China–US: ‘strategic stability’ put to the test by Chinese ambitions

04 November 2026

ECO Publication

1. The trade truce does not resolve the deep-seated antagonisms

1.1 On the trade front, a sense of stabilisation…
1.2 … which does not resolve the deep-seated tensions

2. The battle for AI has only just begun

2.1 China, the US’s technological challenger
2.2 Rare earths and minerals: China’s stranglehold

3. Funding the model: China gears up

3.1 A shared problem: debt
3.2 The financial system: the driving force behind the five-year plan

4. New world order: which model will gain acceptance?

4.1 Dollar versus yuan
4.2 Global trade: who still plays by the rules?

The start of the 21^stcentury has been marked by growing rivalry between a dominant power, the United States, and a new rival, China. Since 2016, this rivalry has manifested itself across an increasing number of sectors: trade, technology, finance, defence and energy. Each side is building or safeguarding its comparative advantages and dominant positions in order to maintain its attributes of power and curb its rival.

Whilst China had underestimated the duration, intensity and unpredictability of US trade policy during Donald Trump’s first term, it has shown that it was better prepared for his return. The year 2025 was thus marked by a more offensive stance from China, particularly following Liberation Day in April, when Beijing threatened to impose drastic controls on exports of rare earths and their use in global value chains.

Following the one-year truce announced in Busan in October 2025, Xi Jinping’s visit to Washington from 23 to 25 September this year provided an opportunity to take stock of the persistent disagreements and potential areas of progress. For both presidents, the focus is now on ‘strategic stability’, which they need both domestically and internationally. Donald Trump will face a Democrat Congress after his electoral defeat and an economy plagued by inflation, whilst Xi Jinping is preparing for the 2027 Communist Party Congress, at which he will seek a new term, against a backdrop of more challenging economic growth. Externally, the United States is already engaged in the Gulf and in Ukraine and cannot afford a further escalation in Asia.

Strategic stability therefore does not rest on a resolved disagreement, but on the mutual recognition that neither Washington nor Beijing can, in the short term, impose its model on the other. China sees this as a respite to consolidate its industrial, financial and technological autonomy; the United States, as a means of containing escalation whilst preserving its levers of pressure.

Citation

Over the past eight years, China has taken steps to anticipate upheavals in global trade and protect itself from further US escalations or sanctions. It has internationalised its production processes by relocating the final stages – notably assembly – to third countries benefiting from more favourable tariffs or free trade agreements with the United States. China’s strategy is, for the time being, paying off. The authorities are aware that the United States is struggling to implement rules of origin capable of measuring the Chinese value added incorporated into products transiting through third countries, and that there is no alternative capable of supplying, on tariff terms comparable to those of China, the consumer goods on which US households depend.