The 2024 U.S. election was a crucible. Chinese policymakers steeled themselves for a clash. The specter of the last administration’s trade war still haunted them. With a sluggish economy, they anticipated a cataclysm. A storm that could shatter bilateral ties.

Then, a seismic shift. The predicted tempest vanished in a blink. It did not weaken Beijing. It ignited a new fire of confidence. This economic duel was a revelation. Chinese policymakers discovered a new reality. They possessed immense power. They had leverage far beyond what they imagined. Now, they see the trade-focused Trump as a more adaptable rival. He is a tactician, not an ideologue.

Beijing's leaders are on the offensive. They seek a trade agreement to dial down the heat. They eagerly await a fall summit between President Trump and President Xi Jinping. A moment to forge a new path. This optimism is a testament to China's strategic strength. The two nations are locked in a protracted strategic competition. Beijing will leverage its economic might. A powerful deal will buy time. It will mitigate vulnerabilities without conflict.

Weathering the Storm
The trade war's dynamic shifted dramatically. Trump’s second inauguration reignited the previous policies. Punitive tariffs were his weapon. Washington confirmed suspicions with two rounds of ten percent tariffs. China responded with powerful countermeasures. Export restrictions were unleashed. The U.S. escalated. An additional 125 percent tariff followed. By mid-April, U.S. tariffs on Chinese goods reached a staggering 150 percent. A seemingly unwinnable situation.

Then, the script flipped. Many assumed China’s economy would buckle. Instead, Beijing's retaliation was a masterstroke. It prompted Washington to de-escalate. The United States and China swiftly signed an agreement in Geneva. They lowered the tariffs. This was a clear triumph. Beijing's negotiating position was a fortress.

Chinese leaders had a clear conclusion. The U.S. was weaker at absorbing a trade shock. The U.S. "supply shock" hit consumers directly. China’s political system provided a shield. It absorbed the "demand shock." The U.S. response exposed their weaknesses. The stock, bond, and retail markets were new pressure points for Beijing to exploit.

Unleashing a Strategic Advantage
Beijing also uncovered a critical vulnerability. Washington’s dependence on rare-earth elements. A supply chain nearly monopolized by China. When China halted rare-earth exports, it was a devastating blow. It threatened U.S. manufacturing of critical goods. The move was a smashing success. An agreement was reached to lift restrictions. But Beijing delayed compliance. They accused Washington of violating the accord. This was a demonstration of resolve.

This confrontation proved the efficacy of China’s leverage. U.S. actions, including visa restrictions and export controls, revealed the strategic importance of rare earths. For many Chinese policymakers, this was their first true strategic chokepoint. A tool they now know how to wield.

Furthermore, China’s decade-long quest for economic resilience paid off. Since 2018, China has reduced its reliance on U.S. supply chains. It has diversified trade relationships. By late 2024, China traded more with the European Union and ASEAN. A clear sign of its growing independence.

Transshipment is another shield. It funnels goods through third-party countries. It insulates Chinese exports from direct sanctions. The Trump administration faces an immense challenge. Enforcing penalties against transshipment would mean disengaging from the global economy. This gives Beijing another layer of strategic protection.

A New Path Forward
This newfound sense of empowerment has a new motto: "So what?" Chinese scholars and decision-makers are unwavering. They are ready to endure any trade war. They believe Washington's ability to damage their economy is diminished. This affords Beijing greater latitude.

Beijing’s policymakers believe the U.S. won't dare another round of significant tariffs. It would harm their own economy. This perception favors a piecemeal approach to negotiations. It suits Beijing perfectly. China’s leaders welcome short-term agreements. They address imbalances without forcing difficult structural changes. They will increase purchases of American products. In exchange, they demand the easing of U.S. export controls on high-tech goods.

This optimism also stems from a new dynamic. The current administration largely avoids ideological rhetoric. It has shown restraint regarding Taiwan. It has even imposed tariffs and travel restrictions. This focus on trade aligns with Beijing's ultimate objective. Chinese leaders feel they have finally encountered the "businessman" they expected to deal with in 2016.

Beijing’s diplomatic strategy is a direct assault. They prioritize direct engagement with the president. His clear priorities make direct negotiation the most effective way to shape his agenda. This explains Beijing's desire for a summit in China. A reciprocal gesture. An opportunity to appeal directly to Trump's agenda. The goal is a grand bargain. It could lead to concessions on issues like Taiwan. It could shake Taiwan's confidence in the U.S.

Despite this empowerment on trade, Beijing’s long-term outlook remains a game of strategic chess. Chinese leaders are wisely prepared. They do not believe a trade deal is Trump’s final goal. They fear it will simply allow U.S. policymakers to redirect their focus. A return to hostility is a constant shadow.

Beijing's confidence on trade, combined with its long-term anxieties, is a powerful motivator. It will deliberately prolong the negotiation process. This strategy keeps the conversation on trade. A domain where Beijing is strong. Not politics. A domain that could drive the relationship into a tailspin. China will demand rescission clauses in any agreement. 

This gives it flexibility to respond. Beijing’s position has strengthened. It remains vigilant. It prepares for a future where its strength will continue to be tested. This is just a short-lived reprieve. Beijing is poised to take full advantage.