The Busan Summit: Redefining US-China Relations in a New Era of Strategic Partnership

The recent encounter between US President Donald Trump and Chinese President Xi Jinping during the APEC Summit in Busan, South Korea, has emerged as a pivotal diplomatic moment. President Trump characterized the meeting as "amazing" and a "12 out of 10," suggesting a significant breakthrough in relations that appears to have yielded not only a tactical trade armistice but potentially something far more consequential.

Trump's deliberate framing of the gathering as a "G2" meeting—implying a global co-governance role for Washington and Beijing—has sparked profound questions about the future structure of international relations. Could this signal the emergence of "Chimerica," a powerful bilateral partnership with the capacity to reshape global dynamics?

Prior to meeting Xi, Trump announced on social media: "THE G2 WILL BE CONVENING SHORTLY!" Following their talks, he enthusiastically posted: "Just wrapped up a HISTORIC G2 meeting with President Xi in Busan. 12/10. Tariffs down, soybeans up, fentanyl flow STOPPED. Peace through strength. America FIRST!" He further elaborated: "China understands now: we want fair trade, safe borders, and NO DRUGS. Great progress. Great respect. Great deal coming!" On Truth Social, Trump declared: "My G2 meeting with President Xi of China was a great one for both of our countries. This meeting will lead to everlasting peace and success. God bless both China and the USA!"

Secretary of War Pete Hegseth reinforced this positive narrative, claiming US-China relations "has never been better." Following his own diplomatic engagement, Hegseth shared: "Positive meeting with Admiral Dong Jun, China's Defense Minister. We agreed: peace, stability, and good relations are the best path forward." He added: "Admiral Dong and I also agreed to set up military-to-military channels to deconflict and de-escalate any problems that arise. Peace through strength!"

The Xi-Trump summit produced three key outcomes: a partial trade truce, rare earth supply guarantees, and a moderated tariff structure. However, the most significant development was the American leadership's apparent enthusiasm for a strategic reset with China.

Regarding trade relations, President Xi emerged as the more confident negotiator, having strategically leveraged China's economic and strategic advantages to secure meaningful wins. China's key victories included tariff relief (reduction in existing levies and an agreement to postpone new ones) and export safeguards (suspension of fees on Chinese vessels and a critical pause on new US export controls that threatened to block more Chinese companies from accessing American technology). Simultaneously, the agreement allowed President Trump to claim domestic political victories, primarily through the resumption of Chinese purchases of US agricultural products like soybeans. Essentially, China brilliantly permitted the US to declare victory by simply restoring the previous status quo, demonstrating President Xi's nuanced understanding of his American counterpart's domestic political imperatives.

This outcome highlights a crucial dynamic: China wields powerful, asymmetric leverage against the US through tools like its near-monopoly on rare earth minerals—essential components for virtually all modern high-tech manufacturing that could severely impair US production capabilities—and its enormous purchasing power for commodities such as American soybeans. As Indian policymakers recognize, this type of decisive economic influence remains unavailable to India in its strategic dialogues with the US.

China's effective deployment of economic counter-pressure highlighted its ability to deliver a powerful strategic message. Beijing can weaponize its dominance in global supply chains and its massive market size. In the official summary of President Xi's statements, Beijing characterized the trade tensions as a crucial "lesson," suggesting Washington should avoid a self-destructive cycle of mutual escalation.

China maintained an advantage because the US lacked a coherent, long-term strategic objective, instead relying on short-term tactical measures. While the US purportedly aimed to address fundamental trade imbalances, China's response has been described as a successful game of "Whack-A-Mole." Beijing's tactics forced the US administration to constantly shift focus—from soybeans to rare earths to technology companies—without resolving the core issues.

This successful demonstration of transforming a perceived weakness (being targeted by tariffs) into a strategic advantage showcases the sophisticated coordination in China's statecraft. It ultimately enables Beijing to shape the terms of engagement and maintain a magnanimous position, having demonstrated its capacity to dictate the scope of the agreement.

The emergence of a potential US-China condominium represents the second major development. With the "G2" narrative, Trump, in his characteristic exuberant style, has offered China symbolic elevation, granting Beijing the appearance of equality in managing global affairs in exchange for economic concessions.

The joint statements issued by Trump and Hegseth following the summit with Xi mark an extraordinary reversal in the administration's China policy. Just a few years ago, and indeed until quite recently, the Trump doctrine viewed China not merely as a competitor but as a strategic adversary to be confronted, contained, and if necessary, defeated.

