The Trump-Xi Summit: Behind Managed Competition and the Deferral of Structural Issues

Executive Summary

The Trump-Xi summit is a follow-up to the agreement reached during Trump's May visit to China. While a partial agreement on trade issues like tariffs and rare earths is possible, the Taiwan issue and the definition of AI safety are likely to be excluded from negotiations and deferred. Beijing is maintaining its red line that new arms sales to Taiwan would be grounds for canceling the summit. Meanwhile, Washington continues to build up technology controls on China through regulatory channels like the FCC, independent of the summit diplomacy, which limits the effectiveness of any potential agreement. Pressure from China hawks in the U.S. Congress to curtail the president's discretionary authority also poses a structural vulnerability to the political sustainability of any summit agreement. The South Korean government and companies need to establish a dual-track response system that separates securing collateral benefits in trade and economic security from managing risks in security-linked areas. The EU's approach to consolidating technology regulations on China can serve as a reference model for managing multi-layered regulatory tracks.

I. Situational Analysis

Analysis of Key Issues in U.S.-China Relations Ahead of the Trump-Xi Summit

1. Background and Developments

This summit is a follow-up measure agreed upon during President Trump's visit to Beijing in May [7]. This is President Xi Jinping's first visit to the United States since 2023 [15]. Washington has arranged for a state dinner, an exceptional format [18]. The protocol includes an airport reception upon arrival, a White House welcoming ceremony, and an honor guard review in the Rose Garden [18].

This differs in nature from the meeting on the sidelines of the 2025 APEC summit in Busan. This time, the summit builds on the preceding diplomatic engagement of the May visit to Beijing, creating a framework for continuous relationship management [7]. The two sides have restored contact between their military leadership [7]. Discussions on tariff reductions are also underway [7]. Ostensibly, a tone of managed competition is being projected.

However, beneath this stability, the Taiwan issue appears to be solidifying as a structural red line rather than a bargaining chip[7]. Beijing had set a red line in advance, stating that it could cancel the talks altogether if new arms sales to Taiwan were approved[3]. Washington, while officially recognizing the “one China” principle, maintains a separate approach to Taiwan[7].

2. Current Situation

Two days before the summit, working-level negotiations have reached their final stages. Foreign Minister Wang Yi stated in a call with Secretary of State Rubio on the 17th that they "must prepare well for the next stage of high-level exchanges in a spirit of equality, respect, and mutual benefit" [11]. Minister Wang emphasized that summit diplomacy serves as an anchor for U.S.-China relations [11].

On the trade front, USTR Representative Grier and Treasury Secretary Besant met with Vice Premier He Lifeng in New York on the 20th [14]. Representative Grier stated, "We will monitor the implementation of recent agreements, optimize trade in non-sensitive items, and improve market access" [14]. The White House has prepared a state dinner to be attended by Big Tech CEOs. Sam Altman (OpenAI) and Jensen Huang (Nvidia) are among those invited [16].

China hawks in the U.S. Congress are consolidating their position ahead of the summit [17]. According to local assessments, while Republican lawmakers have historically granted President Trump broad discretion in negotiations with China, they are now showing signs of moving to curtail that discretion through related legislation [17]. The Trump administration is facing criticism for pursuing economic gains while disregarding human rights and political issues [17].

Separately from the summit diplomacy track, the FCC has been building up its own technology regulations against China, such as considering a ban on optical transceivers [10]. Given that the flashpoint of conflict is not the White House but a bureaucratic track at the regulatory agency level, localized friction is likely to persist regardless of the summit's outcome [10]. Beijing has so far refrained from direct retaliation, but this patience is being tested [10].

3. Key Actors and Positions

U.S. Administration: President Trump is attempting to create a favorable atmosphere through the exceptional courtesy of a state dinner [9]. The Brookings Institution analyzes that President Trump has shown considerable deference to President Xi's priorities and concerns, publicly praising him [9]. USTR Representative Grier is pursuing an expansion of trade in non-sensitive items under the rationale of balanced trade [14].

China's Ministry of Foreign Affairs and Ministry of Commerce: Minister Wang defined summit diplomacy as the anchor of the relationship, emphasizing the need for stable preparations for high-level exchanges [11]. Vice Premier He Lifeng has served as China's counterpart in working-level trade negotiations [14]. Beijing demonstrated its focus on the U.S. visit by having President Xi skip the UN General Assembly [15].

