China: The Limits of Transactional Diplomacy – The American Spectator | USA News and Politics

China: The Limits of Transactional Diplomacy

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Pres. Donald Trump and Chinese Premier Xi Jinping (U.S. White House photographer (public domain))

Nixon’s 1972 visit to China is widely remembered as one of the great diplomatic turning points of the 20th century. It opened the door between the United States and Communist China, reshaped the Cold War balance against Soviet Union, and seemed to serve American interests.

But history has a way of revising reputations.

Today, many Americans increasingly view that opening differently. Nixon’s visit helped rescue the Chinese Communist Party at a moment when Maoist rule had pushed the country toward political, economic, and moral bankruptcy. Over the following decades, Western capital, technology, markets, and educational institutions contributed to the rise of a powerful totalitarian state now challenging the democratic world.

Trump’s May 2026 visit to China may also prove historic, though in an entirely different way — not because it achieved a diplomatic breakthrough. Not because it resolved the growing strategic conflict between Washington and Beijing. And not because it fundamentally changed the trajectory of U.S.-China relations.

Its historical significance may lie precisely in the opposite: it achieved almost nothing.

Yet in achieving almost nothing, the visit exposed something important. It revealed the exhaustion of a half-century-old American assumption — that economic engagement with Communist China would gradually moderate the regime, align its interests with the democratic world, or ultimately transform it into a more open society.

That illusion is becoming increasingly difficult to sustain.

If Nixon’s trip symbolized the beginning of America’s engagement strategy toward China, Trump’s visit may someday be remembered as the moment the world finally realized that strategy had failed.

Rather than a breakthrough, this visit may become a wake-up call — the last major warning to the United States and other democracies that the challenge posed by China is not temporary, transactional, or merely economic. It is systemic, ideological, and institutional.

The most fundamental problem with Trump’s 2026 visit was not what was said, but what was left unsaid.

Throughout the visit, discussions focused heavily on trade, market access, and economic cooperation. Yet the central strategic issue confronting the world today was largely absent: the nature of the Chinese Communist Party regime itself.

China’s challenge to the world is not simply that it has become economically powerful. Many countries become powerful without threatening the foundations of the international order. The deeper issue is that China remains a Leninist one-party dictatorship capable of mobilizing the resources of an entire society — capital, technology, universities, media, state-owned enterprises, and private companies — under centralized political control.

In my “China Inc.” framework, China does not operate as a normal market economy. It functions more like a gigantic state-directed corporation in which the boundary between state and business is intentionally blurred. Chinese firms may appear commercial, but ultimately they serve national objectives defined by the Communist Party.

The Communist Party can coordinate state power, industrial policy, technology acquisition, market access, financial leverage, and nationalist mobilization toward long-term geopolitical goals.

It can reshape supply chains, pressure foreign corporations, weaponize economic dependence, export surveillance technologies, and exploit the openness of democratic societies while denying reciprocity at home.

This is why the key issue should not have been whether the United States needs to accommodate China’s rise. The real issue is whether the CCP is willing to abandon its China Inc. model.

But that issue was entirely absent during the visit.

Trump’s visit exposed America’s strategic uncertainty more clearly than ever.

Xi’s reception for Trump included great fanfare, lavish banquets, and carefully choreographed displays of friendship — the kind of political theater at which dictatorships excel.

But beneath the polished images, the substantive divide between Washington and Beijing was impossible to hide.

Trump arrived in China under considerable domestic economic pressure. Much of the trip therefore appeared transactional: asking China to buy more American goods and create new opportunities for American business.

That also explains why Trump brought along some of America’s most powerful corporate leaders.

Beijing, however, operates on a very different strategic horizon.

For Xi Jinping, the central issue is not trade. His overriding objective is geopolitical and historical: ensuring that the United States will not block China’s long-term ambition toward Taiwan. He openly warned of grave consequences if the United States interferes with China’s plans regarding Taiwan.

And notably, there is little public indication that Trump conceded anything substantial on Taiwan. From that perspective, Trump deserves some credit.

One side was seeking transactions. The other was pursuing history.

Behind the diplomatic ceremony lie several fundamental issues that neither side can realistically ignore, even if they remain unwilling or unable to resolve them.

The first is trade.

China has become the world’s manufacturing superpower. It dominates critical supply chains across a wide range of industries, from consumer electronics to rare earth processing, batteries, pharmaceuticals, solar panels, and industrial components. Chinese products remain extraordinarily competitive in global markets.

