American-Chinese leadership summits frequently signal critical junctures in global diplomacy. During the 2013 Sunnylands meeting, newly elected President Xi Jinping sought to reassure Barack Obama by pledging to end his regime’s cyber campaigns. However, he later broke that promise, culminating in 2016 when Beijing barred Obama from standard Air Force One hospitality and compelled him to exit “the ass of the plane” instead. Last year’s Busan summit temporarily eased trade tensions, and this year’s meeting suggests an ongoing, fragile truce.
Many perceive this diplomatic détente as evidence of America’s declining influence and China’s ascending power. Some even argue this summit marks China’s emergence as a peer to the United States in global affairs. Both perspectives are flawed. Each nation harbors significant vulnerabilities, and both leaders—Donald Trump and Xi Jinping—have leveraged the summit to downplay weaknesses while redirecting competition toward areas they believe offer strategic advantages.
China’s earlier confidence has waned, yet conventional wisdom previously held that Trump entered this meeting in a weakened state. Recent events have revealed mounting challenges: Iran’s involvement in Yemen has escalated regional conflict, with Houthi forces threatening to block Red Sea shipping lanes and disrupt Middle Eastern oil access. Global oil prices remain elevated, American gas costs are 50% higher than pre-war levels, and Republican prospects in the upcoming midterms appear dim. Geopolitically, U.S. allies express growing alarm over Trump’s policies, and European support for Ukraine’s defense is diminishing.
Yet Xi Jinping faces mounting pressures as well. Beyond a few state-subsidized sectors, China’s economy progresses slowly. Rising national debt and urban youth unemployment indicate economic strain. Xi has recently purged multiple members of the Central Military Commission—only one other official remains nominally free—which suggests doubts about his command over the military. Additionally, despite rhetoric on green energy, Beijing is concerned about oil markets: it has urged Tehran to curb Houthi activities.
While Trump and Xi engage in diplomatic gestures to smooth relations, they simultaneously undermine each other’s positions behind closed doors. China aims to isolate and weaken Taiwan through political and economic pressure, while the Pentagon quietly enhances its capabilities to operate near Chinese waters. Although Trump has occasionally dismissed Taiwan’s strategic importance, his recent cautious statements about potential responses to Chinese actions reveal a clear reluctance to abandon the island democracy.
China seeks to undermine Taiwan’s stability by fostering internal divisions, with Xi actively promoting pro-appeasement candidates for the 2028 elections. A compliant leader in Taipei could facilitate a Hong Kong-style takeover without large-scale military intervention. Such efforts previously backfired in 2020, reviving President Tsai Ing-wen’s faltering re-election campaign. However, Xi believes years of sustained military exercises, cyber operations, and propaganda will eventually weaken Taiwan’s resolve.
Should Europe recognize China as an emerging threat, it would face significant economic challenges. Chinese electric vehicles threaten to overwhelm European markets and disrupt the auto industry, which has long been a cornerstone of the European economy. Volkswagen, Germany’s largest company in 2024, recently cut 100,000 jobs and was removed from the Euro Stoxx 50 index. China already faces restrictions on exporting vehicles to the U.S.; if Europe imposes similar measures, Xi’s economic pressures would intensify.
The most unpredictable factor is artificial intelligence. Its impact on physical systems remains uncertain, but it has the potential to revolutionize robotics and biotechnology. If American firms gain a head start in AI development, they could significantly disrupt China’s strategy of gaining global dominance through low-cost exports.
Beyond economic challenges, the Chinese Communist Party (CCP) faces another threat: its legitimacy. As Walter Russell Mead noted this week, if AI fails to acknowledge historical patterns described in Xi Jinping Thought, the party’s credibility will suffer severely. A leader who fears comparisons to Winnie the Pooh would struggle to maintain confidence if his initiatives are seen as ineffective.
Efforts to establish an AI safety protocol are underway, but Trump has dismissed such measures as insignificant, stating he wants to “leave it exactly where it is.”
This week’s diplomatic performances mask a deeper reality: the true contest for global dominance will determine which nation shapes the next century.