The U.S. Strategic Competition-Coexistence Framework Toward China and South Korea's Response

Executive Summary

U.S. strategy toward China has shifted in its means and intensity with each change of administration, without ever settling into a completed equilibrium between competition and coexistence. The Biden administration's selective containment posture has, under Trump's second term, expanded beyond tariffs and export controls to targets such as robotics and inverters, while China has secured substantive negotiating leverage through its rare earth export restriction card. The scenario in which selective decoupling confined to advanced industries such as semiconductors, quantum computing, and AI persists is assessed as most likely at 55%, though the trajectory remains fluid depending on the U.S. domestic political calendar and the manner in which China exercises its leverage. Rather than betting on a specific scenario, South Korea should build a robust response system covering the full range of scenarios through three pillars: supply chain dualization, participation in shaping multilateral export control norms, and continuous monitoring of U.S. domestic political trends.

I. Situation Analysis

The U.S. Strategic Competition-Coexistence Framework Toward China and the Perspectives of Asian Allies

1. Background and Development of the Issue

The Biden administration's China strategy can be summarized as a framework of "managing strategic competition from the perspective of coexistence"[3]. This framework differs in character from the unilateral pressure of Trump's first term. Washington operated on the premise that decoupling from China was not feasible. Instead, it chose an approach of selectively drawing containment lines in advanced industrial areas such as semiconductors, AI, and quantum computing[10].

The point at which this framework actually came into operation was the U.S.-China summit in San Francisco in November 2023. EAI analysis characterizes this as an occasion for "seeking cooperation between 'managed competition' and 'securing the right to development'"[2]. National Security Advisor Jake Sullivan and Foreign Minister Wang Yi met three times between May and October, shuttling between Vienna, Malta, and Washington[2]. Starting with Secretary of State Blinken, four U.S. cabinet-level officials visited Beijing in succession[2]. The meeting between Treasury Secretary Yellen and Vice Premier He Lifeng served as a final coordination step immediately before the summit[2].

The resulting outcomes were not substantial. No compromise was reached on the two core issues of the Taiwan question and export controls on advanced technology[2]. Instead, the achievements amounted only to the resumption of high-level military dialogue and the establishment of new intergovernmental dialogues on narcotics and AI[2][5]. EAI assessed this by noting that "without compromise on the substantive issues, agreement was reached only at the level of strengthened communication and confidence-building through the resumption of high-level military dialogue"[2].

The axis of competition continued to concentrate on advanced industry thereafter. Over the course of 2022, the U.S. Department of Commerce placed 33 Chinese firms, research institutes, and universities on the Unverified List, and took additional export control measures in August and October[10]. Precision-strike style sanctions in the semiconductor, quantum computing, aviation, and AI sectors continued in succession[10]. EAI characterizes this phase as a "technological cold war," noting that techno-geopolitical considerations have become a major foundation shaping world politics[10].

2. Current Situation

Under Trump's second term, pressure on China is spreading into a broader range of areas beyond tariffs and export controls. The Global Times criticized the U.S. import bans on robots and inverters as "impulsive policy decisions born of anxiety"[15][19]. Chinese experts argue that the "small yard, high fence" strategy itself is based on the misjudgment that the United States can maintain technological superiority through isolation[15].

This response is linked to China's confidence in the leverage it has already secured. Foreign Affairs points to a case in April 2025 in which China countered high U.S. tariffs on Chinese goods with rare earth export restrictions, forcing Washington to retreat[13]. A similar pattern recurred in May 2026[13]. However, the same publication also notes that China's economic conditions have changed qualitatively compared to four years ago. There is a view that China's domestic economic slowdown and structural vulnerabilities are actually strengthening the United States' negotiating leverage[4].

