It has been a turbulent year for the fraught US-China relationship. In a new series, we look back at the events of 2025, starting with the geopolitical struggle between the two rival superpowers.
In a year marked by domestic crises and global turmoil, Washington and Beijing are set to end 2025 with a fragile truce after they stepped back from the brink of full-blown tariff warfare – but deeper antagonisms remain.
The downward spiral of rhetoric and retaliation started with US President Donald Trump’s tariff threats and vow for a “total decoupling” from China – echoing his first‑term trade war. But it culminated in an unexpected late‑year thaw at a leadership summit in Busan, South Korea.
Observers broadly agree that this was neither a return to engagement nor a shift towards “managed competition” but rather a tactical pause. It was seen as a mutual de-escalation shaped by domestic imperatives and global pressures that have pushed most countries to hedge rather than choose sides.
It lowered the temperature but did little to alter a relationship that most analysts see as structurally adversarial, with the pause seen as having more to do with the greater struggle over the future of the global order.
At the core of that struggle is the question of which political and economic system will prove more resilient in a crisis‑ridden world – a contest that experts say has only intensified in the past year, even as both sides temporarily set aside their harshest economic weapons.
The year’s events also underscored a fundamental asymmetry between Washington and Beijing, with each testing the limits of coexistence.
Trump’s “America first” transactional approach has unsettled traditional partners, raising doubts about Washington’s long‑term reliability and the durability of its alliances.
Beijing, meanwhile – despite slowing growth and mounting socio‑economic strains – has projected greater confidence in wielding economic leverage and narrative control to manage an unpredictable American president.
Zhiqun Zhu, a professor of international relations at Bucknell University in Pennsylvania, said it was premature to say the US-China relationship had reached a “competitive coexistence” or a state of “managed competition”.
“The current relative stability in the relationship is largely due to domestic considerations on both sides, such as the US midterm elections and China’s economic slowdown,” he said.
According to Zhu, both Beijing and Washington want that stability to continue, at least for the next year when Trump and Chinese President Xi Jinping are expected to meet several times.
But he said after 2026, freed from re‑election constraints and facing more domestic pressure, Trump would be “very likely to return to a more hawkish and hostile approach towards China, and the bilateral relationship will face some strong headwinds again”.
From ‘Liberation Day’ to Busan
The first year of Trump’s second term reopened old wounds from the 2018-19 trade war, as his return to the White House marked a pivot back to transactional, unilateral tactics after four years of alliance‑centric policy under Joe Biden.
His April “Liberation Day” tariff shock – threatening 100 per cent duties on imported semiconductors and expanding curbs on advanced chips – revived fears of full decoupling, even as Washington framed the measures as “fair trade” and industrial protection, rather than national security confrontation.
Analysts said this prioritisation of trade over security reflected deep divisions in Washington over how far to push confrontation with China.
“What we saw was a temporary adjustment of US national security priorities, and consequently, a change of approach towards China,” said Yun Sun, director of the China programme and co-director of the East Asia programme at the Stimson Centre in Washington.
“I don’t think there is a consensus in the US strategic community about Trump’s approach to China. In fact, there is a lot of disagreement.
“So I’d say in the long run, what will change the trajectory of the US-China relations will be US domestic politics, and who will be in charge again.”
Nevertheless, the late-October Busan summit between Xi and Trump – their first encounter since 2019 – was a turning point.
In the absence of strategic breakthroughs, both sides agreed to a limited but symbolically significant package: China shelved rare earth restrictions for a year and bought more US soybeans, while the US froze new tariffs and eased export‑control threats, with both pledging to work together on Ukraine.
For George Magnus, a research associate at Oxford University’s China Centre, the summit was “about stabilising relations, at least for a while” after “a lot of trade weaponisation on both sides”.
Magnus said a trade deal akin to the “phase one” agreement of January 2020 was likely, but that measures to pause escalation lacked “permanence or strategic significance”.
“I don’t see any material or substantive improvement in the underlying adversarial nature of the relationship,” he said.
Artyom Lukin, a professor at Russia’s Far Eastern Federal University in Vladivostok, described the outcome as “most likely a temporary truce, not a durable stabilisation”.
“The main fact is that America and China are the world’s strongest powers, and they don’t trust each other,” he said, citing “hardwired differences” between the two nations in political culture and identity.
