The 'Frozen' Phase of the US-China Technological Hegemony Competition and South Korea's Response Following the Trump-Xi Washington Summit

Executive Summary

The Trump-Xi Washington summit resulted in a single achievement of extending the trade truce by two months, while key issues such as rare earths, semiconductor export controls, and AI safety norms were deferred without agreement. Despite the friendly atmosphere of the summit diplomacy track, regulatory bodies like the US Department of Commerce and the FCC are independently accumulating measures for technological control over China, leading to a dual structure where the two tracks operate separately. The most likely scenario for the next 3-6 months is a 'managed stalemate' (probability 55%) where this dual structure persists, although conditional easing (20%) or a potential reignition of tensions cannot be ruled out. South Korean companies should not be swayed by the mild tone of the White House announcement, but instead manage security-related items and commercial items separately, making the diversification of procurement for rare earths and semiconductors a constant task. The Taiwan issue has solidified as a structural red line rather than a negotiation card, necessitating the urgent establishment of a separate management system for supply chain risks related to Taiwan.

I. Issue Situation Analysis

US-China Technological Hegemony Competition Following the Trump-Xi Washington Summit: Issue Situation Analysis

1. Background and Progress of the Issue

Chinese President Xi Jinping arrived in Washington on September 23 for a three-day state visit[1][4]. This marks the first visit by a top Chinese leader to the United States in 11 years[3]. President Trump personally welcomed Xi at Joint Base Andrews' runway[17]. It is a rare occurrence in US diplomatic history for a president to greet a foreign leader at the airport[17]. The White House prepared a welcoming ceremony, a Rose Garden honor guard, and a state dinner as part of the protocol[2][3].

This summit was a follow-up to the agreement made during President Trump's visit to Beijing in May[3][6]. At that time, the so-called '3T' agenda of trade, technology, and Taiwan formed the framework of discussions, and this same framework was repeated at the Washington summit[6]. Four days before the summit, on September 21, the Chinese Foreign Ministry consistently provided cautious responses to questions about whether Beijing had fully resumed rare earth supplies and whether the deadline for export restrictions set for November 10 could be extended[12]. This indicates that the rare earth issue emerged as the biggest variable in negotiations even before the summit began[12].

Just before the summit, US Treasury Secretary Mnuchin, US Trade Representative Lighthizer, and Chinese Vice Premier He Lifeng activated a working channel in New York to discuss the renewal of the Busan Agreement and the establishment of a US-China Trade Committee[18]. AI safety and governance dialogue was also officially addressed for the first time at this meeting[18].

2. Progress of the Summit

During the White House meeting on September 24, President Trump presented security, technology, and superintelligence (SI) issues as key agendas[14]. Xi responded by emphasizing cooperation over confrontation, stating that both countries should work together to keep AI under human control[14]. However, Xi simultaneously publicly demanded opposition to Taiwan independence[7]. This was a more direct mention than during the Beijing meeting in May, indicating that China has explicitly placed the Taiwan issue on the negotiation table[7].

The three-day state visit ultimately concluded with an extension of the trade truce by two months[7]. Agreements on key issues such as rare earths and advanced technology controls were deferred to the next negotiations[7]. DW highlighted the summit with the title "Results or just symbolism?" noting that despite the mild public gestures and lavish state honors, core disagreements remain[1]. The Atlantic Council also pointed out that, aside from the extension of the trade truce and the dinner menu, virtually all agendas remain unresolved[2]. Business Times analyzed that the personal trust formed between the leaders could increase the predictability of US regulatory measures, potentially benefiting Beijing[19].

Japan's Nihon Keizai reported that the second summit, held four months later, concluded amid ongoing tensions surrounding tariffs, rare earths, and AI[10][11]. Channel News Asia conveyed analysts' evaluations that while the personal friendship between the two leaders warmed the atmosphere of the meeting, sustainable stability depends on whether both sides can manage unresolved disagreements[16]. In fact, Trump and Xi have indicated plans to meet again in November[2].

3. Interests of Each Country

The US administrationfocused on securing visible economic outcomes at this summit. Hankyoreh analyzed that the US prioritized tangible economic achievements such as expanding agricultural purchases[4]. While President Trump's public remarks emphasized security, technology, and superintelligence agendas[14], the actual negotiations resulted only in the procedural achievement of extending the tariff truce[7]. The White House's unusual protocol reflects President Trump's intention to secure predictability in China policy through building personal trust with Xi[17][19].

