U.S.-China Summit Preparations and the Management of the Taiwan Issue: Implications for Middle Powers

Executive Summary

Ahead of Xi Jinping’s visit to the United States and the summit scheduled for September 24, both Washington and Beijing are signaling a posture of managed competition, evidenced by the restoration of high-level military contacts and discussions on tariff reductions. However, the proposed arms sales package to Taiwan and Taipei’s increasing defense budget show that the Taiwan issue is solidifying into a structural red line rather than a bargaining chip. In the trade and technology sectors, there are signs of partial cooperation, such as holding an AI safety dialogue, but individual actions by regulatory agencies are expected to continue on a separate track from high-level diplomacy. If the summit results in a resolution that excludes Taiwan, it could heighten political uncertainty for Taiwan's foundry supply chains. This makes it necessary for South Korea to maintain separate channels with Taiwan and to preemptively coordinate its interests with the United States before the summit. Japanese Prime Minister Sanae Takaichi’s efforts to communicate in advance suggest a common logic of response for allies concerned about being excluded.

I. Situational Analysis

U.S.-China Summit Preparations and Attempts to Manage the Taiwan Issue: A Situational Analysis

1. Background and Developments

In accordance with an agreement reached during President Trump’s May 2026 visit to China, President Xi Jinping’s visit to the United States is scheduled for late this month. The summit date has been set for September 24 [2][4]. President Trump personally announced that the White House is preparing a state dinner, an unusual step [4]. This is different in nature from the November 2023 APEC summit in San Francisco, which was aimed at mending relations that had soured due to the spy balloon incident [9]. The structure this time involves a fall visit to the U.S. that builds upon the preceding high-level diplomacy of the May visit to China.

The Taiwan issue is being managed with particular sensitivity in the lead-up to this summit. While the U.S. officially acknowledges the One China principle and has historically maintained a policy of strategic ambiguity toward Taiwan, that line has blurred since the first Trump administration [3]. Within Taiwan, the 2027 defense budget has been increased by 16%, surpassing 1 trillion New Taiwan dollars for the first time, and a trend of strengthening its self-defense posture continues, including conducting live-fire drills during the Han Kuang exercises to test its blockade response systems [3]. Republican hardliners in the U.S. are pushing for the submission of a $14 billion arms sales package to Taiwan [3]. Against this backdrop, the move by both militaries to restore communication channels ahead of the summit is a key aspect of recent developments.

2. Current Situation

On the sidelines of the 28th Indo-Pacific Chiefs of Defense (CHODs) conference held in Victoria, Canada, from August 31 to September 2, senior People's Liberation Army (PLA) general Yang Zhibin (杨志斌), who oversees the Taiwan Strait, and U.S. Indo-Pacific Command (INDOPACOM) Commander Admiral Samuel Paparo resumed commander-level contact for the first time in two years [16]. China’s state-run Global Times commented that this meeting should be interpreted as a signal to the “Taiwan region” [1]. The fact that the two military leaders met on the sidelines of a multilateral conference attended by 32 senior military representatives from 29 countries suggests that both sides intend to reduce the risk of accidental conflict ahead of the summit [16].

At the same time, President Trump publicly assessed that China was “relatively inactive” during the Strait of Hormuz blockade situation. This remark came just weeks before Xi Jinping’s visit to the U.S. [7]. This can be read as an indication of Washington's intent to induce Chinese cooperation on the Iran issue [13]. In the trade sector, tariff reductions on “nonsensitive” items are being discussed, but according to sources, tensions surrounding trade with China, Iran, and rare earths persist [12]. In the technology sector, President Trump’s special envoy, Senator Steve Daines, visited AI and space companies in Hangzhou and Guangzhou to conduct preliminary groundwork ahead of the summit [10]. In mid-September, the first official U.S.-China AI safety dialogue, led by Treasury Secretary Beth Besant, is scheduled to take place [17].

3. Key Actors and Positions

United StatesThe U.S. has the dual objective of securing substantive progress on economic issues such as tariffs and rare earths through the summit, while also aiming to secure China’s cooperation on the Iran issue [7][13][12]. However, on the matter of arms sales to Taiwan, there is a difference in approach between the administration and congressional hardliners. Republican hardliners are pushing for the submission of the $14 billion package before the summit, but the White House is likely to take a more cautious stance to avoid spoiling the atmosphere for the talks [3].

