Behind Trump’s truce with China
Allies are trying to work out if the administration is pursuing a tactical détente related to rare earths or if it is placing less emphasis on security issues
Demetri Sevastopulo in Washington
Deng Xiaoping, the former Chinese leader, often used aphorisms to set a course in the early years of reform and opening in the 1980s and early 1990s.
In foreign policy, his oft-quoted advice was that China should “hide your strength, bide your time”.
“Hide and bide”, as the phrase is sometimes known in English, is open to two very different interpretations — one that China should keep a low profile, the other that it should adopt such a posture only for now.
Ahead of Donald Trump and Xi Jinping striking a quasi-détente in October in their trade war, some US officials started using the phrase “hide and bide” to describe a new conundrum facing US policy towards Beijing.
In the spring, China started slowing the export of rare earths to the US.
But in early October, it announced a draconian export control regime that would have used its dominance in the rare earths industry as a potent weapon against the US for the first time.
As US companies struggled to get critical minerals and magnets used to make everything from phones to fighter jets, Washington felt snookered.
When Trump and Xi met in South Korea, they reached a one-year truce.
It included China delaying restrictions on the exports of rare earths and the US postponing putting thousands of Chinese groups on an export blacklist.
But the question now is whether Trump is using a tactical détente to help the US cut its reliance on China for rare earths or whether this is the start of a different approach where the US puts greater focus on trade and economic issues ahead of more traditional national security.
Amid considerable confusion among US allies about the administration’s approach to China, these questions are likely to grow ahead of an expected state visit to Beijing in April.
Kyle Bass, chief executive of Rochefort Asset Management and a China hawk who serves as an informal adviser to US Indo-Pacific command, says the fragile truce is “nothing more than a high-stakes hostage exchange”.
“America is held captive by China’s stranglehold on rare earth metals and critical minerals essential for our tech and defence industries, while Beijing desperately clutches at Nvidia’s AI chips to fuel its military modernisation to challenge US supremacy,” says Bass.
“It’s turned into a desperate race for both nations to extricate themselves from this precarious entanglement before the other gains the upper hand.”
Some US officials describe current policy on China as “strategic stability”, a term that recognises that both countries have an interest in keeping relations steady for the time being as they reduce their own vulnerabilities.
US ambassador to China David Perdue says a top priority for Trump is “to establish a lasting, level playing field economically for our workers, farmers, ranchers and companies doing business around the world”.
Craig Singleton, a US-China expert at the Foundation for Defense of Democracies, says strategic stability does not mean weakness on security.
He says Trump is “avoiding self-inflicted shocks” that could rupture the trade truce as he takes actions to prepare for the “next phase of competition” with China.
“This is not détente.
It’s deliberate sequencing,” says Singleton.
“Trump is still competing, and most export controls remain firmly in place.
This reflects no strategic softening, only a recalibration of timing and tactics.”
But Trump has imposed almost no new controls on sensitive technology being exported to China — which is one of the arguments made by those who say he is prioritising trade at the expense of national security.
A senior US official counters that Trump is “ushering mutually beneficial trade relations with China without compromising . . . national and economic security”.
The official argues that Trump has implemented “rigorous tariff, sanctions, and export control regimes” and that China has agreed to crack down on fentanyl ingredients, buy US agricultural products, and ensure that rare earths are flowing.
He stresses that the trade truce reached in Busan “prevented China from sending the global economy into a tailspin”.
One key issue for American allies is what will happen once the US cuts its reliance on China for rare earths to a point where it is no longer being held hostage.
Some believe Trump will pivot to aggressive security measures, while others think he will stay focused on economic issues.
“China hawks hope Trump will revert to a tougher approach on security issues after he has pulled the US out from under the rare earths sword of Damocles,” says Ryan Hass, director of the China Center at the Brookings Institution.
“I am not convinced, in part because Trump in his second term has his eye on his legacy, and blowing up relations with China isn’t a legacy-enhancing exercise.
Putting the relationship on a new plane could be.”
While there are many China hawks in the administration, Hass says Trump himself is not driven by the military threat from Beijing.
“He is focused on economic and tech issues as the core of the US competition with China.”
Even during the trade truce, the administration has taken some measures to tackle security threats from China.
The Federal Communications Commission put DJI, the Chinese drone manufacturer, on a list of groups deemed to pose an unacceptable national security risk.
The move will prevent them from getting the certification needed to fly in the US.