But this competitiveness cannot be understood purely through classical free-market economics.

China’s advantage is deeply connected to what I have called the “low human rights advantage,” which enables the creation of a vast low-cost migrant labor force, facilitates land seizures, tolerates lower environmental standards, and mobilizes national resources on a scale democratic societies cannot easily replicate.

Under such conditions, the trade imbalance cannot fundamentally narrow unless China changes its underlying model. As long as Beijing retains the ability to combine totalitarian political control with global market access, the imbalance will persist.

The second major issue is Taiwan.

Here, contrary to some perceptions, the stronger strategic cards remain largely in American hands.

The United States can choose whether to maintain its commitments to Taiwan’s security, whether to continue supplying advanced military systems, and whether to upgrade its diplomatic relations with Taipei.

The third issue is technology transfer, especially in advanced semiconductors and artificial intelligence.

Trump’s decision to bring corporate leaders such as Jensen Huang of NVIDIA highlighted the tension at the center of American China policy. On one hand, American companies understandably seek profits from the Chinese market. On the other hand, advanced technology exported to China can endanger America’s national security.

A complete technological embargo against China also carries risks. It could accelerate Beijing’s determination to achieve full technological self-sufficiency. Given enough time, resources, and political will, China will eventually close much of the gap on its own.

Finally, there is the issue many American elites still hesitate to confront directly: the Chinese Communist Party’s growing efforts to project influence inside democratic societies themselves.

This includes espionage, intellectual property theft, political influence operations, pressure on overseas Chinese communities, and covert partnerships. A recent court case revealed that a Chinese agent had established a Chinese police station in New York.

These activities are not isolated incidents. They reflect the global reach of a totalitarian system increasingly seeking to shape political and social environments beyond China’s borders.

Ultimately, all four major issues, namely, trade, Taiwan, technology transfer, and Chinese interference inside democratic societies, are secondary to the core problem, which is political.

It is the institutional structure of the Chinese Communist Party system itself: a centralized totalitarian regime capable of mobilizing an entire society toward strategic objectives while simultaneously participating in and benefiting from the openness of the global economic order.

That is the real issue.

The secondary issues are all symptoms of a deeper structural conflict between two fundamentally different systems.

If the underlying political problem could somehow be addressed — if China gradually evolved toward genuine rule of law, political openness, reciprocity, and institutional restraint — many of the secondary conflicts would become far more manageable.

But if the underlying structure remains unchanged, it is difficult to see how those secondary issues can ever be permanently resolved.

And yet, unfortunately, the United States is no longer in a position simply to lecture China to change.

That era is over.

China today is not the weak, impoverished country Nixon visited in 1972. It is now an economic, technological, and military superpower. The gap between the United States and China has narrowed dramatically, and both sides know it.

This new reality creates a profound strategic dilemma for the democratic world.

America increasingly recognizes the nature of the challenge, yet it still lacks a coherent long-term strategy for dealing with it.

That, more than anything else, is what Trump’s 2026 visit exposed.

During the visit, Trump repeatedly praised Xi Jinping in highly flattering terms, hoping perhaps to generate economic concessions. Xi, by contrast, remained composed and restrained. The imbalance was striking.

The economic focus of the visit undermines the long-term effort to contain the CCP. Bringing America’s most powerful CEOs to Beijing is even worse.

It is like leading free-range chickens into a chicken farm: the feed looks delicious and abundant — until the owner decides it is time for slaughter.

Based on all of this, I would call Trump’s 2026 visit to China a mistake.

But the visit is also historic precisely because it stripped away much of the remaining illusion.

The democratic world must recognize China as it is, not as many once hoped it would become.

Decades ago, Mao Zedong used a famous phrase: “Abandon illusions and prepare for struggle.”

The democratic world need not adopt Mao’s ideology to understand the strategic realism embedded in that statement.

The United States urgently needs a coherent grand strategy toward China — one that explains honestly to the American people the scale of the challenge, the sacrifices that may be required, and the long-term objectives the nation seeks to achieve.

Trump’s visit exposed America’s strategic uncertainty more clearly than ever. And that may ultimately be its most important historical significance.

READ MORE from Shaomin Li:

Trump’s Iran Strategy: Economic Strangling Is Not Enough

The Ceasefire Is the Right Move: Bombs Don’t Break Regimes

Unclogging Hormuz

Shaomin Li is professor of international business at Old Dominion University.

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