China does not accept this phase of containment purely defensively. The Diplomat analyzes that just as the Xi Jinping government exported roads, ports, and fiber-optic cables through the Belt and Road Initiative, it is now seeking to export an entire AI ecosystem (chips, cloud, foundation models, standards, workforce training, and governance)[1]. Nvidia CEO Jensen Huang has also warned of the possible combination of the Belt and Road Initiative with AI[1]. Nikkei reported that China is considering strengthening export controls on AI and semiconductor technology[11]. This represents a trend in which China's countermeasure cards against U.S. pressure are expanding into the advanced technology domain.

Europe, too, has moved to realign its independent stance toward China. At the EU summit on June 19, EU leaders requested that the European Commission prepare trade defense instruments against subsidized imports[9]. At the France-Germany ministerial meeting on July 16-17, the two countries, setting aside long-standing differences, for the first time jointly designated China as "a challenge to our economy"[9]. Austrian Chancellor Stocker summarized this as: "The EU needs a strategic reorientation"[9]. This shows that the reconfiguration of China policy is not solely a U.S. concern but a broader Western realignment.

3. Key Actors and Positions

U.S. Policymaking Circlesface a dilemma of needing to sustain export controls on advanced industries such as semiconductors while simultaneously pursuing a trust-restoring diplomatic agenda[3]. Foreign Affairs, citing Jake Sullivan's reindustrialization vision, notes that America's century-long advantage in the capacity for invention, manufacturing, and technology diffusion is now being shaken by a new phase of state-led competition[7]. The warning is that the "second China shock" will come not in the form of cheap exports but in the loss of technological hegemony[7].

The Chinese Government and State Mediaframe U.S. containment not as strategy but as a product of anxiety[15]. Measures such as the import bans on robots and inverters are criticized as "counterproductive and self-defeating" actions, with public statements expressing intent to protect domestic firms[15][19]. At the same time, China is pursuing the offensive card of AI ecosystem exports in parallel[1].

Southeast Asian Countriesare sensitive to the issue of U.S. credibility. Foreign Affairs points out that regional responses to disputes in the South China Sea "depend on Washington's credibility"[17]. Regional countries can sustain their willingness to resist China only when they are confident that the United States will contain China without unnecessary escalation and will abide by the international law it itself invokes[17]. There are also calls for the United States to correct policies that constrain regional partners' capacity to respond to China[17].

The EU (the France-Germany Axis)is building its own independent defensive posture toward China, separate from the United States[9]. This is underpinned by demands for trade defense instruments against subsidized imports and for the establishment of an EU-level roadmap[9].

4. Key Points of Contention

The first point of contention is where the U.S. China strategy will place its center of gravity between "competition" and "coexistence." Following the San Francisco summit, no progress was made on the core issues of the Taiwan question and export controls[2]. The prevailing assessment is that outcomes were limited to the restoration of communication channels[2][5].

The second point of contention is the effectiveness of export controls. The Chinese side counters that the "small yard, high fence" strategy is based on the misjudgment of maintaining technological superiority through isolation[15]. Indeed, there is precedent of China neutralizing U.S. tariff measures twice through the rare earth card[13].

The third point of contention is U.S. external credibility. The willingness of Southeast Asian countries to resist China depends on the consistency and predictability of the United States[17]. This is directly linked to the precondition of restoring domestic political trust[3][7].

The fourth point of contention is that China's countermeasures are expanding from defense to offense. The new card of AI ecosystem exports is assessed as a structural challenge that goes beyond Belt and Road-style infrastructure exports[1]. Combined with China's own consideration of export controls on AI and semiconductors, the structure of containment and counter-containment surrounding advanced industry is becoming increasingly multilayered[11].

II. In-Depth Issue Analysis

The U.S. Strategic Competition-Coexistence Framework Toward China: An In-Depth Analysis

1. Analysis of Root Causes

The reason the U.S. China strategy has taken on a dual structure pursuing both competition and coexistence simultaneously lies in the practical impossibility of decoupling. Washington judged that it could not withstand the shock a full-scale severance of ties with China would inflict on the U.S. economy[3]. At the same time, it is not in a position to let China's advance in advanced technology go unchecked[10]. At the point where these two constraints intersect, the compromise of "selective containment" was derived.

