China Just Showed America What Real Economic Strength Looks Like

Xi Jinping and Donald Trump sat down in Busan for an hour and forty minutes, and here's what they walked away with: China agreed to buy American soybeans again. Trump cut fentanyl tariffs from 20% to 10% and knocked China's overall tariff rate from 57% down to 47%. Trump declared victory on rare earths, claiming they'd locked in a one-year deal that "All of the rare earth has been settled”.

Presidents Xi and Trump met for nearly two hours in Busan, steering the crucial US-China relationship. Xinhua Photo

Following over six months of trade dispute beginning in early April, the standoff between China and the US appears temporarily settled. During the dispute, the US approach was characterized as inconsistent, while China was described as proceeding cautiously and deliberately. Significantly, China's counter-strategy transformed from a passive defensive posture to a proactive approach leveraging control over critical supply chains, granting it strategic initiative in trade disputes. Scholars are calling it China's "magnificent transformation."

Partnership Over Punishment

Xinhua's report gave us the details. When President Xi Jinping met with former U.S. President Donald Trump, he framed the bilateral relationship not as a rivalry but as a necessary partnership shaped by history and mutual interest. Xi pointed out that while differences are inevitable between two major economies with distinct systems, their leaders must steer the ship steadily through challenges—focusing on cooperation over confrontation. When storms hit, the two leaders as helmsmen must grasp direction and control the overall situation, steering the China-US relationship steadily forward.

Xi underscored China’s robust economic resilience, citing a 5.2% growth rate in the first three quarters and a 4% increase in global merchandise trade—achievements secured despite internal and external pressures. He described China’s economy as a “vast ocean” with scale, resilience, and potential, fully capable of navigating risks.

For over 70 years, Xi noted, China has stayed committed to its own development path—never seeking to challenge or replace others. He urged that trade remain a “ballast” and “propeller” in bilateral ties, not a stumbling block.

Xi reaffirms China's commitment to its own development path. AP Photo

Both sides, he said, should prioritize long-term gains and avoid a cycle of retaliation, instead expanding the cooperation list through equal and respectful dialogue.

From Purchasing Power to Supply Chain Power

Xinhua reported that both heads of state agreed to strengthen bilateral cooperation in economic, trade, and energy sectors, promote people-to-people exchanges, and maintain regular contact. Trump said he looks forward to visiting China next year and invited Xi to visit the United States.

Wang Yiwei, a professor at the School of International Relations at Renmin University of China, told Observer Network that the shift in China's countermeasure methods reflects China's strength—from initially manifesting in purchasing power and market leverage to now demonstrating technological capability, complete industrial chains, and position in the global industrial chain division of labor.

Trump seems oblivious of China's "magnificent transformation." This China-US contest tested what kind of strength China truly possesses and forced the US to reassess China's capabilities.

Wang described China as a "machine" that has fully started operating. China no longer relys on single punches but rather deploys a series of combination punches. That's why China's countermeasures have become increasingly steady, precise, and powerful.

Calling It What It Is

Labeling the situation a “U.S.-China trade war” is misleading, Wang emphasized. It’s the Trump administration unilaterally initiated trade disputes in 2018. This China-US trade contest has continued for seven years, and China-US economic and trade relations have undergone several transformations.

In reality, it is the United States suppressing not only China but global trade—undermining multilateral rules. China’s actions are defensive, aimed at upholding a free, rules-based international order.

Thus, Wang concluded, America’s moves are “unjustified,” while China's countermeasures are "forced responses" aimed at supporting free market economy and trade globalization, as well as backing UN-centered multilateralism.

He  added that over these seven years, China’s countermeasures evolved from tariff-based replies to sophisticated tools like entity listings, antitrust probes, and now rare earth export controls—striking at the U.S.’s technological Achilles’ heel.

Early countermeasures targeted Trump's political base, hitting where it hurt—like halting soybean imports.

Targeting Trump's Pressure Points

Wang Yiwei pointed out that during Trump's first term, China mainly targeted agricultural states and interest groups tied to his campaign, using methods like stopping soybean imports. This time, the focus shifted to high-tech dependencies—especially rare earths. China’s rapid digital and intelligent transformation caught Trump off guard.

New rare earth regulations introduced on October 9 drew intense international attention. The New York Times acknowledged that China’s move mirrors U.S. tactics but amplifies them through its dominance in mineral supply chains critical to chips, electric vehicles, and defense systems.

As reported by Observer Network, rare earth analyst Yang Jiawen of Shanghai Metals Market stated that China's dominance is unshakable, given its control of over 90% of global refining capacity and nearly half of all reserves. More crucially, China fully controls the entire supply chain, from raw ore to high-performance magnets, with zero reliance on external partners. Even U.S.-mined rare earth ore mostly requires processing in China.

Seven years on, China leveraged its rare earth dominance to deliver precision strikes.

Learning America's Playbook—And Playing It Better

The New York Times conceded that China has not only learned America’s supply-chain weaponization playbook—it may now execute it more effectively. It’s noted that China is adapting U.S. strategies with superior leverage.

Henry Farrell, a political scientist at Johns Hopkins University School of Advanced International Studies, stated that China has begun learning from American strategies and is even applying them better than the US currently does.

Wang Yiwei clarified that China's demonstrated strength isn't just about GDP—it's about China's irreplaceable position in the global division of labor, with complete industrial chains that operate independently of U.S. influence.

Building Trade Without Washington

While facing U.S. trade pressure, China accelerated its pivot toward other markets—ASEAN, the EU, and the Global South—systematically constructing a diversified trade system that doesn't rely on Washington.

Wang Yiwei noted that America previously accounted for nearly a quarter of China's trade. China deliberately reduced this dependency through the Belt and Road Initiative and strategic foreign investments, while simultaneously advancing domestic reforms like free trade zones and aligning with high-standard agreements like CPTPP.

