After an opaque summit, China and the United States hope to work together again. This may not be good news for the world

After the global financial crisis broke out a few years later, economic cooperation between the two countries briefly seemed to prove the success of efforts to integrate China into a liberal rules-based order.

To be sure, the G2 is not ostensibly meant to replace the larger, formal G20 grouping of major economies, but to strengthen it.

To support the G20’s broader response to the global financial crisis, the United States implemented an initial $787 billion in fiscal stimulus, while China also provided $586 billion in stimulus. This could help avoid an even greater global economic disaster.

This week’s summit between U.S. President Donald Trump and Chinese President Xi Jinping heralds a different kind of G2.

On Friday, Trump claimed the two countries had struck some “fantastic trade deals.” But anyone hoping for details on such a deal — tariffs, rare earths or Iran — was disappointed Friday afternoon.

Whatever happens, Sino-US cooperation no longer automatically means positive spillovers to the rest of the world. Instead, by 2026, the G2 will be, at best, a private bargain between two great powers, with hidden costs for outsiders.

The Trump administration has brought about a significant shift in the United States’ view of its economic interests: no longer premised on shared liberal values, but on spheres of influence among great powers. The key question, therefore, is not whether the United States and China can cooperate. It’s about what kind of order their cooperation will produce.

west and east

Old economic comparisons are useful here.

After World War II, the Western bloc was united by a shared commitment to a Keynesian global order that sought freer trade in goods while retaining national economic autonomy.

In contrast, the Eastern Bloc organized trade through so-called Councils for Mutual Economic Assistance, which traded many goods between countries through planned barter arrangements rather than cash.

Ironically today, the Trump-Xi agenda looks more like the approach of the old Eastern Bloc.

Given this, the clearest sign that the G2 may be working outside the G20 or the larger rules-based order is not what Washington and Beijing are talking about. It’s a set of solvable issues that tie together issues like tariff relief, aircraft orders, rare earth access, chip restrictions, Taiwan and Iran.

In each case, it is reasonable for both countries to wish to coordinate policies. But together they point to a new global order in which the two superpowers increasingly call the shots in their own interests.

Chips and rare earths

Rare earths and advanced chips are the most obvious examples. Beijing wants access to the advanced semiconductors it needs to dominate the race for artificial intelligence.

Washington wants rare earths and critical minerals, whose importance has become more prominent as the conflict with Iran strains U.S. stockpiles of missiles, drones, air defense systems and other high-end military technology.

If these are exchanged, then this summit is not about economic liberalization. At stake is whether strategic technology remains a constraint on national security or becomes a bargaining chip in bilateral agreements.

Executive entourage

The business delegation accompanying Trump on this trip is pointing in the same direction.

The attendance of executives including Nvidia’s Jensen Huang, Apple’s Tim Cook, and Tesla and SpaceX’s Elon Musk made the summit look like a business negotiation.

According to reports, agreements on aircraft orders, agricultural product purchases, investment forums and business access may all be seen as signs of economic normalization.

But the issue is not just whether U.S. companies gain market access. The question is whether a commercial victory helps stabilize great power bargaining, while its geopolitical costs are borne elsewhere.

Any tariff agreement that countries eventually reach is likely to have the largest market impact. But the deal itself may be more important than meets the eye, allowing Trump to claim a business victory.

This may calm markets in the short term, but it highlights the potential for a longer-term exit from multilateral rules-based liberalization.

Warning on Taiwan, almost silent on Iran

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The Taiwan issue loomed large at this week’s summit. On Thursday, Xi Jinping issued an unusually direct warning to Trump, saying the two countries could have “conflicts or even clashes” if the issue was not handled properly.

More broadly, the danger is not necessarily formal U.S. concessions to Taiwan. Taiwan and other regional actors bear the external costs of private bargaining.

If Taiwan becomes a variable in broader negotiations, the costs of U.S.-China cooperation may fall on those who are not present.

Iran and oil broaden the same logic. If Trump urges Xi Jinping to use China’s influence over Tehran, he is not just asking for diplomatic help. He sees Beijing as a co-hegemon in a great power bargain based on the ordering of some countries (the United States and China) and the exclusion of others.

This G2 may harm global public interests. It will also test whether middle powers such as Australia, Canada and European countries can retain their seats at the decision-making table or risk being “off the menu”, as Canadian Prime Minister Mark Carney put it. GRS

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This article was generated from automated news agency feeds without modifications to the text.