From the beginning of his first term in 2017, Trump's rhetoric toward China was infused with hostility. Beijing was accused of "ripping off" the United States, "stealing" intellectual property, manipulating its currency, and flooding American markets with cheap goods. The Covid-19 pandemic only intensified this antagonism, with Trump repeatedly referring to the coronavirus as the "China virus" and blaming Beijing for unleashing it globally. The administration's stance hardened further during his second term, with tariffs, technology bans, and military positioning in the Indo-Pacific becoming hallmarks of a confrontational strategy.

This adversarial framing extended beyond political rhetoric. As recently as May this year, CIA Deputy Director Michael Ellis declared, "China is the existential threat to US security in a way that we really have never confronted before." That assessment reflected the prevailing consensus within the national security establishment: that China's rise posed a systemic challenge to American primacy, demanding vigilance, decoupling, and deterrence.

Against this backdrop, the tone and content of the "G2 summit" communications are nothing short of astonishing. Trump's effusive praise suggests not just a tactical pause but a rhetorical rehabilitation of China's global role. Hegseth's parallel statement, highlighting "positive" talks and the establishment of military-to-military deconfliction channels, further underscores the shift from confrontation to coordination.

What explains this dramatic recalibration? Some observers view it as a transactional pivot: a temporary thaw to stabilize markets, secure rare earth supplies, and reduce fentanyl inflows ahead of a volatile political season. Others interpret it as a strategic reorientation, acknowledging that unrelenting hostility toward China has yielded diminishing returns and heightened global instability.

Regardless of the rationale, the implications are profound. If China is no longer portrayed as an existential threat but as a partner in peace and trade, then the entire framework of Trump-era foreign policy begins to destabilize. Allies who aligned with Washington's hard line may now feel adrift. Domestic constituencies primed for confrontation may feel betrayed. And Beijing, accustomed to American unpredictability, may view this as an opportunity to reposition itself as a responsible stakeholder—without conceding on core issues like Taiwan, the South China Sea, or technological self-sufficiency.

For India, the message presents mixed signals. On one hand, reduced US-China tensions may diminish regional volatility and create space for economic recalibration. On the other, it may indicate a return to great-power accommodation that marginalizes regional or "middle" powers like the EU, India, and Russia. New Delhi, having invested in strategic alignment with Washington partly due to shared concerns about Beijing, will need to carefully monitor whether this G2 détente represents a temporary adjustment or the beginning of a new geopolitical equilibrium.

In either scenario, the transformation from "China is the enemy" to "God bless both China and the USA" represents more than a tonal shift—it serves as a reminder that in Trumpian geopolitics, today's existential threat can rapidly become tomorrow's indispensable partner. The challenge for allies and adversaries alike is determining whether this represents a tactical maneuver or a strategic reorientation.

"Chimerica," a term coined by historian Niall Ferguson to describe the symbiotic economic relationship between the two powers in the pre-trade war era, suggests deep, structural interdependence and shared strategic vision across geopolitics and global macroeconomics. However, even after Busan, the current relationship remains characterized by deep-seated strategic competition. Fundamental issues—China's industrial policies, intellectual property rights, technological rivalry, and geopolitical tensions over Taiwan and the South China Sea—remain unresolved. The underlying competition for global technological and geopolitical supremacy continues. While Xi Jinping stated that China's vision of development may not "contradict" Trump's "Make America Great Again" agenda, it certainly challenges the foundation of American global primacy.

Nevertheless, it may be premature to reach a definitive conclusion. Growing indications suggest the US may be reorienting its strategic worldview toward a hemispheric focus—prioritizing homeland security, border control, and dominance in the Americas—while tacitly conceding greater influence to China in the Indo-Pacific under a loose "G-2" framework. Such a shift would mark a return to spheres-of-influence thinking, with Washington pursuing stability through selective engagement rather than global primacy.

In summary: the concept of a G2 condominium dividing the world into spheres of influence is undermined by the persistence of the New Cold War's structural fault lines—unless Trump is actively redrawing those fault lines and ending the strategic competition that has been widely taken for granted.

(Shashi Tharoor has been a Member of Parliament from Thiruvananthapuram, Kerala, since 2009. He is an author and a former diplomat)

Disclaimer: These are the personal opinions of the author