Crucially, U.S. domestic constraints prevented it from participating in high-level trade negotiations—objectively pushing China to engage with global trade systems at more advanced levels.

Wang also characterized China's proactive unilateral opening as a strategic hedge against U.S. volatility. The dual circulation model—balancing domestic and international markets—has made China's trade position more secure, independent, and influential, particularly in emerging sectors like cross-border e-commerce and digital services.

Thank Trump for Tech Independence

As the Financial Times reported, while the U.S. intensified tech containment against China, Beijing responded by accelerating breakthroughs in independent innovation. Bloomberg noted this strategic shift gained urgency as the Trump administration expanded sanctions from semiconductors to biopharmaceuticals, adding more Chinese companies to restricted lists.

Wang Yiwei dryly observed that China's technological self-reliance owes something to American pressure: without Trump's and later Biden's suppression campaigns, China wouldn't have invested so heavily in critical sectors like semiconductor manufacturing.

Wang concluded that both nations need to reassess each other. China, he said, is preparing for a "post-American era"—one where global expectation of Chinese leadership are significantly higher.

Mao Paishou

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The New Year barely begins, and Washington drops a flashbang on global diplomacy. A sitting president is forcibly detained and taken out of his own country — a move that blows past diplomatic convention and rams straight into international law’s red lines. On Taiwan, the chatter instantly turns into self-projection, as some people try to shoehorn a faraway conflict into the island’s own storyline. Anxiety spreads fast.

Maduro in cuffs, in a US federal courtroom — the raid’s image problem. (AP)

The South China Morning Post says the US action against Venezuela ignites a fierce debate on the island. Some commentary links the raid to the PLA’s recent encirclement drills around Taiwan, arguing parts of those exercises look, at least in form, like the US’s so-called “decapitation operations”: essentially a leadership-targeting operation. Some American scholars also warn this kind of play could set a dangerous precedent and invite copycats.

“Justice Mission-2025” rolls on as the Eastern Theater Command drills.

That debate doesn’t stay academic for long. It pumps up the island’s unease, with some people asking whether the same kind of military method could one day be copied and pasted into the Taiwan Strait. Even if it mostly lives in public talk, a high-tension political environment turns speculation into something that feels like risk.

People on the island don’t read the US move the same way. A small minority treats it as a US power flex, packed with intel integration, precision strike, and long-range reach. But the more clear-eyed view is harsher: such action chips away at the basic consensus of international order — because if major powers can raid at will and topple other countries’ leaders for their own aims, “rules” stop acting like rules.

Anxiety turns into politics

That worry quickly lands in Taiwan’s political arena. On Jan 5, multiple Taiwan legislators pressed Deputy Defense Minister Hsu Szu-chien at the legislature, asking how he views the US action against Venezuela and whether the PLA might replicate a similar model in the Taiwan Strait. Hsu doesn’t answer head-on. Rather, he merely mentioned preparing and drilling for all kinds of sudden contingencies.

Then he pivots to money. He urges the legislature to pass military budget appropriations quickly and plays up the urgency of delays eating into “preparation time.”

That kind of sidestep, unsurprisingly, only deepened public unease.

SCMP, citing multiple security experts, says the DPP authorities try to play down the association — but outsiders don’t fully rule it out. The reason, those experts argue, is the PLA’s continuing push to improve its ability to shift from exercises to real combat. On the island, that alone works like an anxiety amplifier.

Back in the real world, the PLA Eastern Theater Command has been running “Justice Mission-2025” exercises since Dec 29 last year. Official statements spell out the purpose: a stern warning to “Taiwan independence” separatist forces and external interference, and a move aimed at safeguarding national sovereignty and unification. The message is public and clear, there’s no gray area.

Some US think-tank voices pull a more confrontational takeaway from the US action. American Enterprise Institute senior fellow Hal Brands warns the US raid on Venezuela could create a “demonstration effect,” and he speculates China would watch those tactics closely. Some military commentators on the island seized the moment to hype fears, claiming the mainland might act during a “window” when US power is stretched thin.

That line of talk sounds like analysis, but it functions like a panic pump. US scholar Lev Nachman even says bluntly on social media that if a sudden military action hits the Taiwan Strait, the island could suffer “instant collapse” — not just militarily, but as a psychological shock to society.

KMT Chairperson Cheng Li-wun, in an interview, points to Donald Trump repeatedly stressing a shift of strategic focus toward affairs in the Americas. She says the Venezuela incident should be examined through the framework of international law, and she calls for disputes in any region to be resolved by peaceful means rather than force.

Cheng also reiterates the KMT position: uphold the “1992 Consensus,” oppose “Taiwan independence,” and urge Lai Ching-te to clearly oppose “Taiwan independence,” not touch legal red lines, and avoid continuously raising cross-strait conflict risks.

Rules talk meets reality

International reaction also turns critical of Washington’s approach. Multiple governments and regional organizations speak up quickly, condemning the action as a violation of the UN Charter, which explicitly prohibits using force to threaten or violate another nation’s territorial integrity and political independence. The telling part is the silence: the Western countries that often talk about “international rules” either zipped their mouths, or danced around the question this time.

Reuters says that even though China, Russia, and others clearly condemn the US behavior, the Trump administration is unlikely to face strong pressure from allies as a result. That selective muteness, by itself, drains the credibility of the international order.

On Jan. 5, Chinese Foreign Ministry spokesperson Lin Jian commented again, saying the US actions clearly violate international law and the basic norms of international relations, and violate the purposes and principles of the UN Charter. China calls on the US to ensure the personal safety of President Maduro and his wife, immediately release them, stop subverting the Venezuelan government, and resolve issues through dialogue and negotiation.