US-China ‘reset’? Analyst on Taiwan, Iran and what the Trump-Xi summit really changed

Key Concepts

• Constructive Strategic Stability: A diplomatic framework proposed by Xi Jinping, interpreted by analysts as a potential "truce" to prevent actions that harm the other party's core interests.
• US-China Board of Trade/Investment: New bilateral mechanisms established to manage trade differences and promote growth in non-sensitive sectors.
• Core Interests: A term used by Beijing to define non-negotiable issues, primarily Taiwan, where they expect the US to refrain from interference.
• Strait of Hormuz: A critical maritime chokepoint for global energy and supply chains, currently a focal point of US-China diplomatic alignment regarding freedom of navigation.
• Undersea Cables: Vital infrastructure for global internet connectivity; their potential disruption is identified as a high-consequence risk to global commerce.

---

1. The Beijing Summit: Overview and Outcomes

The summit between President Trump and President Xi Jinping was characterized by a "friction-free" atmosphere, focusing on optics and high-level alignment rather than specific policy breakthroughs.

• Diplomatic Framework: The US officially accepted the "constructive strategic stability" framework. Experts like Bonnie Glaser argue this may be a strategic move by Beijing to "lock in" the US and prevent future challenges to Chinese interests, such as arms sales to Taiwan or technology restrictions.
• Trade Management: The leaders established a US-China Board of Trade and a Board of Investment. These are not designed to resolve structural economic issues (e.g., industrial subsidies, state ownership) but rather to facilitate trade in non-sensitive areas and reduce the bilateral trade deficit.

2. Geopolitical Conflict: The Iran War and the Strait of Hormuz

The summit produced verbal alignment regarding the conflict in Iran, though significant risks remain.

• Strategic Alignment: Both nations agree that Iran should not possess nuclear weapons and that the Strait of Hormuz must remain open.
• Chinese Stance: Beijing opposes the use of force and the resumption of hostilities. While China is unlikely to intervene militarily to aid Tehran, they have pledged not to supply weapons or provide satellite imagery that could assist in targeting US bases.
• Infrastructure Risks: Tehran’s threat to impose tolls on undersea internet cables poses a severe risk. Experts note that such disruptions would be highly consequential, as these cables are difficult to repair and are essential for global supply chains, including the transport of oil, gas, and fertilizer.

3. The Taiwan Issue

Taiwan remains the most sensitive and volatile point in US-China relations.

• Differing Perspectives: President Xi frames Taiwan as the "core issue" and accuses the island of seeking independence to provoke war. Conversely, the Taiwanese government views its actions as a necessary defense of autonomy.
• US Policy Shift: Bonnie Glaser notes that President Trump’s rhetoric has shifted from non-committal acknowledgments of Chinese concerns to a more receptive stance toward Beijing’s historical narrative. There is concern that the summit failed to address Chinese military coercion, cyber intrusions, and psychological pressure tactics used against Taiwan.

4. Economic Structural Issues

Despite the "modest progress" in trade, the two nations remain fundamentally divided on structural economic policies.

• The "Failure" of Reform: The US has largely moved away from attempting to force China to implement economic reforms, shifting instead toward a policy of protecting domestic interests.
• Long-term Outlook: While issues like industrial overcapacity and state subsidies remain unresolved, they are currently "off the table" in favor of short-term trade growth. Analysts warn that ignoring these fundamental differences may lead to greater instability in the long term.

5. Synthesis and Conclusion

The summit represents a tactical pause in US-China tensions rather than a resolution of deep-seated conflicts. By adopting the "constructive strategic stability" framework, the US has entered a period of managed competition where both sides seek to avoid direct conflict while maintaining divergent goals. The immediate focus is on stabilizing the Strait of Hormuz and managing trade in non-sensitive sectors, while the most volatile issues—specifically Taiwan and structural economic imbalances—remain unresolved and continue to pose significant risks to global stability.