ChinaThrough the Global Times, China is sending a message that the “Taiwan region” must “understand” the signal sent by the resumption of U.S.-China military channels [1]. This is interpreted as a dual strategy: a demonstration of deterrence against Taiwan and an effort to manage the risk of accidental military incidents before the summit. China is also simultaneously applying pressure to shrink Taiwan's international space, for instance by strongly opposing its return to the Pacific Islands Forum (PIF) and warning that “there will always be a price to pay” [15].

TaiwanTaiwan is assessed by observers as a “strict red line,” not a bargaining chip [3]. While strengthening its own deterrent capabilities through defense budget increases and the Han Kuang exercises, warnings have been raised by institutions such as the Brookings Institution about the risk of miscalculation if the United States uses the Taiwan issue as leverage to pressure China [3][5].

JapanPrime Minister Sanae Takaichi is seeking to secure an in-person meeting with President Trump before the U.S.-China summit. The Nikkei reports that Tokyo is concerned about the possibility of a tariff deal with Beijing and a potential conciliatory U.S. approach toward North Korea [14]. This illustrates the structural tendency of U.S.-China summits to provoke concerns about being sidelined among regional allies.

4. Key Issues

The first issue is the timing of the Taiwan arms sales package. The path taken—submission before the summit, submission after adjustments, or forcing it through—will determine the atmosphere of the talks and the subsequent level of tension [3]. The second is whether the restoration of high-level military channels will function as a substantive crisis management mechanism or remain a merely symbolic gesture [16][1]. The third is the uncertainty over whether negotiations in the tariff and technology sectors can proceed separately from the Taiwan issue or will be bundled as part of a package deal [12][10][17]. These three axes are assessed to be the key variables that will shape the direction of U.S.-China strategic competition in the coming weeks.

II. In-depth Analysis

U.S.-China Summit Preparations and Attempts to Manage the Taiwan Issue: An In-depth Analysis

1. Analysis of Root Causes

What distinguishes the current preparations for the summit from past instances is that the Taiwan issue is not a secondary item on the negotiating table. While Republican hardliners in the U.S. are pushing for a $14 billion arms sales package, Taiwan has increased its 2027 defense budget by 16%, surpassing 1 trillion New Taiwan dollars for the first time [3]. The assessment by observers that the Taiwan Strait is not a bargaining chip but a “strict red line” [3] highlights the structural limitation that the Taiwan issue itself will be difficult to resolve, even if the summit is successful.

The root cause lies in the gradual erosion of the U.S. policy of strategic ambiguity since the first Trump administration. Official visits to Taiwan by high-level officials, once considered a red line, have taken place, and within Taiwan, public support for cross-strait unification has plummeted since the implementation of Hong Kong’s National Security Law [3]. From Beijing’s perspective, the accumulation of these trends has grown its domestic political constraints, making it difficult to treat the Taiwan issue as a subject for conciliatory gestures in negotiations. The Global Times’ comment that the “Taiwan region” must “understand the signal” from the commander-level meeting in Canada [1] shows that Beijing is framing the restoration of military channels as a signal of deterrence, not as evidence of détente.

At the same time, there are signs that the Trump administration is attempting to link the Taiwan issue with the Iran issue. President Trump’s public assessment of China’s “relative inactivity” during the Strait of Hormuz blockade [7] is not only intended to elicit Beijing’s cooperation on Iran but can also be read as a signal demanding Chinese restraint on the Taiwan issue. This approach is an extension of a long-standing U.S. practice of bundling different regional issues into a single negotiating package to maximize leverage.

2. Structural Context

Security Structure: The military competition surrounding the Taiwan Strait was characterized by a structural vulnerability: the breakdown of communication between the two countries’ military leadership. The contact between PLA General Yang Zhibin and U.S. INDOPACOM Commander Paparo was the first resumption of commander-level talks in two years [16]. This means that during this gap, military activities on both sides proceeded without communication channels, a factor that has increased the structural risk of accidental conflict. The fact that contact was resumed on the sidelines of a multilateral chiefs of defense conference involving 29 countries [16] can be seen as a compromise arrangement designed to restore substantive communication while avoiding the political burden of a bilateral channel.