According to Lukin, the combination of “superpower rivalry and cultural differences” will determine an enduring antagonism between the US and China.
“It will intensify as soon as the two sides finally extricate themselves from their mutual economic dependencies, such as America’s reliance on Chinese critical minerals and China’s dependence on Western semiconductor technology,” he said.
He said Trump currently stood in the way of a more intense and militarised confrontation between America and China, characterising the US leader as pro-peace and averse to armed conflict.
From Beijing’s perspective, the current calm is a tactical opportunity rather than a reset or a lasting settlement, according to Sourabh Gupta, a senior policy specialist with the Institute for China-America Studies in Washington.
“China would much prefer to nudge the relationship towards a ‘managed competition or competitive coexistence’ framework and had found a willing partner in Biden – albeit, late into Biden’s term,” he said.
“But the US side (with a new president), being the stronger party, gets to dictate the overall tenor of the relationship.”
Confidence and vulnerabilities
Beijing’s response underscored how much had changed since Trump’s first term.
Compared with its earlier defensive posture, Chinese authorities in 2025 deployed a more sophisticated toolkit – combining rare earth and critical mineral controls, targeted corporate measures, anti-sanctions laws, phased tariff retaliation and calibrated concessions.
At the same time, Beijing has intensified its narrative battle with Washington. State‑controlled media depict the US as a hostile, declining power bent on containment, while presenting China as a reliable pillar of global stability, growth and innovation, even as structural economic challenges continue to constrain its ambitions.
Tensions peaked in early October when Beijing made a “bombshell” announcement of sweeping rare earth export controls and Trump in response threatened 100 per cent tariffs on all Chinese goods.
Sun said China was now far better prepared to handle the US than in 2018-19, in part because because the “US currently prioritises trade rather than national security”.
Zhu also said Beijing was far more prepared to manage US challenges than during Trump’s first term, having adopted a more sophisticated strategy after taking cues from Washington’s playbook.
According to Gupta, Beijing was now focused on the punitive actions of Trump’s administration rather than on his rhetoric.
He said China saw the downside of the relationship as “bottomless” and that its goal was to limit that downside, particularly in areas like export controls and the tech conflict.
Taiwan ‘the tip of the spear’
Most observers see Taiwan as the likeliest trigger that could break this fragile equilibrium – more so than disputes over the South China Sea, technology chokepoints or economic sanctions.
Beijing regards the self-ruled island as part of its territory, to be reunited by force if necessary. Most countries, including the United States, do not recognise Taiwan as an independent state. But the US is opposed to any attempt to take the island by force and is legally bound to supply it with weapons to defend itself.
Taiwan was highlighted as a focus of US strategic competition in Trump’s national security strategy released early this month, citing the island’s semiconductor dominance and its strategic location.
While reaffirming Washington’s “long-standing declaratory policy” against “any unilateral change to the status quo in the Taiwan Strait”, the document warned that “deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority”.
Gupta called this “troubling”, though he noted there was continuity in the language used and Washington’s approach to the defence of Taiwan.
“From a US geostrategic standpoint, Taiwan becomes the tip of the spear for purposes of containing China from breaking out through the first island chain and projecting power into the western Pacific,” he said.
He said this suggested that “the final status of Taiwan may no longer be a matter that is to be left solely to the two sides across the Taiwan Strait to resolve”, contradicting Biden’s earlier pledge not to use Taiwan as a containment card.
According to Gupta, Beijing was likely to seek reassurance that the US would not support Taiwan’s independence or use Taiwan as a way to contain China.
Alliances and new friendships
The turbulence of Trump’s second term – from scepticism towards Europe and Nato to repeated questioning of burden-sharing and tariff campaigns – has laid bare Washington’s vulnerabilities and the strains on its alliances.
Yet it remains unclear how far Trump 2.0 has permanently reshaped the global balance of power.
“The erosion of the international system and US alliances under President Trump has not only severely damaged the US global standing, but also offered China an opportunity to further project itself as a responsible global power,” Zhu said.
He noted that “increasingly countries in the Global South view China as a force of stability and catalyst for development” and that the “growing influence of China and other Brics powers has undoubtedly accelerated the emergence of a new multipolar global order”.