Underlying this compromise is a crisis of trust within U.S. domestic politics. Carnegie Endowment analysis notes that for the Biden administration's China strategy to succeed, "a new agenda for rebuilding trust at home and abroad" is required[3]. This means that the problem of China strategy is not solely a matter of foreign policy design. Domestic political pressure stemming from the economic anxiety of the American middle class and the weakening of the manufacturing base operates as a variable that defines the intensity and direction of China policy[7]. The reindustrialization vision put forward by former National Security Advisor Sullivan also emerged in this context[7]. The "second China shock" warned of by David Autor and David Dorn refers not to low-cost exports but to the loss of technological leadership[7]. The very fact that this frame is in currency among Washington policymakers demonstrates that containment of China is not driven by pure security logic alone.

China's manner of response is also one axis of the root causes. Beijing has not accepted the term "strategic competition" itself as a framework for defining U.S.-China relations[18]. EAI analysis notes that "while the U.S. government has used strategic competition as a framework defining U.S.-China relations since the Trump administration, the Chinese government has consistently refused to accept this framing"[18]. This refusal is not mere rhetoric. China has countered U.S. pressure with the concrete card of rare earth export controls[13]. A representative example is the case in April 2025, when China countered high U.S. tariffs on Chinese goods with rare earth export restrictions, forcing Washington to retreat[13]. This illustrates the structural reason why U.S. containment policy is difficult to impose unilaterally.

2. Structural Context

Political Structure

The U.S. domestic political calendar is the key variable constraining the continuity of China strategy. The intensity and means of China strategy have shifted with each change of administration. Policy tools have continued to evolve, from the tariff-centered pressure of Trump's first term, to the sophisticated export controls of the Biden administration, to the expanded import bans on robots and inverters under Trump's second term[15][19]. The problem is that these changes resemble discontinuous redesigns tied to changes in administration rather than adjustments within a consistent strategic framework. The Global Times criticizes such policy shifts as "impulsive policy decisions born of anxiety"[15]; although this assessment reflects the tone of Chinese state media, it touches on a problem of predictability in U.S. China policy that resonates with the concerns of Asian allies.

Polarization within U.S. domestic politics is also a structural constraint. Nikkei, analyzing the landscape of public opinion ahead of the 2026 U.S. midterm elections, notes that the AI boom is being perceived among voters as "heat without benefit"[11]. This report suggests a backlash of public opinion is forming against data center construction[11]. This implies that the industrial policy foundation of containment through the promotion of advanced industries is not securing stable domestic public support.

Economic Structure

Cracks in multilateral cooperation over supply chain reorganization are also a structural issue. SIPRI explains the background against which security of supply chains for strategic materials was treated as a core agenda item at the G7 meeting, noting that China has used its export controls to create bottlenecks in the supply of rare earths and related technologies[6]. China has used this as a countermeasure against U.S. tariffs and export controls, and also as a means of pressuring Japan over statements related to Taiwan[6]. This means that export controls are no longer a unilateral weapon of the United States but have become a mutual deterrence instrument operating in both directions.

Changes in China's economic conditions are also a variable altering the structure. Foreign Affairs notes that the strategic challenge China faces today differs qualitatively from that of four years ago[4]. The analysis suggests that as domestic economic slowdown and structural vulnerabilities deepen, this is paradoxically strengthening U.S. negotiating leverage[4]. Another analysis from the same publication assesses that despite these conditions, China still holds an edge over the United States through concrete means such as the rare earth card[13]. The coexistence of these two assessments itself shows that judgments about the balance of U.S.-China economic power diverge even within the United States.

