[Text/Author: Chen Jing, Observer Network Columnist]
From May 10 to 11 local time, the high-level economic and trade talks between China and the United States were held in Geneva, Switzerland. He Lifeng, the lead person of the Chinese side of the China-US economic and trade talks and Vice Premier of the State Council, stated at the press conference held by the Chinese delegation that this high-level economic and trade talk between China and the US was candid, in-depth, and constructive, reaching important consensus and making substantial progress.
It seems that both sides had a good discussion, and we can wait for the joint statement to see what specific contents were discussed.
It should be noted that this contact between China and the US is not a negotiation itself. Within less than three months after Trump took office, the China-US economic and trade issues were made uncontrollable. After such shocking reckless performances, regardless of whether it's contact, talks, or negotiations between China and the US, the first thing to do is to establish the most basic mutual trust, which is indeed difficult.
Trump's decision-making circle has lost credibility on too many issues, with increased uncertainty. Sliding wherever the situation takes them, decisions are frivolous and unsteady. This style has already backfired, significantly restricting Trump's decision-making freedom. For example, although Trump insists that the U.S. economy and capital market are doing well and blames the Federal Reserve, he actually takes it very seriously.
Besentes said "not wanting to decouple," which is true in the short term. However, China and the US have been preparing separately for several years, and decoupling is an inevitable long-term trend. The result will evolve into China becoming increasingly easier to reduce its dependence on the US, while the US finds it difficult to make significant progress in decoupling from China. With the rapid evolution of Sino-US trade relations, the world needs to decide how to maximize benefits and minimize harm. The situation will quickly turn in favor of China, which is clearly reflected in the rhythm of their contacts, talks, and negotiations. Ultimately, it will evolve into China leading a "trade counter-offensive" against the US.
As for tariff cooling, this is expected by all sectors. Both Trump and Besentes have made relevant statements, and the current high tariff state is unsustainable. Goldman Sachs estimated on May 8 that US tariffs on China would soon drop to about 60%, with corresponding reductions in Chinese tariffs on the US. Similar rumors abound. This reduction is far from enough and can only serve as a starting point for negotiations. How subsequent tariff cooling and negotiations proceed will not be dominated by the US side; the initiative will change hands. When dealing with such a US, one can only rely on credible deterrence and cannot trust political promises. As a responsible major country, China has stood up to oppose bullying and must represent the international community in setting rules for the US and stopping reckless actions.
I. Handover of Initiative in Tariff Cooling
In recent weeks, the "China narrative" propagated by Western countries portrays China's economy as already in recession, suffering from tariff strikes, and on the verge of collapse. This is a rare resurgence of the so-called "China Collapse Theory" in recent years.
For example, on April 25, Zhang Jiadun connected with Fox News and claimed that China was about to collapse because China was very determined and refused to yield to the US. Although Zhang Jiadun has predicted incorrectly for over 20 years, he still maintains some popularity because Americans are willing to hear the narrative of "China is collapsing."
Some Americans who don't understand China find it confusing when they see bustling Sam's Club stores in China, thinking it doesn't look like an economic depression. They wonder if there are "two worlds" in China, with those shopping at Sam's Club being the upper class. But they also feel that the people in the photos don't look like the upper class, leaving them confused. Such misunderstandings about China are common not only in the US and Western Europe but around the world.
Since the outbreak of the trade war in 2018, the American propaganda and public opinion atmosphere has been following this pattern. Under the煽动 of politicians and media, hostility towards China in American society has surged dramatically.
A survey conducted by Pilon in April 2025 showed that the percentage of people viewing China as an enemy decreased by 9 percentage points compared to 2024, which was somewhat surprising. The background is that the vast majority of Americans view China as an enemy or competitor rather than a partner.
Therefore, American society is eager to hear bad news about China and supports harsh sanctions. During Trump's first term, he was happy to hear about problems in the Chinese economy as a reference for maximum pressure on China.