Other experts are more cautious. Sun said the global power balance was constantly shifting and there was no such thing as permanent change.
“I have not seen countries align more closely with China as a result of US policy change,” she said. “In fact, more countries are identifying their agency between the great powers.”
Magnus said Trump had “unquestionably alienated public opinion in America’s backyard of alliance systems” but cautioned that “it certainly doesn’t mean that China faces an open door to exploit new friendships”.
Gupta also warned that it was “too early to tell” if Trump’s erosion of alliances had permanently altered the balance of power.
He said allied partners were “stepping up their contributions within the framework of their alliances with Washington”, reinforcing both existing structures and their own self‑strengthening and hedging capabilities.
“I don’t think there is much or any additional traction to be had for Beijing in terms of authoritarian competence or in terms of being seen as a more reliable partner,” he added.
Gupta said that was particularly true of middle powers that did not have formal alliances, such as India and Vietnam, and small allied democracies that sat on geopolitical fault lines such as Taiwan and Lithuania.
For many of those nations, he said the “self‑cutting down to size of the 21st century’s sole superpower” was a double‑edged sword: it reduced fears of an overbearing hegemon but also threatened the supply of global public goods they had previously relied on.
“As for China, it will not by default become a beneficiary of this dismal state of play, and it will have to earn the credentials if it is to occupy the space ceded by the Americans. To its credit, it is edging in the correct direction,” Gupta said.
Magnus added that while some countries admired China’s governance style, there were “many more that are confronted by global circumstances that require a recalibration at home as to how much the state should be allowed to do and intervene”.
He noted that “scores of countries are resisting China’s industrial policy consequences nowadays”, including a “swathe of” emerging and middle‑income economies whose industries feel threatened by “cheap Chinese imports and overproduction”, even as they avoid fully siding with Washington.
Fragile equilibrium
Looking ahead, experts differ on whether the fragile equilibrium of 2025 can evolve into a more sustainable modus vivendi, or if it marks a plateau before the next spike in confrontation, amid grinding conflicts in Ukraine and the Middle East.
Zhu remained cautiously optimistic, pointing to potential cooperation in several areas.
“US-China rivalry in geopolitics and technology will continue since such competition is structural between a dominant power and a rising power,” he said. “However, cooperation on non-geopolitical issues such as food security, public health, climate change, cultural exchanges and AI governance is not only possible but desirable.”
He said the two powers should prioritise their common interests in these areas to reduce bilateral tensions.
But Sun was sceptical, calling great power cooperation “an overstretch”.
“Cooperation on what? The Trump administration is not a strong advocate on climate change,” she said, adding that any cooperation was more likely to “focus on individual concerns of the US and China”.
Gupta said the fragile equilibrium could hold if a significant trade and tech agreement was reached in 2026, which could open the door to “pragmatic cooperation” but “primarily on the bilateral – not multilateral – front”.
He said such cooperation would be “restricted to certain issues only”, such as military communications, Asia‑Pacific diplomatic coordination, law enforcement cooperation and people‑to‑people exchanges, while global agendas like “climate, public health and AI governance will not make the cut”.
Magnus envisioned “a fractious and occasionally ill‑tempered Sino‑US relationship punctured by periods of relative calm and even some collaboration”, with trade and tech as “subsets of the broader national security” rivalry that both sides felt compelled to champion.
“Rare earth restrictions from a US standpoint and financial exclusion or sanctions from a Chinese point of view are likely to erupt at any moment,” he said, adding that “Taiwan is forever a sensitive matter”.
Magnus argued that a truly “stable and enduring framework” for US-China ties would require “substantial political change in both countries”.
He said any resolution would require the US to accept Chinese dominance in the Asia-Pacific, and China to abandon its state-led industrial policy – conditions he saw as nearly impossible to meet.
“We must all hope that despite deep structural problems, managed disengagement or decoupling, the mutual cleansing of supply chains in the name of national security, and polar opposite ideas on governance, the US and China can nevertheless manage their relationship ... this would at least make a Cold War 2.0 liveable and manageable,” Magnus said.
“But as we know, misunderstanding and miscalculations could potentially wreak bad outcomes, and so both sides must sustain dialogue.” -- SOUTH CHINA MORNING POST
