By Alicia García Herrero
The images of the meeting between Donald Trump and Xi Jinping in Beijing tell a story: two leaders surrounded by business delegations, flanked by CEOs, toasting the promise of renewed trade relations. Public reports of the talks refer to the creation of new trade bodies and regulatory frameworks for investment, rumours that US financial firms have finally managed to break into the Chinese market and that Chinese green technology companies will soon establish themselves in the United States.
To get an idea, we can compare this summit with the previous meeting between Trump and Xi held in Busan in October 2025. In South Korea, the talks focused almost exclusively on economic issues. Both sides presented the meeting as a sort of purely transactional, cautious and limited-scope ‘reset’.
Judging by the official communiqués, the Beijing meeting would have been a continuation of the efforts initiated in Busan, building on them. In some respects, this was the case. But the true substance of the Beijing summit had more far-reaching consequences. At its core, it was rather a set of negotiations regarding the militarisation of the AI stack and a mutual communication of red lines that reveals the extent to which relations between the great powers remain unchanged and, ultimately, precarious.
The truce: a very temporary pause in the technology war
To understand what was actually negotiated in Beijing, one must grasp the profound asymmetry that characterises the AI race.
On the one hand, the United States dominates a fundamental aspect: it has mastery and control over the hardware necessary for the computing power on which the AI race is based.
Nvidia’s chips, TSMC’s manufacturing capacity — secured through US diplomatic pressure — and the wider ecosystem of advanced semiconductors constitute a bottleneck that Washington has been tightening around Beijing for three years.
On the other hand, China controls a bottleneck that is not usually highlighted as much, but which is just as crucial: rare earths and critical minerals, without which no chip can be manufactured, no electric vehicle battery assembled, nor any advanced weapons system deployed.
However, ahead of the summit, both sides had intensified and accelerated the militarisation of their respective advantages: Washington by tightening its export controls, and Beijing by responding with restrictions on the export of gallium, germanium and, now, the processing of rare earths in general, using these retaliatory measures to mount a form of counter-offensive against US measures aimed at limiting its capabilities.
Had this dynamic continued, it would have fragmented the global technology supply chain into two truly incompatible systems, destroying value on both sides whilst simultaneously accelerating a decoupling for which neither economy is truly prepared. It is in this context that the summit has given rise to what appears to be a mutual truce regarding the most aggressive uses of these bottlenecks. This is by no means a resolution of the disputes between Beijing and Washington, but rather a check on a dangerous dynamic that has been unfolding for several months. Although the United States and China do not admit their vulnerabilities, this can be seen as an implicit acknowledgement that, at this moment, neither side can afford to pull the trigger they have been cocking over the past few months.
The context: trade talks without compromise
The framework for trade issues announced in Beijing is a reality and should not be overlooked. The prospect of US financial services firms gaining access to Chinese retail and institutional markets represents real earnings potential, and the fact that Chinese companies in the clean energy sector are being offered clearer pathways to the US market clearly unblocks a bottleneck that was hindering Beijing’s industrial policy ambitions.
The two governments, which needed something to present at home as a victory, have thus been able to find common ground.
However, trade councils and other investment committees constitute an extremely flexible framework: although they simply provide the structure of economic incentives that makes firmer potential commitments seem slightly more credible, they are not, in themselves, commitments.
The geopolitics of a summit: the red lines drawn in Beijing
The most tense talks, which took place more discreetly and were undoubtedly the most difficult, centred on both sides’ red lines in the military sphere.
The United States arrived in Beijing with a clear and non-negotiable message: China must stop arming Iran. The flow of Chinese dual-use technologies and components into Iranian arms programmes — some of which also end up in Russian hands in Ukraine — has, in fact, become a source of great irritation in Washington, threatening to derail any broader normalisation. On this point, Xi Jinping appears to have made an offer to Trump, who stated upon leaving China that he and his counterpart held ‘similar’ views on ending the war in Iran. However, the precise contours of a commitment from Beijing on this matter remain deliberately vague.
For China, the red line remains Taiwan. In this regard, Xi’s message was unequivocal: the continued transfer of US arms to Taipei constitutes a provocation that Beijing cannot tolerate indefinitely. The public response from Secretary of State Marco Rubio — according to which any military action against Taiwan would be a catastrophic mistake — confirmed that an exchange had indeed taken place between the two sides without either yielding on the political front. In this regard, both statements were aimed as much at public opinion as at the other side.
However, it is worth noting that, in the public summaries of the talks, the United States made no clear commitment regarding a possible halt to arms sales to Taiwan. This silence speaks volumes: on this matter, one might conclude that Washington merely listened to Beijing, but did not yield to Xi’s request.
Continuity: fundamentally, the points of disagreement have not changed
Following a summit that has produced photos of smiling leaders and lists of potential trade agreements, it would be tempting to conclude that relations between China and the United States have stabilised and paved the way for a possible revival. But this is not the case.
The conditions that make this relationship structurally antagonistic remain intact: China has not abandoned its timetable or its intentions regarding Taiwan; the United States has not questioned its commitment to the island’s right to defend itself in the event of an attack.
Furthermore, it is highly likely that the technology race will resume, perhaps in a slightly more moderate form, as soon as Beijing’s diplomatic goodwill fades.
What the summit has achieved, however, is a tactical pause in a long-term strategic struggle.
It is clear that both sides needed a truce, and the two economies are sufficiently intertwined for an uncontrolled escalation to be truly damaging. Generally optimistic and buoyed by the prospect of an ambitious recovery, business circles and, by extension, the markets are likely to interpret these new investment frameworks as a green light heralding a prosperous period for deals, although some deals may have disappointed in Beijing, as evidenced by the fall in Boeing’s share price following the announcement of a 200-aircraft contract deemed disappointing compared to what had been anticipated as a ‘mega-deal’.
It is true that, for a while, we can expect a truce in this regard. But the dynamics of competition between the major powers are not defined at trade negotiating tables or through group photos.