Economic Structure: In the trade sector, tariff reductions on “nonsensitive” items are being discussed, but fundamental tensions over rare earths, Iran, and trade have not been resolved [12]. This suggests that the U.S.-China economic relationship is solidifying into a dual structure where partial decoupling and partial interdependence coexist. In the technology sector, Senator Daines’s visit to AI and space companies in Hangzhou and Guangzhou [10] and the AI safety dialogue led by Treasury Secretary Besant in mid-September [17] are proceeding concurrently. This reveals a dual-track structure of technological competition and dialogue in the lead-up to the summit. As EAI has previously pointed out, since “the flashpoint of conflict is not the White House's high-level diplomatic track but the bureaucratic track at the regulatory agency level” [6], there is a structural potential for friction originating from regulatory agencies like the FCC to persist, regardless of the political outcomes of the summit.

Political Structure: Within the United States, the pressure from Republican hardliners for arms sales to Taiwan and the White House’s prioritization of high-level diplomacy are in tension with each other. The efforts President Trump is making for Xi’s visit, such as preparing a state dinner [4], conflict with the political calculation that hardline measures on the Taiwan issue could spoil the atmosphere for the summit. Within China, the Xi Jinping leadership faces the constraint of significant domestic political costs if it appears to make concessions on the Taiwan issue. This has led to a dual strategy of allowing practical and technical contacts, such as the restoration of military channels, while approaching politically symbolic measures with extreme caution.

3. Historical Precedents and Comparison with Similar Cases

The November 2023 U.S.-China summit at the APEC forum in San Francisco is a comparable precedent. At the time, the two countries “promised to install guardrails to prevent strategic competition from veering into confrontation or conflict and to pursue responsible competition” [9]. To restore relations that had soured after the spy balloon incident in February of that year, National Security Advisor Jake Sullivan and Foreign Minister Wang Yi held a series of meetings in Vienna, Malta, and Washington, and four cabinet-level U.S. officials visited Beijing in succession before the summit could be held [9]. The key outcome of that summit was limited, as “no compromise was reached on pending issues; the agreement was limited to strengthening communication and building trust through the resumption of high-level military-to-military dialogue” [9].

In the current situation, the resumption of commander-level contact in Canada is being highlighted as a key achievement ahead of the summit [16], suggesting the 2023 pattern is repeating itself. However, there are also clear differences. Whereas 2023 was a process of restoring relations after a sudden downturn caused by the spy balloon incident, this time, the preceding high-level diplomacy of the May visit to China has already taken place [2][4], and the fall visit to the U.S. is scheduled as a continuation, making the trajectory of improving relations more stable. At the same time, variables originating from the Taiwan Strait—namely, Taiwan’s own defense budget increase and the pressure for arms sales from U.S. congressional hardliners [3]—have become structurally more acute than they were in 2023.

4. Key Variables Shaping Future Developments

First is the timing and scale of the Taiwan arms sales package. An EAI analysis has previously presented the following probabilities: a 20% chance of a resolution through the summit, a 55% chance of an adjusted package submission with limited Chinese backlash, and approximately a 25% chance of the arms sale being forced through, leading to an escalation of tensions [3]. Whichever of these three paths is taken, warnings have already been issued that a “risk of miscalculation” persists if the White House uses the arms sale as a tool to pressure China [3].

Second is the management of mutual signals between the U.S. and China via the Iran issue. President Trump’s public assessment of China’s “relative inactivity” [7] is a remark intended to set the mood before the summit, but it has also been pointed out that U.S. policy toward Iran “lacks the will to confront China and Russia head-on” [13]. If substantive cooperation on the Iran issue does not materialize after the summit, this signal could be quickly exhausted.

Third is the controllability of technology-related friction originating from regulatory agencies. The FCC’s measures against China are accumulating on a separate track from high-level diplomacy [6], and the parallel structure of Special Envoy Daines’s visit to Chinese AI and space companies [10] and the AI safety dialogue led by Treasury Secretary Besant [17] carries the potential to create a disconnect between the political outcomes of the summit and the practical responses of bureaucratic organizations.

Fourth is the response of regional allies. Japanese Prime Minister Takaichi’s push for a meeting with President Trump before the summit [14] shows that Tokyo is concerned about a potential tariff deal with Beijing or U.S.-China coordination on North Korea. This suggests that if middle powers in the region, including South Korea, remain in a position of passively accepting the outcome of the U.S.-China summit after the fact, they could be affected by the results of negotiations without their own interests being reflected.