But Trump has also taken actions that critics say will help China modernise its military.
En route to Busan, Trump triggered alarm by saying he might let Nvidia export Blackwell chips, its most advanced, to China.
He abandoned that idea but agreed to let Nvidia export the H200, a less powerful but advanced chip.
Underlying the gap between Trump and his hawkish aides, the FT recently reported that some officials, including at the state department, want to attach rigorous conditions to the licences, in what could prove to be a litmus test for how far China hawks can quietly push back without angering the president.
Trump has taken other actions that critics view as an unwillingness to upset China and an indication of a lack of focus on security threats.
The FT reported that the Treasury halted plans to impose sanctions on China’s Ministry of State Security over a cyber espionage campaign known as Salt Typhoon.
It followed Trump telling officials after meeting Xi not to take actions that could derail the deal, according to people familiar with the order.
The US official rejects claims that Trump is pulling his punches on export controls.
He says they are just a “subset of a much larger set of economic tools” that include tariffs, sanctions and inbound investment vetting that form a “comprehensive approach to levelling the playing field with China”.
“In the past year, the US added more Chinese entities to export control and financial sanctions blacklists than those from any other country,” he adds.
One move that bolsters claims that Trump is not ignoring security came recently when the Pentagon put the ecommerce giant Alibaba and electric-car maker BYD on a list of groups with alleged ties to China’s military.
In an unexplained move, however, the Pentagon abruptly requested that its own list be removed from a federal website, sparking speculation that the White House was worried that it would undermine the deal and complicate relations ahead of Trump’s expected state visit to China in April.
But several people familiar with the matter said it was withdrawn for other reasons and Alibaba and BYD would remain on the list when re-released.
While experts parse Trump’s comments and actions to divine his China policy, his team recently published two documents that provide some guidance: the national security strategy and national defence strategy.
The NSS said the western hemisphere was the top priority region.
On Asia, the second priority, it stressed the need to rebalance trade with China and have a “robust and ongoing focus on deterrence to prevent war in the Indo-Pacific”.
But the document struck a softer tone on Beijing than Trump’s first NSS in 2017, which called China a “revisionist power”.
The section on “deterring military threats” in Asia focused on threats to Taiwan from Beijing without mentioning China by name.
It stressed that Washington wanted to reinforce the ability of the US and its allies to “deny any attempt to seize Taiwan” and stressed that those efforts would require higher defence spending from Japan, South Korea, Australia and Taiwan.
The NDS said the US would prevent any country, including China, from being able to dominate the US or its allies in the Indo-Pacific and would strive for a balance of power that would provide a “decent peace”.
While the NDS did not mention Taiwan, it said America would “erect a strong denial defence along the first island chain”, which includes Japan, Taiwan and the Philippines.
Some critics questioned the omission which came amid questions about Trump’s support for Taiwan and US allies as he focuses on maintaining his trade truce with China and tries to engineer another deal ahead of his trip to Beijing.
Tokyo was extremely frustrated last year when the Trump administration did not offer strong support for Prime Minister Sanae Takaichi after she came under pressure from China for saying that a Chinese attack on Taiwan would provide the legal justification for Japan to deploy its military.
The lack of support surprised Japanese officials because Trump and Takaichi seemed to enjoy a very strong rapport when he visited Tokyo in October.
Writing in Foreign Policy last month, Mira Rapp-Hooper and Ely Ratner, two senior officials in the Biden administration, said Trump had “stood silent as China unleashed its fury” on Japan over Takaichi’s comments.
Trump’s defenders say his approach is to focus on action over rhetoric.
But critics such as Zack Cooper, an Asia expert at the American Enterprise Institute, argue that while his deterrence strategy is to “focus on bolstering capabilities rather than demonstrating commitment”, Trump has made remarks that have sparked concern among allies and in Taipei.
For instance, he has said that it was “up to Xi” how to handle Taiwan.
“Trump’s comments on Taiwan have undercut that strategy by raising questions . . . about whether he would actually intervene in a cross-Strait conflict, even if he was capable of doing so,” says Cooper.
Singleton at FDD counters that Trump has a “duck-on-water strategy” that results in calm on the surface while there is constant activity below.
“Trump values his relationship with Xi, and he sees no reason to manufacture new irritants when deterrence is being reinforced quietly and consistently.”
Supporters also note that Trump approved a record $11.1bn arms sales package for Taiwan in December.
The FT recently reported that his team was compiling another package that could total as much as $20bn.
