[Jung Ingyo's Trade-Off] From Confrontation to Management... Economy Takes Precedence Over Security

How Has the US-China Summit Changed?


Tariffs, Rare Earths, Semiconductors... Reducing Uncertainty

Managed Ceasefire as Complete Decoupling Proves Impossible

China Emerges as the 'Real Winner' on the Taiwan Issue

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The U.S.-China summit held in Beijing on May 14 did not feature any particularly notable issues aside from the agreement to manage bilateral relations in a stable manner. Instead, this summit can be seen as an extension of the "trade war truce agreement" reached at the Busan summit last October. With the U.S. midterm elections approaching in November, U.S. President Donald Trump needed to minimize the "China risk" as much as possible. Likewise, Chinese President Xi Jinping, who must prepare for his "fourth term" next year, needed to ensure that relations with the United States did not further worsen China’s economic situation. These circumstances most likely had a significant impact on the direction of the summit.

While there may have been behind-the-scenes tensions during the closed-door talks over sensitive issues such as the blockade of the Strait of Hormuz, there were no unexpected remarks that have previously caused problems at other summits. However, President Xi drew attention by explicitly stating that the Taiwan issue is a core interest of China. Taking all factors into account, it appears that the U.S. and China significantly narrowed the scope of contentious issues by weighing the costs of escalation. The surprise meeting between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng at Incheon Airport the day before the summit was also aimed at final coordination for a smooth summit.

Looking more closely, this U.S.-China summit differed in several significant ways from those in the past. First, while previous summits emphasized restoring relations, declarations of principle, or symbolic breakthroughs, this time both sides designed the meeting as a risk-management exercise to reduce uncertainty. Notably, the core agenda revolved around deals to resolve supply chain bottlenecks involving tariffs, rare earths, and semiconductors.

Second, past summits focused on military communication as a safety mechanism to prevent accidental physical clashes, often producing ambiguous diplomatic agreements such as hotlines. In contrast, this summit strengthened the "managed truce" system. Recognizing that complete decoupling is impossible, the two countries agreed to establish trade and investment committees, thereby building a system for managing U.S.-China trade relations.

Third, unlike previous meetings, the agenda this time was very limited and transaction-oriented, with a clear focus on short-term economic outcomes. This stands in stark contrast to previous summits, which tackled broad structural issues such as trade reform, security, and global governance.

Fourth, the priority on "economic interests" over security was evident. China acceded to Trump’s demands by agreeing to expand imports of U.S. agricultural products and aircraft, while the U.S. reciprocated by considering easing semiconductor export controls. Two days before the summit, Nvidia CEO Jensen Huang was suddenly included in the U.S. delegation, and on the day of the summit, the U.S. Department of Commerce approved exports of Nvidia’s H200 chips to China. The unplanned stopover in Alaska to pick up Huang for the U.S. presidential plane clearly illustrates how strategically President Trump is leveraging Nvidia.

Compared to previous years, this year’s summit was also notable for its symmetrical negotiations, with both sides keeping each other in check. China’s bargaining power appeared to have grown. President Trump’s position was weakened by missteps in the Iran war and the U.S. Supreme Court’s ruling on the unconstitutionality of tariffs. Meanwhile, President Xi still holds strong leverage in rare earths, critical minerals, and manufacturing supply chains, making it harder for Trump’s one-sided pressure tactics to succeed.

Nevertheless, President Trump showed a clear intention to leverage relations with China for the upcoming midterm elections. His official invitation for President Xi to make a state visit to the United States on September 24, ahead of the November 3 election day, was largely intended to manage his political image. While China responded positively, raising the likelihood of the visit, it appears that China will have greater influence over the format and agenda of the summit than the United States.

China seems satisfied with the outcome of the Beijing summit. The international community had hoped that the summit would lead to a strong Chinese commitment to resolving the Iran crisis. Although President Trump claimed diplomatic success, it is reported that China did not provide any clear assurances. Instead, by minimizing references to the Iran war, China made its position on Taiwan clearer than before. While China did not achieve all its objectives, it did achieve tactical stabilization to reduce economic shocks and preserve future bargaining power.

President Xi has often likened U.S.-China relations to the ocean. He previously spoke to former Presidents Barack Obama and Joe Biden about "joint management of the vast Pacific." At this summit, President Xi once again used the rhetorical metaphor of the "nation as a great ship" to describe U.S.-China global leadership, proposing, "Let us steer the great ship of U.S.-China relations toward stability." This reiterates the message delivered to the U.S. side during the opening remarks of last October’s Busan U.S.-China summit. Meanwhile, Nvidia can be seen as the biggest beneficiary of this summit, as its business in China has been elevated to the level of summit diplomacy.

U.S. President Donald Trump and Chinese President Xi Jinping are seen leaving the meeting room and conversing after their summit at Naraemaru within the 5th Air Mobility Wing of Busan Air Force Base last October. Photo by Yonhap News Agency

Furthermore, the United States can now address technological competition with China through a "package deal" that encompasses not only export controls but also corporate interests. From China’s perspective, since Nvidia chips are a bottleneck in the artificial intelligence (AI) ecosystem, it may lift restrictions on foreign-made semiconductors that had previously been prohibited in pursuit of technological self-sufficiency.

The U.S.-China summit presents South Korea with both an "expanded diplomatic space" and the challenge of "managing economic and security risks." Most importantly, the smooth extension of the trade war truce is positive for the Korean economy. If regulations on advanced supply chains such as semiconductors, batteries, and AI are relaxed, it will be favorable for Korean companies.

However, after the midterm elections, U.S. policy toward China may shift back to a "hardline mode." Although the summit led to some easing of export controls on advanced semiconductors to China, the U.S. Congress has recently introduced the MATCH Act, which would ban the export of semiconductor equipment to China. In addition, China’s domestic demand recovery and strengthening of corporate competitiveness could become a long-term burden for Korean companies. The U.S.-China summit brings both opportunities and challenges to South Korea. The country must focus on strategic tasks such as balanced diplomacy between the U.S. and China, supply chain diversification, and strengthening the credibility of extended deterrence.

Jung In-gyo, Professor of International Trade at Inha University (Former Director-General for Trade Negotiations)

This content was produced with the assistance of AI translation services.