Security Structure

A structure in which technological hegemony competition cannot be separated from the military security domain is becoming entrenched. EAI notes that "as competition over core strategic interests intensifies, it could either escalate into full confrontation or settle into healthy competition and cooperation"[16]. Military competition continues to spread not only in the gray zone and conventional forces but also into the nuclear force and new weapons domains[16]. In this structure, export controls on semiconductors and AI function not as pure industrial policy but as a means of managing the military capability gap.

In Southeast Asia, the issue of security trust is raised separately. Foreign Affairs points out that U.S. efforts to contain China over the South China Sea ultimately depend on "Washington's credibility"[17]. For regional countries to trust the United States, they must be confident that it will contain China without unnecessary escalation and that it will abide by the international law it itself upholds[17]. If this trust is shaken, U.S. containment policy toward China will find it difficult to secure the cooperation of allies.

3. Historical Precedents and Comparison of Similar Cases

The San Francisco U.S.-China summit of November 2023 serves as an important reference point for understanding the current phase. EAI characterized this summit as an occasion for "seeking cooperation between 'managed competition' and 'securing the right to development'"[2]. After five months of high-level contact, the outcome amounted only to the resumption of military dialogue and the establishment of new dialogue mechanisms on narcotics and AI[2]. The core issues of the Taiwan question and export controls remained unresolved[2]. This precedent illustrates a pattern in which summit-level agreements between the United States and China tend to manage structural conflict rather than resolve it. The current competition-coexistence framework can be seen as an extension of this same pattern.

Europe's shift in China strategy is also a subject for comparison. The Diplomat reports that at the EU summit in June 2026, the European Commission received a clear mandate to prepare additional trade defense instruments in response to subsidized Chinese imports[9]. It also notes that France and Germany, setting aside years of divergent positions, jointly designated China for the first time as "a challenge to our economy"[9]. Austrian Chancellor Stocker's remark that "the EU needs a strategic reorientation" shows that Europe is converging toward a competitive framework similar to that of the United States[9]. This is evidence that containment of China is spreading not merely as a U.S. policy but as a structural response across the Western bloc as a whole. At the same time, it confirms a difference in that Europe's shift is emerging later, and in a more defensive form, than that of the United States.

The continuity between the Belt and Road Initiative and the AI export strategy is another notable precedent. The Diplomat analyzes that the Xi Jinping government is expanding the Belt and Road approach—which for over a decade exported roads, ports, fiber-optic cables, and other digital infrastructure—into the export of an entire AI ecosystem[1]. This is described as an attempt encompassing semiconductors, cloud infrastructure, foundation models, standards, applications, workforce training, and governance[1]. It is also noted that Nvidia CEO Jensen Huang has warned about the combination of the Belt and Road Initiative with AI[1]. This suggests that China is not merely responding defensively to U.S. export controls but is shifting toward an offensive strategy of implanting its own technology ecosystem in third countries. This is structurally similar to the Cold War-era competition in which the U.S. and Soviet blocs each sought to implant their own technology and standards blocs in the Third World.

4. Key Variables in the Development of the Issue

First, there is the U.S. domestic political calendar. Depending on the outcome of the 2026 U.S. midterm elections, the intensity and means of China policy are likely to be readjusted[11]. Whether the ruling Republican Party retains its majority in both chambers of Congress is the primary variable determining policy continuity[11].

Second, there is the question of whether China's leverage persists. The key issue is whether the bottleneck dominance China has secured in supply chains for critical minerals such as rare earths, will continue to be maintained[6][13]. If this dominance weakens, there is room for U.S. containment policy to shift toward a more offensive stance.

Third, there is the issue of allied trust. Unless the predictability and consistency of U.S. policy on regional security matters, including the South China Sea, is guaranteed, Asian allies will have no choice but to hesitate before fully aligning themselves with a U.S.-led containment framework[17].

Fourth, there is the pace of Europe's convergence in China strategy. Depending on whether the EU moves toward trade defense measures at a level similar to the United States, or maintains an independent line, the density of Western bloc coordination on containing China will vary[9].