Dance of the Big Beasts

Diplomacy, when stripped of ceremony and handshakes, is really all about leverage. And this last week in Kuala Lumpur, Tokyo and Busan, Donald Trump appears to have rediscovered the old craft of using pressure to invite cooperation. The U.S. President, now again playing the roles of negotiator/dealmaker-in-chief, began his week-long diplomacy tour with ASEAN, then APEC nations amid high expectations — and low trust.

As is their wont, Trump’s advisers are eager to claim victory. Treasury Secretary Scott Bessant declared that the mere threat of 100% tariffs “brought China back to the negotiating table.” It’s classic Trumpian strategy: escalate, intimidate, then negotiate. Wash, rinse, repeat. The logic is all too familiar — you shake the tree until the apples fall.

But history reminds us that coercion has a shelf life. America’s reliance on Chinese rare earth minerals — the stuff that powers everything from fighter jets to smartphones — is an open secret as approximately 70% of the global supply chain runs through China. That gives Beijing enormous leverage, especially since 78% of the US military-industrial complex depends on those imports. When Trump threatened to double tariffs, Beijing countered by threatening export restrictions. In that high-stakes standoff, both sides blinked.

Beijing itself is not playing with a full deck of negotiating cards. While China's economy is currently experiencing growth, primarily driven by exports and government investment, it faces considerable headwinds from consistently weak domestic demand, a property market downturn resulting in the collapse of Evergrande and Country Garden’s seemingly inevitable insolvency, as well as high youth unemployment. While the official 2025 growth target is around 5%, the momentum is slowing and the economy is projected to slow to 4.75%-5% for the year, which is a deceleration from 2023. To counter these challenges, authorities are continuing stimulus measures, but long-term structural reforms are needed to rebalance growth away from debt-fueled investment. In a very real sense, the ruling communist party needed a period of relative stability to try and get their economic house in order.

The result? The Chinese government will lift export restrictions on critical minerals, cease exports of chemicals to North America required to produce fentanyl and resume the flow of key auto semiconductors. Regarding minerals and rare earths, this is good news for U.S. civilian and defense industry manufacturers who rely on those elements for their manufacturing processes. Germanium is used in fiber optics, semiconductors and solar panels, while gallium is used to produce chipsets used in computers, mobile phones, as well as 5G base stations.

The White House also said that Beijing will take long-anticipated steps to reduce the flow of precursor chemicals that Chinese exporters ship to Mexico, where cartels process it into fentanyl-like synthetic opioids.

Some China hawks remain worried that there is nothing stopping Beijing from pulling out of the agreement if they find it no longer suits its purpose. For its part, the U.S., will roll back parts of its tariff escalation and extend the current trade truce. No one’s calling it peace — not yet — but it’s a meaningful pause.

If there’s one thing Washington doesn’t like to admit, it’s dependency. For all the talk about decoupling, the American economy remains deeply tied to Chinese manufacturing. Rare earth minerals are a case in point. The irony is painful: the Pentagon’s most sophisticated missile guidance systems rely on materials refined in China’s industrial heartland.

The Chinese leadership understands this absurdist asymmetry better than anyone. For years, Beijing has invested heavily in global mining operations — from Congo’s cobalt to Myanmar’s tin— ensuring that its influence runs deep beneath the world’s soil. So, when US negotiators celebrate delaying export restrictions, they’re not exactly winning a war; they too are buying time.

Trump’s allies frame the outcome as a diplomatic coup. His critics call it transactional theatre. Perhaps both are right. Trump’s diplomacy has always been improvisational — impulsive yet oddly effective in short bursts which mirror his attention span. The man thrives on confrontation, but his instinct for deal-making remains admirable.

Beyond minerals and tariffs, the Kuala Lumpur talks touched on other simmering issues: agriculture and technology. For US farmers — many of whom have grown restless under collapsing soybean exports — even a symbolic promise from Beijing is to be welcomed. Reports suggest that China has agreed to increase soybean purchases, easing domestic pressure on Trump from America’s agricultural heartland and perhaps taking a potentially bothersome issue for his Republican party off the table for next year’s congressional elections.

Then there’s TikTok, the controversial app that once symbolized youth culture and Chinese tech influence has been transformed into the latest pawn in a geopolitical chess match. The new deal — finalized, according to US officials — would spin off TikTok into a company majority-owned by American investors, a number of whom have some sort of association or another with Trump. For the president, who once threatened to ban the platform outright, it’s a way for him to claim both victory and vindication. For Beijing, it represents a small concession to preserve larger interests and to keep the truce going.