Several Chinese officials have warned Washington that the unveiling of another big arms package before April could jeopardise the state visit.
While some US officials believe China is bluffing, Trump recently said that he had talked to Xi about the issue — which sparked a big debate about whether he had broken with precedent and negotiated Taiwan arms sales with Beijing, something that could be viewed as setting a dangerous course.
The US official also dismisses claims that Trump has offered less rhetorical support, claiming that he talks more about Taiwan than Biden, who on four occasions said the US military would intervene if China attacked Taiwan.
“The president has said many times that China will not attack Taiwan while [he] . . . is in office because Xi Jinping understands the consequences.”
As Trump prepares to visit China in April, another concern among some in Washington and also in Taipei is that he may accede to Chinese requests to change “declaratory policy” on Taiwan as part of a broader deal.
China wants him to say the US “opposes” Taiwanese independence instead of the US “does not support any unilateral change to the status quo in the Taiwan Strait”, as the administration describes the policy.
Some officials have sparked speculation about a possible shift by urging attendees at private meetings not to fixate on the language.
“Even an inadvertent or temporary shift — if favourable to China’s interests, like shifting declaratory policy to ‘the US opposes Taiwan independence’ — would become a Chinese propaganda field day aimed at undermining Taiwan’s morale and trust in the US,” says Jennifer Welch, a former White House Taiwan expert who is chief geoeconomics analyst at Bloomberg.
The US official dismisses the speculation, saying: “There has been no change in our policy with respect to Taiwan.”
Sarah Beran, the top White House China aide in the Biden administration, says the NSS and NDS also suggest Trump is unlikely to return to the security-heavy approach he adopted in the final year of his first term.
“Trump is framing the China challenge in a different way from his first administration,” says Beran, partner at the consultancy Macro Advisory Partners.
“The NSS and NDS have clear elements of ‘spheres of influence’.
That’s very different from coordinating a global effort to counter China.”
Nadia Schadlow, senior fellow at the Hudson Institute and architect of the 2017 NSS as deputy national security adviser, sees a “strong Nixonian element” to the NSS and NDS, particularly with the “balance of power” discussion.
“Balance of power essentially means you need to establish the conditions so that one hegemon is prevented from arising, in this case China,” she says.
“That requires active engagement in the world and the creation of political, economic and military coalitions that favour US interests.
How to . . . build those coalitions is now the challenge.”
Part of the challenge is that while many US allies are aligned with Washington on the need to counter China, they are very anxious about Trump’s approach to alliances.
They are angry at the tariffs he has put on allies while at the same time are feeling pressure from his demands for higher defence spending.
And while some privately concede they must spend more on defence, they are exasperated when they hear Trump being more critical of allies than of adversaries such as China and Russia.
His pressure on Denmark over Greenland, for example, poured fuel on the fire of existing anxiety that the US under Trump may not have the back of its decades-old allies in a crisis.
The US official responds that “increased burden sharing makes the US and all of our allies safer and the world more stable”.
“After the record of the past 20 years, there can be no doubt that coddling our allies leads to deterrence failure, and President Trump is committed to preventing and ending wars, not encouraging them like Biden did.”
Schadlow says another challenge is the need to strike a balance between “projecting sufficient strength to deter China while unwinding decades-long supply-chain vulnerabilities that cannot be resolved overnight”.
On that front, joint efforts to cut vulnerabilities in rare earths are one of the few brighter spots in relations with allies.
The US recently convened a critical minerals summit with the EU, UK, Japan, South Korea, Australia and other countries to consider a strategic alliance to cut supply chain reliance on China.
The US and Australia also signed a significant rare earths deal in October when Prime Minister Anthony Albanese visited the White House.
Yet while Washington is proceeding at a fast clip, experts warn that Beijing has significant leverage that it can deploy against other US choke points, including its very heavy reliance on China for the ingredients for medicines.
“There may be some who are convinced that once the rare earths issue is solved Trump will be ready to take tougher actions on China, but that assumes that there are no other choke points,” says Beran.
Foreign officials who visit Washington for meetings with US counterparts in an effort to understand Trump’s approach to China often say in private that they cannot detect a real strategy and leave Washington more confused.
One reason for this, says Hass, is that Trump is charting policy himself.
He does not passively accept suggestions from his advisers and does not tolerate officials taking actions that narrow his range of options on China.
“Trump is his own China desk officer,” says Hass.
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