U.S. Congressional Hawks: Lawmakers with a hawkish stance on China are trying to put the brakes on the administration's interest-driven approach [17]. Their legislative moves could act as a variable that reduces the predictability of China policy even after the summit.

Big Tech Companies: CEOs from the AI and semiconductor industries, such as Altman and Jensen Huang, have been invited to the state dinner [16][1]. This symbolically shows that the AI agenda is a central pillar of the summit.

4. Summary of Key Issues

The first issue is Taiwan. The red line set by Beijing regarding arms sales is acting as a condition that determines whether the summit itself will take place [3][5].

The second issue is the dialogue on AI safety. The conceptual gap is not narrowing, with President Trump's rejection of pacing development clashing with China's demand to share authority in defining safety [3]. The Nihon Keizai Shimbun reported that China is rejecting calls to moderate the pace of AI development [13]. The general view among local experts is that mutual distrust will limit the scope of cooperation in the safety domain [13].

The third issue is the tariff and rare earth supply chain. Negotiations on tariff reductions and the rare earth supply chain issue are scheduled to be on the table together [1]. The SCMP assesses that the outcome is highly uncertain, with both tariff cuts and the possibility of a new 7.5% tariff being discussed simultaneously [8].

The fourth issue is the autonomy of the regulatory agency track. Since the summit diplomacy track and the regulatory track (involving agencies like the FCC) are already operating separately, it is highly likely that individual export control measures will continue to accumulate, regardless of any symbolic agreement at the summit [3][10].

These four issues directly constitute the core pillars of the U.S.-China strategic competition: technological hegemony and the Taiwan issue. At the same time, they are intertwined with the issue of supply chain restructuring in the realm of trade and economic security. The outcome of the tariff and rare earth negotiations is structured to have immediate ripple effects on regional supply chain participants, including South Korea.

II. In-Depth Analysis

The Trump-Xi Summit: An In-Depth Analysis of Structural Causes and Historical Context

1. Analysis of Root Causes

At the root of the tensions surrounding this summit lies the potential reversal of the technological hierarchy that the U.S. and China have maintained for the past half-century. The United States has maintained an advantage over China in semiconductor design and advanced manufacturing equipment, while China has built an advantage over the U.S. in mineral refining and assembly processes. As this structure of interdependence has been weaponized, both sides have acquired control measures targeting the other's vital points [8]. This is the background against which the rare earth supply chain has emerged as a key agenda item for the summit [1].

The logic of technology control now transcends calculations of economic interest. The FCC's review of a ban on optical transceivers proceeded independently of the White House's diplomatic track [10]. This demonstrates the structural reality that policymaking authority on China within the U.S. is not concentrated solely in the executive branch. In a system where regulatory agencies, Congress, and the administration accumulate pressure on China based on their own logic, a summit agreement can only coordinate one of these multiple tracks, not control the entire apparatus [10]. This is why changes in controls on advanced technology to China—a key monitoring point in the U.S.-China strategic competition—move independently of summit diplomacy.

China's fundamental motivations are different. Beijing has consistently defined the Taiwan issue as a matter of sovereignty, not a bargaining chip [3][7]. Setting a red line that even suggests the possibility of canceling the summit if new arms sales are approved shows that this issue cannot be resolved through calculations of economic interest [3]. Unlike trade and technology disputes, which are handled at the negotiating table, Beijing's position is that the Taiwan issue is not considered a subject for negotiation in the first place.

2. Structural Context

Political Structure

U.S. policy toward China exists in a state of tension between executive discretion and congressional checks. For the first 20 months after President Trump took office, Republican lawmakers granted him broad discretion in negotiations with China [17]. However, as criticism has grown that the administration is pursuing only economic outcomes while ignoring human rights and political issues, China hawks in Congress have consolidated to push for legislation aimed at curtailing this discretion [17]. This suggests that any agreement reached at the summit carries a structural vulnerability, as it could be revisited at any time depending on shifts in the U.S. domestic political landscape. This reveals the political constraints on the Trump administration's approach to negotiations with China, operating at the intersection of U.S. domestic politics and foreign policy strategy.

