If we wanted to convince ourselves, the importance of Donald Trump’s visit to China could be seen through the list of executives that the American president brought with him to Beijing. Elon Musk traveled on Air Force One. Jensen Huang joined them during a refueling in Alaska, and then to Taiwan. Larry Fink (BlackRock), David Solomon (Goldman Sachs), Stephen Schwarzman (Blackstone), Kelly Ortberg (Boeing), Jane Fraser (Citigroup), Cristiano Amon (Qualcomm), Sanjay Mehrotra (Micron), and Larry Culp (General Electric) are among the passengers. In short, all the American economy’s companies that rely on China’s rare earth refining capabilities. Chinese and American business leaders have come together for this summit with a combined worth of $10 trillion.
On the American side, mistrust prevails. The delegation lands in China under total digital lockdown. Tim Cook, the man who created the iPhone, carries only a disposable phone with no data or access to company systems. For three days, the American delegation will wander in one of the most aggressive cyber environments worldwide, where even charging a phone poses a risk. Federal guidelines also warn against using unknown USB ports, from where data can be extracted or malware installed, a technique known as “juice jacking.”
Setting digital precautions aside, the Chinese reception is grand. To allow Trump’s convoy quicker access to his hotel, the authorities even cleared the highway section crossing the busy Chaoyang district. Xi Jinping stated right off the bat on May 14th, “We should be partners, not rivals.” Just before, Trump referred to his Chinese counterpart as a “great leader.” This tone contrasts with 2017, when Trump walked the Forbidden City with the Chinese leader and later triggered a trade war upon returning to Washington. At the time, he raised concerns about Beijing’s unfair trade practices. Trump deserves credit for reestablishing a form of balance back then.
Since then, the two economic giants, accounting for 40% of the global economic activity, have kept each other on edge. But their tug of war escalated last year with Trump’s return to power. The American president sought to increase tariffs on Chinese products by 140%. Xi Jinping countered by restricting exports of rare earths and other critical components. Trump then backtracked, reducing tariffs to 30%.
Noticing China’s significant lead in rare earths, Trump decided to target their Achilles heel, which is energy. The capture of Nicolas Maduro and the takeover of Venezuelan oil fields align with this strategy. The Chinese imported almost all of this oil, covering 10% of their needs. The same underlying idea can be seen in the confrontation with Iran. Behind the goals of toppling the Iranian regime and seizing enriched uranium lies the control of this oil, which covers about 15% of China’s needs.
China is the only player that can influence Iran.
In this escalating showdown, Xi Jinping pondered on avoiding the “Thucydides Trap,” from the Greek historian who described how Athens’s rise against Sparta inevitably led to war.
“We have a lot to discuss,” announced Trump on Tuesday before departing for Beijing. Perhaps he wanted to forget that had he visited China before February 28th, he would have been in a much better position for negotiations. America remains the top world power, but Xi Jinping warns: “The East is rising while the West is declining” and “time and momentum are on China’s side.” “Trump is meeting a Chinese leader who is convinced his country is winning the race,” cautioned Rush Doshi, a researcher at the Council on Foreign Relations.
Iran was supposed to be a quick and clean victorious campaign to restore U.S. and Israeli supremacy in the Middle East. With the Strait of Hormuz blockade, it has become a burden on Trump’s shoulders. Due to electoral considerations, the economic well-being of his country and the world, the matter cannot be left as it is. Threats, counter-blockades, naval battles, Trump tried everything to reopen the strait, but without success. He now needs Beijing’s help, a fact that the Chinese are well aware of. China is the only player that can influence Iran, with the Russians and Europeans merely playing roles in this crisis. In fact, it was Beijing that, on April 8th, pressured Tehran into signing a ceasefire, which still holds despite the pressure.
Not coincidentally, during his welcoming speech, Xi Jinping mentions Taiwan right away, which could be the counterpart to Chinese aid. The choice of the meeting place was deliberate. The Great Hall of the People was the site of imperial ceremonies where divine legitimacy was claimed to rule. Xi Jinping warns: mishandling the Taiwan issue could lead to a conflict between the U.S. and China. As they walk to the Temple of Heaven, Trump deflects questions about Taiwan, saying “China is beautiful.” The equation of Hormuz versus Taiwan is on everyone’s mind. The repatriation to the motherland is a Chinese obsession. With the Iranian quagmire, Trump seems unable to engage his army in defending Taiwan. In anticipation of this meeting, Trump had also ordered a freeze on $14 billion in military aid, including Patriot anti-aircraft defense systems and anti-drone equipment. Was it a gesture of goodwill or the resigned action of a leader who knows he has no choice?
Trump described his relationship with Xi as “the longest and best between Chinese and American leaders in history.” Officially, Beijing said nothing about Iran. Trump claims to Fox News that the Chinese leader offered assistance on Hormuz, that Beijing won’t send military equipment to Tehran, and will oppose Iran’s access to nuclear weapons. Amid the carefully crafted postures and selective revelations, both sides seem to have agreed on a new framework for Sino-American relations called “constructive strategic stability.” The goal is to establish a stable, healthy, and long-term relationship. Much remains to be resolved, but it seems the new Peloponnesian War will never happen. That much is clear.