Trump and Xi Jinping’s in person meeting in South Korea (for the first time since 2019) was necessary and a planned effort to ease years of mounting tension. Despite their ongoing rivalry, both did gain something from this face-to-face. For both his restive domestic audience and concerned international investors, Trump wants to project himself as a strong negotiator who can control China without causing economic anarchy. Xi, however, desires stability free from humiliation. It cannot have escaped the Americans that the Chinese leader has made very few forays outside of Beijing’s protective walls even after the pandemic years, a possible indication that he does not want to stray too far from his power base and that his hold on the government just might not be as strong as it might otherwise appear. Trade de-escalation gives China breathing room in the face of a slowing domestic economy and pressure from the US on technology exports.

History, the final arbiter of such things, offers a cautionary tale. In 1972, Richard Nixon’s visit to Beijing was hailed as the dawn of a new era. But detente did not erase rivalry; it merely redefined it. Similarly, this Trump-Xi thaw might cool temperatures, but it won’t change the underlying physics of competition and both sides must continue to proceed with caution lest missteps occur. It’s all too easy to ramp up the heat.

The U.S. and China are no longer trading partners in the old sense — they are strategic competitors intertwined by necessity.

To be clear, China’s state media avoided calling it a truce. US officials, for their part, admit that the toughest issues, like intellectual property theft, cybersecurity and technology transfers, remain unresolved and are likely to remain so for some time to come. Still, tone matters in diplomacy, and the tone has shifted. After months of sharp rhetoric and tariff threats, both Washington and Beijing have lessened the bloviating rhetoric and are now speaking the language of “mutual respect,” a phrase signaling that both nations are now focused on how to frame this détente.

If history teaches anything, it’s that great-power rivalries rarely end with the clear finality of a signature. They evolve through moments of exhaustion, mutual recognition, and, occasionally, pragmatism. Trump’s team insists that “both China and the United States want to make a deal.” Maybe so. But wanting peace and sustaining it are two very different tasks.

ASEAN’s Moment

With Donald Trump’s recent presence, it has brought at least temporary attention to an organization which, at the best of times, looked like a poor sister of the much better-known European Union (EU). Indeed, it has, at times, appeared woefully ineffective in solving complicated and morally ambiguous situations like the long-running Myanmar civil war (though Trump might just be waiting for a member state to ask him to intervene and do what he does best: browbeat and threaten both sides into some sort of vaguely worded truce).

Global powers are now practicing their competition in Southeast Asia, and it is no coincidence that the ASEAN summit in Kuala Lumpur was chosen as the venue. For its part, Malaysia has always been active in ASEAN diplomacy with its “centrality” and views itself as the bridge between the East and the West. Kuala Lumpur’s hosting of these discussions exhibits the idea that minor nations can still have an impact on global politics.

It is clear that the ASEAN nations, for their part, have no desire to pick sides. They benefit from Chinese investment and American security guarantees. Their message to both giants is simple: keep your competition civilized.

Then the question is not about the agreement that Trump and Xi may or may not have reached this week (we are still awaiting details on what Trump referred to as a “twelve out of ten meeting” when asked to rate the quality of his jaw-jaw session. It is about resisting the gravitational pull of rivalry once they return home. Domestic politics in both countries incentivize confrontation, not compromise: Trump’s base thrives on his “tough on China” image, and his cabinet are full of ‘China hawks’ like Marco Rubio and Pete Hegseth. Xi’s legitimacy currently rests on national strength and defiance of foreign pressure as he struggles to keep the wheel on his nation’s rickety economy.

Therefore, despite their optimistic sheen and customary political framing, the events of the last week need to be viewed as a ceasefire rather than a peace treaty. It provides headlines for leaders, breathing room for diplomats, and relief for markets, however temporarily. But beneath the calm surface, the deeper contest continues — over technology, ideology and global influence.

After years of decoupling rhetoric, globalization’s demonization and tariff wars, it can be acknowledged as a small victory. It is not trivial that the world’s two economic superpowers have found a reason to talk again, and that the ‘America First’ doctrine of the American president has not meant complete disengagement from global affairs. It’s the diplomatic equivalent of oxygen after smoke and whatever Trump’s motivations, be they altruistic or an obsession with the Nobel Peace prize, it doesn’t really matter if we have sanity on the world stage.

Still, no one should take a pause for a definitive conclusion. The competition for 21st-century power — from microchips to rare earths to maritime routes — will outlast any single administration or summit. Trump’s meeting with Xi may restore communication, even trust, for a season. But the rivalry between their nations is ultimately structural, not personal and it will be a long twilight struggle that will shape our collective history.