The Chinese governmentprioritized preventing the reignition of the trade war and maintaining 'strategic stability'[4]. Xi reiterated the 'constructive strategic stability' relationship proposed during the Beijing meeting in May[7], but made more explicit demands regarding the Taiwan issue, narrowing the flexibility in negotiations[7]. The Chinese Foreign Ministry maintained a cautious stance regarding the resumption of rare earth exports until just before the summit, avoiding definitive answers to maintain leverage in negotiations[12].

The working negotiation channelwas activated by Treasury Secretary Mnuchin, USTR Lighthizer, and Vice Premier He Lifeng in New York[18]. This channel addressed specific agendas such as the renewal of the Busan rare earth agreement and the establishment of a US-China Trade Committee[18], but these were not reflected in the outcomes of the summit aside from the extension of the tariff truce[7].

US regulatory agencies(such as the Department of Commerce and the FCC) are consistently accumulating measures for technological control over China, separate from the summit diplomacy track, according to EAI's analysis[3][6][9]. This creates a structure where the mild tone of the leaders is juxtaposed with the practical hardline stance of regulatory agencies[6].

4. Summary of Key Issues

Rare earthsare likely to result in conditional easing rather than a complete release[3]. The Diplomat described this as "Relief Without a Resolution"[12]. The extension of the export restriction deadline set for November 10 remains uncertain[12].

AI safety governancewas officially addressed as an agenda for the first time at this summit[18], but fundamental disagreements surrounding its definition were not resolved. PIIE pointed out that expectations for progress on the AI agenda were low even before the summit, and in fact, no significant changes in the existing policy stances of both sides were observed[8].

The Taiwan issueis solidifying as a structural red line rather than a negotiation card. Xi's public demand for opposition to independence[7] suggests that Beijing is narrowing the room for concessions on this matter.

The gap between the summit diplomacy track and the regulatory agency trackis expected to persist even after this summit. Despite the mild public tone, the accumulation of technological control measures over China by the Department of Commerce, FCC, and others continues separately[3][6][9]. This is also why it is difficult for companies to predict policy directions based solely on White House announcements.

II. In-Depth Issue Analysis

US-China Technological Hegemony Competition Following the Trump-Xi Washington Summit: In-Depth Issue Analysis

1. Analysis of Fundamental Causes

The background of the summit's mild tone lies in the nature of the negotiation subjects themselves. Tariffs are negotiable variables. Tax rates can be adjusted, and grace periods can be extended. However, semiconductor export controls and rare earth supply chains are of a different nature. They are security assets based on the perception that each side holds the other's industrial vulnerabilities. Washington perceives advanced semiconductors and semiconductor equipment as weapons. Beijing views its near-monopoly on rare earth refining and processing capabilities as a countermeasure[12]. In this asymmetrical interdependence structure, even if trust is built between the leaders, it is difficult to lead to concessions on specific issues.

The urgency surrounding the AI agenda is also one of the fundamental causes. In early September, Anthropic CEO Dario Amodei publicly urged for a slowdown in AI development, and leaders from OpenAI and SpaceX echoed this, spreading concerns about the risks of AI runaway[6]. President Trump's explicit mention of 'superintelligence (SI)' as an agenda item during the summit is not unrelated to this trend[14]. However, Xi's response remained at a general level, stating that "we should work together to keep AI under human control"[14]. While an agreement was reached on the framework of safety dialogue, it means that there was no shared definition of what to regulate. PIIE noted that expectations for progress on AI-related issues were low from the outset, which aligns with the diagnosis that the inertia of both countries' policies is strongly at play[8].

The Taiwan issue is closer to being a fundamental cause rather than a byproduct of negotiations. Xi publicly demanded opposition to Taiwan independence during this summit. This is a more direct mention than during the Beijing summit in May[7]. For Beijing, Taiwan is a sovereignty issue that cannot be a bargaining chip. In contrast, for Washington, arms sales based on the Taiwan Relations Act are a domestic legal obligation. This clash represents a structural gap that cannot be resolved through personal bonds between the leaders[6][9].

2. Structural Context

This issue needs to be understood as a dual structure where two tracks operate separately. One is the summit diplomacy track. President Trump and Xi are building personal trust through unusual honors such as state dinners and airport receptions[16][17]. The other is the regulatory agency track. The US Department of Commerce and the FCC are accumulating measures for technological control over China, regardless of the goodwill between the leaders[6][9]. EAI's report diagnosed that "the goodwill of the summit diplomacy track and the conflicts of the regulatory agency track are expected to continue in a dual manner"[3]. Judging that regulatory risks have been resolved based solely on White House announcements can lead to misjudgments.

