Donald Trump’s meeting with Chinese President Xi Jinping on Thursday has delivered what looks like a temporary ceasefire in a long-running economic war. Trump called the talks a “great success” and gave them a “12 out of 10” rating.
Beijing, in contrast, responded with a carefully worded statement urging both sides to “follow up as soon as possible” — a hint that China prefers slow, deliberate engagement over quick political victories.
Under the understanding reached in Busan, South Korea, the US is expected to lower tariffs on Chinese goods, while Beijing will lift restrictions on exports of rare earth minerals. China is also set to resume purchases of American soybeans, a politically important signal given that the earlier ban had hurt Trump’s agricultural base in Republican-leaning states.
Though the agreement steadies a tense relationship and reassures global markets, it is far from a full-fledged deal. Negotiators have been working for months, and both sides admit that the truce does not resolve the deeper strategic and economic rift between the world’s two largest economies.
“It’s really about managing the breakup in a way that does a limited amount of damage,” said Kelly Ann Shaw, a former economic adviser to Trump. “This relationship is not going to improve dramatically anytime soon.”
For Trump, diplomacy often involves theatrics — and flattery. During previous visits, allies such as Japan and South Korea courted him with grand gestures. Xi, however, offered a more restrained encounter at a South Korean air base, a symbolic reminder of China’s self-assured stance.
Since Trump launched his trade war in 2018, Beijing has responded with quiet defiance. Tariffs were met with counter-tariffs, and Chinese officials repeatedly warned that there would be “no winners” in such a confrontation. Xi, unlike Trump, does not face elections or voter pressure, but he must still ensure that China’s slowing economy generates jobs and maintains social stability.
Despite a property crisis, high youth unemployment and weak consumption, Beijing has endured the pain of tariffs rather than concede ground. “China’s main principle is struggle, but don’t break,” says Keyu Jin, author of The New China Playbook. She describes China’s approach as “escalating to de-escalate” — exerting pressure to force negotiation from a position of strength.
One of Beijing’s most powerful bargaining chips lies in its dominance of the rare earths supply chain. China processes about 90 percent of the world’s heavy rare earth metals, which are indispensable in advanced defence systems. “That advantage is far harder to dislodge than other parts of the rare earths industry,” says an observer.
By restricting these exports, Xi reminded Washington of its vulnerability. Lifting those controls now gives Trump a tangible “win” — but also underlines China’s leverage.
Beijing’s suspension of US soybean imports was another strategic blow, targeting politically sensitive farm states. Reports indicate that China has already resumed buying, a gesture seen as part of the Busan understanding.
“If the US thinks it can dominate China or suppress it, that has proven wrong,” says Jin. “China is signalling that it deserves respect and will not kowtow.”
Four years of trade tensions have made China more self-reliant. Its exports to the US have fallen from nearly 20 percent to about 11 percent of total shipments. Beijing has cultivated new trade partners and invested heavily in domestic industries to buffer against external shocks.
At the Busan meeting, Xi’s composure contrasted sharply with Trump’s flamboyance. He stood motionless during their handshake as Trump leaned in to whisper — an ad-lib gesture that Chinese officials typically dislike. When the talks ended, Xi departed surrounded by security, leaving Trump momentarily stranded on camera, a metaphor for a shifting balance of power.
Despite their competing postures, both sides have incentives to keep dialogue alive. Businesses, global markets and third countries caught between the superpowers will welcome any reduction in tension. But experts warn the calm may be fleeting.
“I wouldn’t be surprised to see more instability in the next three to six months,” an analyst cautions.
Trump may yet secure a trade deal that looks impressive on paper. But the broader contest for technological, economic and geopolitical dominance is far from settled. China has shown it can withstand pressure and respond with strategic patience.
For now, the world’s two largest economies have paused their confrontation — not ended it. The rivalry that defines the 21st century remains very much intact.