China’s president, Xi Jinping, has met with his American counterpart, Donald Trump, for their first face-to-face talks in six years — a meeting that has injected a degree of optimism into one of the world’s most consequential and turbulent bilateral relationships. The summit, held in South Korea, marks the highest-level contact between Beijing and Washington since Trump’s return to the White House in January 2025.
Trump emerged from the discussions in a jubilant mood, describing the meeting as “a 12 out of 10,” and declaring that the United States would begin lowering tariffs on Chinese imports. In return, Beijing agreed to provide Washington with enhanced access to rare earth elements — a critical resource for the global electronics and defense industries that China has long dominated.
Beijing’s official response, however, was noticeably cautious. China’s Ministry of Foreign Affairs issued a brief statement noting that both sides had exchanged “views on important economic and trade issues,” while emphasizing that Xi was “ready to continue working with President Trump to build a solid foundation for China and the US.”
Despite Trump’s characteristically exuberant tone, the summit’s modest outcomes and the muted tone from Beijing underscore the fragile nature of the current thaw. The underlying tensions that have defined US-China relations for more than a decade remain deeply entrenched, especially as both nations grapple with internal economic pressures and shifting global alliances.
The Seoul meeting came at a critical juncture for both leaders. For Trump, the talks represented a potential foreign policy win amid mounting concerns over trade imbalances, the US manufacturing slump, and rising inflation. For Xi, the encounter was a chance to ease mounting economic pressures at home while projecting stability at a time when China’s once-miraculous growth model is faltering.
Yet, analysts warn that despite the diplomatic warmth on display, significant hurdles remain before any substantive trade accord can be finalized. Chinese officials remain wary of the Trump administration’s unpredictable policymaking, which has repeatedly sent shockwaves through global markets and China’s economy.
The Trump-Xi talks followed closely on the heels of a key Communist Party plenum in Beijing, where China’s top leadership unveiled the country’s economic priorities for the next five years. Central to that plan is a renewed focus on “self-reliance” — a euphemism for insulating China from external shocks, particularly those caused by Washington’s tariffs and technology restrictions.
China’s leadership faces one of its toughest economic challenges in decades. After years of rapid expansion, the country’s growth has slowed dramatically. The 2021 property market collapse — triggered by the debt defaults of major developers such as Evergrande and Country Garden — wiped out trillions in household wealth. The crisis dented consumer confidence, depressed spending, and left local governments drowning in debt.
For decades, China’s economic engine was powered by two main drivers: massive investments in infrastructure and real estate, and an export-led manufacturing boom. Together, these strategies transformed the nation into the world’s second-largest economy. But both engines are now sputtering.
Infrastructure and property investment have stalled due to oversupply and high debt levels. At the same time, China’s export sector has been battered by Washington’s tariffs and tightening global supply chains. The US-China trade war, which began during Trump’s first term in 2018, ushered in years of tariff escalations and retaliations.
Trump’s return to the presidency in 2025 reignited those tensions. Within weeks of taking office, he reimposed tariffs as high as 145% on most Chinese goods. Although many of these measures have since been eased, the uncertainty surrounding Trump’s policies continues to discourage long-term investment and trade. His repeated threats — including one just weeks before the Seoul meeting to reinstate 100% tariffs — have left Beijing anxious about America’s reliability as a trade partner.
Faced with an increasingly hostile external environment, China is pivoting inward. The government’s latest strategy focuses on stimulating domestic consumption as a new growth engine. By expanding social safety nets, improving healthcare, and creating more job opportunities, Beijing hopes to encourage citizens to spend rather than save.
However, such structural shifts will take time. China’s social welfare system remains underdeveloped, and local governments — burdened with trillions in debt — have limited fiscal space to expand benefits. Without significant reform, economists warn, boosting consumer demand may prove elusive.
Parallel to its consumption-driven growth agenda, Beijing is doubling down on its ambition to become a global leader in artificial intelligence, quantum computing, and advanced manufacturing by 2035. Yet, its pursuit of technological supremacy faces unprecedented obstacles.
The United States has tightened export controls on advanced semiconductors, AI chips, and related equipment, effectively cutting China off from critical technologies. These measures have intensified since Trump’s return. In May 2025, his administration ordered American chip design software companies to halt all sales to China, escalating the technological decoupling between the two superpowers.
Even after the Seoul summit, there are few signs of a softening in Washington’s tech stance. Trump said the two leaders discussed potential Chinese purchases of certain US-made chips but made it clear that Nvidia’s cutting-edge “Blackwell” semiconductors — seen as vital for advanced AI applications — would remain off-limits.
Beijing has not commented on any semiconductor-related discussions, suggesting that the issue remains unresolved. In the absence of Western technology, China has pledged to invest heavily in research, education, and intellectual property protection to close the innovation gap.
Still, replicating decades of American and allied technological expertise will be an uphill battle. US restrictions are supported by Japan, South Korea, and the Netherlands — all of which control critical segments of the global semiconductor supply chain.
One area where China continues to wield significant influence is rare earth production. These 17 elements are essential for everything from electric vehicles and smartphones to advanced military hardware. Beijing controls roughly 60% of global rare earth output, giving it a formidable bargaining chip in any negotiation with Washington.
In early October, Beijing imposed new restrictions on rare earth exports — a move that, in hindsight, appears to have been designed to pressure the US into softening its tariff regime. The strategy seems to have worked. Trump’s willingness to reduce tariffs after the Seoul talks suggests that rare earth access played a decisive role in breaking the deadlock.
For Xi, the apparent breakthrough provides a much-needed political victory. Amid slowing growth and rising domestic discontent, any diplomatic success that stabilizes trade or relieves economic pressure helps consolidate his authority. However, it also underscores the transactional nature of the current détente: Beijing’s concessions are narrowly targeted, and its willingness to cooperate remains contingent on tangible US policy shifts.
For more than a decade, the Chinese Communist Party has relied on two pillars to maintain legitimacy — sustained economic prosperity and nationalist pride. Both are now under strain. Growth has slowed to its weakest pace in decades, and frustration over unemployment, falling property prices, and corruption has begun to erode public confidence.
Xi’s leadership, once seen as unassailable, now faces the delicate task of maintaining political stability amid mounting economic and international pressures. His administration’s emphasis on “common prosperity” — an effort to narrow inequality and rein in private capital — has been met with mixed results, discouraging entrepreneurs and foreign investors alike.
The Seoul meeting offered a temporary respite, but the road ahead remains uncertain. With the US election cycle always capable of altering policy trajectories, Chinese officials are mindful that any easing of tensions could be short-lived.
For now, both sides appear to have achieved what they needed most. Trump can claim a diplomatic win that strengthens his “America First” economic narrative, while Xi can return home touting progress in securing relief from punitive tariffs — and reaffirming China’s status as an indispensable global player.
But beneath the diplomatic smiles and optimistic statements, deep structural rivalries endure. The US is determined to curb China’s technological and military rise, while Beijing remains committed to reshaping global power dynamics in its favor.
As Xi and Trump’s first meeting in six years draws to a close, one reality stands clear: while both leaders may have momentarily paused their economic conflict, the geopolitical contest between Washington and Beijing is far from over.
