US-China relations: No war, no peace, but a rivalry kept in check

(Edited and refined by Candice Chan, with the assistance of AI translation.)

The summit between US President Donald Trump and Chinese President Xi Jinping held in Washington from 23 to 25 September neither ushered in a new period of détente nor brought an end to the strategic rivalry between the two countries. Instead, it suggested that the two sides are gradually settling into a new relationship model of “managed competitive coexistence”.

At the heart of this model is the idea that intense competition can continue even as guardrails are put in place; communication is maintained and cooperation pursued selectively; economic ties are recalibrated rather than severed altogether; and rivalry is prevented from escalating into military conflict. China-US relations are moving beyond the old binary of “cooperation or confrontation” and entering a new phase in which competition is becoming a long-term reality, but its management increasingly institutionalised.

From Deng Xiaoping’s cowboy hat to Xi Jinping’s Mao suit

The shift in the balance of power between China and the US can perhaps best be understood through two images, 47 years apart.

When Deng Xiaoping visited the US in 1979, he famously sported a ten-gallon cowboy hat in Texas. China had only just emerged from the international isolation of the Mao Zedong era, and its GDP was equivalent to just 6.7% of that of the US. Beijing hoped to modernise through reform and opening up, better relations with Washington and integration into the Western-led international system.

I was studying at an American university at the time. I still remember the students in my dormitory cheering excitedly when they saw Deng in his cowboy hat.

Fast forward 47 years to 2026, and Xi Jinping attended a White House state dinner dressed in a Mao suit. By then, China’s economy, measured in US dollars, was roughly two-thirds the size of America’s; measured at purchasing power parity, it was about 130% of the US economy.

The journey from Deng’s cowboy hat to Xi’s Mao suit symbolises a fundamental transformation in China’s international standing. Beijing no longer approaches Washington as a developing country seeking entry into the Western system, but engages the US as a major economic, industrial, technological and military power in its own right. China seeks to coexist with the US without becoming Westernised, to cooperate without pursuing ideological convergence, and to participate in the international system without accepting a subordinate strategic position.

Competition is structural, but war is not inevitable

The US has not abandoned its goal of maintaining its technological and strategic edge. It continues to restrict China’s access to the most advanced semiconductor and artificial intelligence (AI) technologies, strengthen the resilience of its supply chains and preserve its strategic position in Asia. China, meanwhile, continues to pursue technological self-reliance, industrial upgrading and strategic autonomy, while reducing its vulnerability to US technological and economic pressure.

China-US competition is therefore structural and will not disappear because of a single summit.

Yet both sides are also becoming increasingly aware of the limits of coercion. The US cannot force China into strategic submission without incurring enormous costs, just as China cannot compel the US to withdraw from Asia. Both have the ability to inflict serious harm on the other, but neither can do so without paying a heavy price itself. Competition may therefore be here to stay, but war is by no means inevitable.

The “constructive relationship of strategic stability” proposed at the summit can be summed up as intense competition within clearly defined boundaries, sustained communication, selective cooperation and efforts to prevent military conflict. This is not strategic reconciliation; it is strategic stability.

From ‘decoupling’ to ‘partitioned interdependence’

Nowhere is this new relationship more apparent than in the economic sphere. China and the US are unlikely to return to the highly integrated economic relationship they enjoyed before 2018, but comprehensive decoupling is equally unrealistic. What is more likely to emerge is a form of “partitioned interdependence”.

Advanced semiconductors, frontier computing, sensitive data and military-related technologies will continue to be subject to stringent restrictions, while critical minerals, AI and certain strategic industries will remain areas of sustained competition and negotiation. Less sensitive sectors, such as agriculture and consumer goods, can continue to support relatively high levels of trade.

Future China-US economic relations could therefore be characterised by selective decoupling, selective recoupling and continual negotiation.

Underlying this model is an increasingly apparent mutual vulnerability. The US enjoys advantages in advanced technology, finance and scientific research, while China possesses vast manufacturing capacity, extensive supply chains and considerable leverage in critical minerals. America’s “semiconductor leverage” is increasingly being counterbalanced by China’s leverage in manufacturing and critical minerals.

Both sides can inflict economic pain on the other, but neither can insulate itself from the repercussions. Paradoxically, this mutual vulnerability creates a stronger incentive to negotiate rather than engage in unrestricted economic warfare.

AI emerges as new strategic high ground

AI is overtaking traditional trade issues as one of the most important arenas of China-US strategic competition. In the long run, therefore, the establishment at the summit of an AI dialogue and a communication mechanism for major AI incidents could prove more consequential than any tariff agreement.