China positions summit diplomacy as the highest-level management track for U.S.-China relations. Foreign Minister Wang Yi's emphasis that "summit diplomacy serves as an anchor for China-U.S. relations" [11] shows that Beijing is pursuing a strategy of using top-level agreements to resolve conflicts occurring on lower-level working tracks. In the context of Chinese domestic politics, President Xi's visit to the U.S. holds symbolic significance as his first since 2023 [15]. The itinerary, which involves skipping the UN General Assembly to focus solely on the U.S. visit [15], suggests that Beijing has designed this trip as an event focused on managing the bilateral relationship rather than on multilateral diplomacy.

Economic Structure

It is no coincidence that tariffs, rare earths, and AI are all on the agenda simultaneously [1]. These three issues are all conflicts stemming from the asymmetry of supply chain interdependence. Rare earths are items where China holds an absolute advantage in refining capacity. AI semiconductors are items where the U.S. holds a design advantage. Tariffs are a financial tool used to offset or leverage this asymmetry. USTR Representative Grier's mention of "optimizing trade in non-sensitive items" at the New York meeting [14] indicates that both sides are aiming for selective management rather than a full-scale decoupling. This serves as evidence that supply chain restructuring—a key monitoring point in trade and economic security—is proceeding through item-specific segmentation rather than a complete severance.

Security Structure

The war of nerves over the AI safety dialogue reveals a new layer of the security structure. The Trump side's push for pacing development is clashing with China's demand to share authority in defining safety [13]. Nikkei Asia assessed this, stating, "Mutual distrust is likely to limit the scope of safety cooperation between the superpowers" [13]. Given that the AI competition has already been incorporated into a technological domain with military implications, this issue is being treated not as pure industrial policy but as part of the security discourse. In the realm of interstate competition over AI, a conflict is emerging over the very authority to define the concept of safety.

3. Historical Precedents and Comparison with Similar Cases

A comparison with the U.S.-China summit on the sidelines of the 2025 APEC meeting in Busan is instructive. That meeting was aimed at mending relations that had soured after the spy balloon incident [7]. Its purpose was to restore a minimal management framework after a deterioration in the relationship. This summit is different. It is a continuation of the preceding diplomatic engagement of the May visit to Beijing [7]. As a summit being held with the continuity of relationship management already secured, it is assessed as having a higher potential for substantive progress on the agenda than the 2023 case.

However, the approach to managing the Taiwan issue is similar to past patterns. The U.S. is once again repeating its long-standing practice of maintaining a separate approach to Taiwan while officially acknowledging the 'One China' principle [7]. This dual approach has been a structural feature of U.S.-China relations since Nixon's visit to China. Beijing's presentation of an explicit red line this time—canceling the summit if arms sales are approved [3]—can be seen as a clearer pressure tactic than in the past. It is a method of using the very possibility of the summit as leverage by setting a red line outside the negotiating table in advance.

In the realm of technology controls, it is difficult to find a clear precedent. The phenomenon of individual regulatory agencies like the FCC accumulating their own measures against China, independent of summit diplomacy [10], is a new pattern that has gained momentum during the second Trump administration. In the past, under the Obama and Biden administrations, technology regulations on China were relatively centralized, primarily under the Department of Commerce's Bureau of Industry and Security (BIS). This diversification of regulatory actors is acting as a structural factor that weakens the binding power of summit agreements.

4. Key Variables Shaping Future Developments

The first variable is subsequent U.S. action regarding Taiwan. If the United States resumes new arms sales to Taiwan after the summit, it will test whether Beijing's pre-established red line will actually be triggered [3]. This is an issue that will unfold separately, regardless of the summit's symbolic achievements.

The second variable is the independent movement of the regulatory track. If measures against China by individual agencies, including the FCC, continue to accumulate after the summit, the key question is whether Beijing's policy of restraint will be maintained [10]. According to local analytical institutions, there is a possibility that retaliatory measures could be triggered if a specific regulatory item crosses a critical threshold [10].

The third variable is the legislative trend among China hawks in the U.S. Congress. If the Trump administration's negotiating discretion is curtailed, the very enforceability of any agreement reached at the summit could be undermined [17].

The fourth variable is the direction of the disagreement over the concept of AI safety. As long as the fundamental difference in perspective over the authority to define safety is not narrowed, it will be difficult to expect substantive progress on this issue beyond a symbolic agreement [13][6]. The PIIE has projected that progress on AI-related issues will be limited at this summit [6].

These four variables span different issue areas: U.S.-China strategic competition, trade and economic security, U.S. domestic politics, and new technology regulation. The structural conclusion is that it is difficult for a single event like a summit to resolve this entire multi-layered conflict structure.