

The two moves are fundamentally at odds, as an aspiring global military cannot credibly advance while purging its senior commanders in large numbers. 

Xi knows that repeated naval and air wargames cannot substitute for real combat experience, and the PLA is far from being able to seriously challenge U.S. forces. 

Chinese military assertiveness, therefore, appears aimed less at building true battlefield capability than at maximizing leverage over Washington in negotiations over trade, investment and technology access.

These moves also help shore up Xi’s domestic political standing. 

Over time, China’s difficult economic situation could translate into political threats to Xi’s power. 

In recent months, there were reports that the aging Chinese leader had fallen ill, which could affect his ability to drive leadership decisions – especially during a period of aggressive domestic consolidation and international posturing. 

Even the presence of such rumors can undermine perceptions of Chinese leadership stability, affecting investor confidence, diplomatic signalling and internal elite cohesion.

Xi is negotiating with Trump from a position of relative but significant weakness. 

China retains leverage through its near-monopoly on rare earths vital to U.S. high-tech and defense sectors, as well as its large purchases of American soybeans, but these tools cannot compensate for its structural disadvantages. 

Much attention has been paid to Beijing’s new K-visa program, designed to attract global tech talent and potentially poach U.S. experts amid tighter American immigration rules. 

Yet this initiative reveals not strength but a deepening vulnerability in China's technological ascent – its growing dependence on foreign talent to sustain innovation. 

Relative to the West, China is not an attractive destination for foreign high-tech talent for a variety of reasons. 

They include language barriers, tight social controls, compensation and the work environment, and overall economic conditions. 

Beijing cannot overcome these constraints quickly, if at all.

For Washington, the challenge is to exploit this window of relative advantage without drifting into complacency or escalation. 

A stable cadence of managed competition would go a long way toward reducing U.S. exposure to conflicts on land and fortifying its position in the Western Pacific maritime space.