AI will shape economic productivity, military capabilities, intelligence, cyber warfare and national strategic decision-making. China and the US thus face a paradox: both want to maximise their technological advantage, yet both must also work to prevent AI accidents, miscalculation or loss of control from causing catastrophe.

Future China-US competition over AI could come to resemble the strategic arms competition of the past: technological rivalry will be about maximising capabilities, while strategic dialogue will focus on minimising the risk of catastrophe. Competition and risk management will have to coexist.

Taiwan is the hardest issue to resolve within this framework of “managed competitive coexistence”. Xi hoped that Trump would move closer to Beijing’s position of “opposing Taiwan independence”, but Washington did not announce any corresponding change in policy. Significantly, Taiwan was also absent from the summit’s formal outcomes.

This illustrates the limits of managed coexistence. Tariffs can be negotiated, critical minerals can be traded, and guardrails can be established for AI. Taiwan, however, touches on sovereignty, national identity, US strategic credibility and the balance of power in the western Pacific.

Strategic stability, therefore, does not mean that fundamental strategic disputes have been resolved. Taiwan remains the issue where China-US competition is most at risk of escalating into a serious security crisis.

From personal diplomacy to institutionalised stability

Frequent meetings between Trump and Xi can help reduce the risk of miscalculation. However, if stability in China-US relations becomes overly dependent on the personal relationship between the two leaders, that carries risks of its own.

The real test is whether the political understandings reached at the leadership level can be translated into lasting mechanisms governing trade, AI, military communications and crisis management.

The two countries also have different conceptions of what “stability” means. Washington places greater emphasis on tangible outcomes involving tariffs, exports, investment and market access. Beijing, meanwhile, stresses respect, equality and reciprocity, as well as US recognition of China’s status as a major power.

These two narratives are not necessarily incompatible. Washington can emphasise economic gains, while Beijing highlights strategic equality. What matters is whether the two sides can turn leader-level diplomacy into institutionalised strategic stability.

What this means for ASEAN and Singapore

For ASEAN, greater stability in China-US relations could give countries more room to hedge strategically, diversify their relationships and preserve their autonomy. However, the question is no longer simply: “Should we choose the US or China?” but increasingly: “How can we maintain interoperability across two competing strategic ecosystems?”

That is because China-US competition is spreading deeper into AI, semiconductors, cloud computing, telecommunications, critical minerals, digital standards and data governance. ASEAN countries may make different choices in different areas: cooperating with the US on security, working with China on infrastructure and commercial technologies, while using ASEAN to uphold regional rules.

A new paradox is thus emerging: geopolitical relations between China and the US may become more stable even as their technological ecosystems grow more fragmented.

For Singapore, this presents both risks and opportunities. As a financial, technological and logistics hub, as well as a close US security partner and an important economic partner of China, Singapore has a strong interest in avoiding a world split into two blocs.

Singapore’s strategic advantage may increasingly lie in “interoperability” — using regulatory, legal, financial and technological mechanisms to bridge different systems, within the limits imposed by security restrictions. The more fragmented the world becomes, the more valuable Singapore could become as a trusted intermediary, regulatory bridge and “geopolitical clearing house”.

From ending competition to managing it

The Washington summit did not end China-US competition. Rather, it began to define the rules of that competition more clearly.

The China-US relationship of the future will be neither détente in the traditional sense nor a straightforward replay of the US-Soviet Cold War. Instead, it is likely to take the form of managed competitive coexistence: strategic rivalry combined with partitioned economic interdependence, mutual vulnerability, technological competition, crisis management and high-level diplomacy.

The US will continue striving to preserve its technological and strategic advantages, while China will continue pursuing technological self-reliance and greater international influence. Neither side will abandon its core objectives, but both are increasingly recognising that the costs of unconstrained confrontation may be more than either can bear.

The most important question for the future, then, is no longer whether China and the US can eliminate their strategic differences, but whether they can build effective institutions, channels of communication and strategic guardrails to allow two great powers to compete intensely over the long term without allowing that competition to spiral into catastrophic military conflict.

The real significance of the Washington summit may therefore lie not in heralding a new era of China-US reconciliation, but in marking the beginning of a more pragmatic one: the US and China are gradually coming to accept that neither can easily change or defeat the other, and that they must therefore learn to coexist amid long-term competition.

The defining word for the future of China-US relations may be neither “cooperation” nor “confrontation”, but “management”.

This article was first published in Lianhe Zaobao as “习特华盛顿峰会后的中美关系——从战略对抗走向可管控的竞争性共存”.

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