Economic considerations weigh heavily on this week’s US-China summit, as both sides push their respective priorities. For its part, Beijing is looking to liberalise trade, safeguard supply chains, and ensure freedom of maritime navigation after Iran seized control of the Strait of Hormuz, where 20% of the world's global trade passes through. Importantly, Tehran's chess move came after the US and Israel jointly waged war on Iran on 28 February this year.
Since April, a tenuous ceasefire has mostly put a halt to massive airstrikes, although a different war of attrition is unfolding in the Strait of Hormuz amid US attempts to break what it calls an Iranian blockade. Furthermore, Washington has imposed sanctions on three Chinese companies accused of providing images of the locations of American armed forces, exposing them to Iranian strikes and casualties.
China buys around 80% of Iran's total oil exports, which account for 45% of the Iranian government's budget. Iranian oil accounts for about 15% of China's total oil imports, so their relationship is important. Cheap Iranian oil boosts China's competitiveness, so Washington disapproves of this trade, which bypasses Western sanctions—it would rather Iran be starved of revenue.
Meanwhile, China and the US are competing in several key areas. One key competitive field is the Artificial Intelligence (AI) market, as the technology expands into areas such as defence, intelligence, engineering, and education. And with Chinese policymakers acutely aware of the country's ageing population, which is expected to reach 320 million (around a quarter of the population) by 2035, Chinese universities are actively recruiting gifted students from around the world, putting them in direct competition with US universities.
Trump’s visit to Beijing follows the launch of China’s 15th Five-Year Plan, which represents a strategic roadmap for 2026-30. China aims to achieve scientific independence, reduce reliance on external suppliers of advanced technology, expand emerging sectors in innovation, robotics and AI, and avoid external dependence, especially on the United States.
China’s 2030 vision also rests on transitioning to a green economy and achieving carbon neutrality, meeting the Sustainable Development Goals, securing supply chains amid geopolitical tensions, and rebalancing economic growth by increasing domestic consumption. Its economy is growing at around 5% but shows signs of slowing. The US economy grew by 2%, according to Standard and Poor’s, but high inflation of 4% could threaten it, say experts at the Manhattan Institute.
China defiant over US tariffs
Last year, Trump launched his so-called ‘Liberation Day’ tariffs (since ruled illegal by the US Supreme Court). He raised the rate on China to 145%, but China stood its ground and reciprocated with high tariffs of its own. Combined, they led to a 20% fall in bilateral trade by the end of 2025, but China still recorded a trade surplus with the rest of the world of $1.1tn in the same year. Its surplus with the US was $202bn.
