Why 2026 won’t be a reset year for US-China relations

When the Eastern Theater Command of the People’s Liberation Army abruptly announced live-fire drills encircling Taiwan at the end of December, it sent a signal that was neither routine nor symbolic. This was only the second “encirclement exercise” of the year, but unlike the first one in April — which still retained the atmosphere of a politically framed training mission — this round had a different tone. The PLA published firing coordinates, emphasised the use of live ammunition and described the drills as a “powerful countermeasure” to US-Taiwan “collusion”. In Beijing’s vocabulary, that word choice matters.

The timing is just as telling. Many analysts expected China to respond militarily when Lai Ching-te took office in May, during the large-scale recall election on the island, or after Taiwan’s Double Ten Day. None of those moments triggered action. Beijing waited. Only when most observers began to assume that cross-strait tensions were levelling off — at the quiet end of the year — did the PLA move. It is difficult to read this as coincidence. In Chinese political signalling, surprise is often the point.

The immediate backdrop was the US$11 billion US arms sale to Taiwan, the largest such package to date. Beijing reacted by sanctioning more than 20 American defence companies and ten executives — measures unlikely to change US policy, but important as choreography. They were accompanied by sharper language from the Ministry of Foreign Affairs, which accused Washington of violating the three US-China Joint Communiques, “playing the Taiwan card” and most notably, declared that “China is no longer the China of 70 years ago”.

This last line circulated quickly through state media. It functions less as a patriotic flourish than as a doctrinal reminder to Washington: Beijing considers its current capabilities sufficient to enforce its red lines. The implication is that containment logic based on a 20th century balance of power cannot operate the same way in the 21st.

In this context, the live-fire drills look less like an escalation than a statement of jurisdiction, a way for Beijing to reaffirm that deterrence is not passive — it is applied.

A narrative has taken hold in Western policy circles that 2026 might be a “reset year”. It rests on three assumptions:

First, Trump and Xi are expected to meet as many as four times, suggesting opportunities to stabilise ties.

Second, channels for crisis management may reopen, continuing a trajectory started in late 2025.

Third, Washington’s latest strategic documents are softer in tone, implying that the era of “containment” may be giving way to a more nuanced approach.

This reading is convenient. It is also fragile.

The problem is not dialogue itself, but the conditions under which dialogue occurs. Beijing currently believes that the US is re-anchoring Taiwan in its Indo-Pacific security architecture in a way that changes the political meaning of arms sales. Put simply: the material scale of the sale matters, but the conceptual framing matters more.

If military assistance to Taipei is described as “strengthening deterrence”, Beijing hears an argument that deterrence is incomplete unless it includes Taiwan. And if Taiwan’s defence is implicitly tied to regional strategy, Beijing interprets it as a step toward normalising Taiwan as a quasi-ally, rather than an entity within the “one China” framework.

Under these conditions, presidential summits function as buffers, not breakthroughs. They prevent collapse; they do not produce agreement. The expectation that meetings alone can stabilise competition misunderstands Beijing’s worldview. In China’s assessment, Washington is not stepping back from containment; it is stepping sideways, broadening the toolkit while keeping the objective.

Taiwan is not “an issue”. It’s “the structure”.

The most consequential misunderstanding in Washington is the belief that Taiwan is a component of the bilateral relationship. In Beijing’s view, it is the architecture. Everything else — technology controls, trade rules, military posture — sits on top of that foundation.

This is why the optimism about 2026 is misplaced. The US can pursue dialogue, sanctions relief or selective cooperation; China can reciprocate on fentanyl, climate or diplomatic channels. None of these will create durable stability if the Taiwan question is moving in the opposite direction.

Critics might say Beijing’s interpretation is paranoid or maximalist. Maybe so. But what matters is not whether Washington believes it is provoking Beijing, but whether Beijing believes it is being provoked. Deterrence collapses when narratives diverge faster than the actors can manage them.

For decades, PLA exercises near Taiwan served primarily as signalling: coercive, often theatrical, but not framed as obligation. The most significant shift in the latest drills is rhetorical. Beijing presented the drills not only as a deterrent signal, but also as 反制 (fanzhi) — a term that means counter-measure, retaliation, even enforcement. This is the vocabulary of compliance, not negotiation.

When counter-measures become the baseline response to US-Taiwan engagements — political or military — room for calibrated signalling shrinks. The ladder of escalation becomes steeper. And even if neither side wants conflict, inertia begins doing the work.

This is not to say Beijing has set a military timetable. It has not. But it is trying to build a narrative wherein the use of force, if it happens, is not a last resort but the execution of policy — a contingency already justified by precedent.

The drills deliver three messages simultaneously:

To Washington: strategic ambiguity is no longer stabilising; it is eroding into contradiction.

To Taiwan: international support strengthens political confidence but cannot erase military asymmetry.

To US allies: the cost of aligning with US strategy in the Taiwan Strait is rising, even if conflict remains avoidable.

To mistake this as a temporary spasm of anger at an arms sale is to miss the structural point. Beijing sees the current moment not as a crisis to be cooled, but as an alignment to be clarified. And clarity, in the short term, often feels like instability.

None of this means that 2026 is destined for confrontation. But the diplomatic instinct to equate dialogue with progress is outdated. The US and China can talk more than ever and still move further apart. The Taiwan Strait is no longer governed by mutual restraint; it is increasingly governed by mutual argument over who violated restraint first.

If military exercises are a language, Beijing is saying one thing clearly:

Do not confuse the absence of war with the presence of stability.

Neither side wants to be the one who miscalculates. But hoping for stability because both sides prefer it is not a strategy; it is a belief. And beliefs, unlike strategies, do not survive first contact with reality.

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