The presence of hardliners in the US Congress also acts as a structural constraint. Even if there is an agreement between the leaders, legislative movements exist that seek to reduce the executive branch's discretion. This factor weakens the political sustainability of agreements between the leaders[9]. From Beijing's perspective, domestic political considerations are also at play. China prioritizes preventing the reignition of the trade war and maintaining 'strategic stability,' while the US emphasizes securing visible economic outcomes such as expanding agricultural purchases, a asymmetry that was reaffirmed during this summit[4]. This asymmetry is a structural factor that continues to misalign the form and content of agreements.

From an economic structural perspective, the asymmetry surrounding the rare earth supply chain is key. The Chinese Foreign Ministry's consistent cautious stance regarding the full resumption and the possibility of extending the November 10 deadline[12] shows that Beijing has no intention of fully relinquishing this card. Business Times analyzed that the personal trust formed between the leaders could actually increase the predictability of US regulatory measures, potentially benefiting Beijing[19], suggesting that the uncertainty of the regulatory track could be somewhat buffered by the summit diplomacy track.

3. Comparison with Historical Precedents and Similar Cases

The pattern of this summit resembles the trajectory of the 2019 US-China Phase One trade agreement. At that time, practical conflicts related to technology controls persisted apart from the symbolic event of a signing ceremony between the leaders. The trend of the trade truce extension emerging as a key achievement in this summit[1][2] reflects a repetition of past patterns where progress was made only on negotiable variables like tariffs while structural issues were deferred.

There are also points of comparison with the 1980s US-Japan semiconductor friction. At that time, the US defined the rise of the Japanese semiconductor industry as a security threat and controlled market access and prices through agreements. However, the current US-China issue differs in that it is a friction between strategic competitors rather than among allies. The approach is not one of resolution through agreements but rather of management through mutual regulatory accumulation.

Comparisons with the Cold War US-Soviet détente are also valid. As the Atlantic Council pointed out, both sides have "established an uneasy status quo over the past year, but this is not true détente; it is temporary stability"[5]. This expression parallels the situation in the 1970s when US-Soviet détente made progress only in the limited area of arms control while the ideological competition remained intact. DW summarized this state as "frozen," questioning whether this frozen state works to Beijing's advantage[17]. A freeze implies maintaining the status quo, which suggests that maintaining the status quo is advantageous for those who benefit from time.

4. Key Variables Shaping Issue Development

The most imminent variable is the deadline for the rare earth export restrictions set for November 10[12]. Depending on whether this deadline is extended or shifted to broader restrictions, the procurement risks across semiconductor, electric vehicle, and defense supply chains will change. The Chinese Foreign Ministry's avoidance of definitive answers until just before the summit[12] suggests that this card may continue to be leveraged in future negotiations.

The second variable is the third summit scheduled for November[2]. The Atlantic Council reported that this summit is the second meeting this year, with a third meeting planned for November[2]. This can be interpreted as a signal that both sides are attempting to institutionalize the summit diplomacy track itself as a regular channel for relationship management. However, it remains uncertain how much this channel can absorb the conflicts of the regulatory agency track.

The third variable is the legislative trends in the US Congress. If hardliners push legislation that reduces the executive branch's discretion in negotiations with China, there is a possibility that agreements between the leaders could be undermined in the domestic political process[9]. This is also why South Korean companies should not hastily conclude regulatory easing based solely on White House announcements.

The fourth variable is the management of the Taiwan issue. Xi's public demand for opposition to Taiwan independence during this summit[7] increases the likelihood that this issue will repeatedly appear on the table in future meetings. EAI analysis points out that "the Taiwan issue is solidifying as a structural red line rather than a negotiation card, necessitating long-term observation"[3], and as long as this structure is maintained, the 'frozen' state of US-China relations is likely to persist.

The fifth variable is whether AI safety dialogue will be institutionalized. The discussions on AI governance, which were first officially addressed at the New York working meeting[18], will be a point of observation to see whether they lead to specific verification systems or definitions, or remain at the level of political rhetoric. If the policy inertia identified by PIIE continues to operate[8], it is expected that this issue will also struggle to move beyond a general agreement level for a considerable period.