It should be noted that American professionals generally do not think so "superficially." Reports from financial institutions such as Goldman Sachs, due to their service to global investors, maintain the most neutral stance. Although they may criticize China, they do not go too far. Overly pessimistic predictions that fail to materialize can damage their reputation. Politicians, think tanks, and scholars may be more radical, with many having a negative attitude toward China. Some politicians even propose extremely malicious proposals, but these people are not ordinary citizens. They understand that China is not an easy opponent to deal with.
The Biden administration's decision-making is more professional. Although they also criticize China in propaganda, they do not truly believe in the collapse theory. The Biden administration relies less on personal will and instead refers to think tank reports and expert group opinions to formulate comprehensive policies toward China.
For example, the tone of the "National Security Strategy Report" issued by the Biden administration in October 2022 is medium to long-term "Out-Compete China" (compete with China) rather than based on a collapse hypothesis. As for details of chip sanctions, they require professional opinions. Regardless of their effectiveness, at least they respect expertise in terms of posture.
Compared to Trump, the Biden administration's approach to competing with China is more normal, adopting a long-term competitive mindset. Although there have been extreme behaviors like "shooting down balloons," these can be explained politically. From China's perspective, Biden can be assessed normally. The meeting between the heads of state of both countries in November 2023 helped restore some exchanges and prevented the competitive situation from spiraling out of control.
The Biden administration's understanding of China approximately represents the overall level of the US political, academic, and industrial circles. China studies are taken seriously, and think tanks occasionally release warning reports acknowledging China's progress, such as evaluations of China's artificial intelligence. These politicians, think tanks, and scholars are severely influenced by hostile emotions, often harboring a tendency to hope for decline, and their cognitive progress is somewhat slow. Even if scholars do not fully believe in the "China collapse theory," there are still many biases overall.
Even in the American academic circle, China is not well understood. Things in China change rapidly, and the situation is complex, with many things unprecedented. American researchers often conduct superficial analyses based on data and add emotional interpretations, resulting in serious biases. On one hand, Western media reports China's seemingly normal economic data, while on the other hand, they constantly use words to render these numbers unreliable, repeatedly promoting negative economic phenomena and unfavorable social atmospheres.
Under long-term bombardment-style propaganda, people lose their sense of China's numbers, leaving only emotions. A 5% growth rate in China's economy seems lower than America's 2.9%. The "consensus" in the West is that China's economic figures are completely unreliable, and scholars' research levels on China are reflected in finding the "truth" through various data processing methods.
Trump's policies are very arbitrary, often based on intuition and occasional factors, believing individual claims without much predictability. Trump's behavior is so unpredictable that sometimes China cannot study it, only preparing for battle. Just a month ago, Trump raised tariffs on China to 145%, clearly based on a grossly incorrect understanding, believing that China absolutely could not withstand the interruption of economic ties with the US and would soon beg for mercy.
In the collective atmosphere of the US society singing the tune of China's decline, Trump could easily believe in the "China collapse theory." Trump's small-circle decision-making style has already caused great impact on the US, with no one able to stop it.
Ironically, Trump's reckless actions exacerbated conflicts, objectively deepening the understanding of China by the US and the world. On May 7, India launched an attack on Pakistan, providing valuable practical testing opportunities for China's weapons systems, which shot down five advanced aircraft including the Rafale, Su-30, and MiG-29. The military strength was revealed, startling even some of their own people.
Trump's fierce trade war and tech war against China in 2018 objectively led the world to take China's strength more seriously. It can be said that China's strength is something even China itself does not know how to assess, requiring "practical testing" in trade and technology struggles. We have weathered the sanctions and achieved a series of brilliant trade and technological achievements, and the world now recognizes China's strength as very strong and capable of competing with the US. In the past, this might not have been the case, as many people thought that once the US started sanctions, China would collapse. It is precisely based on the results of these confrontations that the Biden administration decided to adopt a long-term competitive strategy toward China.
Just after Trump's second term began, based on the erroneous belief that "China would collapse without selling goods to the US," he rashly imposed heavy tariffs on China. This was another extreme action but also the most direct "practical test," quickly testing how important trade with the US is to China's economy.
Against the backdrop of the US initiating the tariff war, the hot consumption during the May Day holiday highlighted the strong resilience of China's economy. Since this year, multiple international institutions have successively upgraded their expectations for China. For instance, on May 8, Goldman Sachs' research report stated that the resilience of China's stock market is due to the weakening of the dollar, strong economic growth, and domestic policy support. Goldman Sachs maintained its "overweight" rating for the Chinese stock market, upgraded its 2025 earnings per share forecast, and raised the 12-month target points for the MSCI China Index and CSI 300 Index to 78 and 4400 respectively.
Another serious emotion among US institutions is their hope to see China take massive stimulus measures akin to "flooding the market." In fact, this is two sides of the same coin as hoping for decline—if China were to stimulate the economy like many Western countries, it would indicate that the economic situation is indeed dangerous and requires extraordinary measures. On May 7, the central bank and other departments' policies of cutting reserve requirements and interest rates were still minor operations. Judging from this policy rhythm, China's economic figures should still be moderate, without significant fluctuations, and this wave of pessimism seems to have passed.
Western institutions are unwilling to damage their reputations by predicting alarming collapse figures for China. Out of experience, they actually believe that China will achieve its announced economic targets. They can only continue literary渲染, saying that the figures are unreliable, creating a repetitive cycle of publicity for many years.
After Trump initiated the "Liberation Day" operation on April 2, the US and other countries' economic and trade relations were originally in an uncontrollable state, causing a sharp decline in the US stock and bond markets. On April 9, Trump realized something was wrong and postponed the tariff policy for 90 days for all countries except China, avoiding further chaos. Dealing with China alone, he harbored hopes for China's troubles. But after a month, even if Trump continues to listen selectively, he should have realized China's resilience by now, at the very least China has not responded to him and is not in a hurry.
Trump's capriciousness is also evident in his "China collapse theory." When imposing tariffs, he believed it lightly, but soon became uncertain, realizing things were not as he imagined. Trump has psychologically accepted that China will not collapse in the short term, sees no immediate "results," cannot believe in so-called "good news," and cannot fantasize. After accepting this, the cooling of the tariff war with China is a natural outcome.
The weekly arrival container TEU volume in Los Angeles has not dropped significantly.
The number of ships arriving at the Port of Long Beach has only slightly decreased.
Personally, I do not believe that the Trump administration is "at its wit's end" and urgently seeks talks with China due to supply chain disruptions. Supply chain issues are complex, but based on logistics information and negotiation dynamics, there should not be any major incidents in the short term. On April 21, the CEOs of Walmart, Home Depot, and Target met privately with the White House, and Trump likely agreed to some requests. American supermarket groups are asking Chinese suppliers to ship goods. Such exemption operations have been carried out by the Trump administration many times, and they would not let things get out of hand. Although Trump's decisions are rash and based on mistaken assumptions, he will not stubbornly persist until collapse. For him, making adjustments is not a problem.
Some analysts in the US believe that Chinese factories desperately need US orders, otherwise the economy will have big problems, which is also overly hasty. Neither China nor the US is likely to face unbearable major problems in the short term. If this were the case, there would be no need to negotiate; just wait for the problems to arise.
Both sides have begun contact, and neither side is indulging in illusions about this.
Trump urgently seeks talks with China to cool the tariff war, primarily abandoning fantasies, no longer believing in coercion. Mainly, the demand of the overall situation requires a positive outlook. For example, judging from the reaction of the US stock and bond markets, news of progress in contacts with China is clearly more popular in the market, and the market has even anticipated a cooling of the tariff war between China and the US. If Trump goes against this trend, he will face market punishment. Besentes is familiar with financial markets and understands the pros and cons involved.
From the negotiation stance between the US and various countries, even Japan's talks are not going smoothly. China's firm fighting posture has rendered Trump's entire tariff plan unworkable. It is hard to imagine that Trump could simultaneously disrupt trade with China and negotiate well with other countries. Each country needs stable expectations, and China is unavoidable.
If Trump wants to cool the tariff war, he needs China's cooperation to stabilize capital market expectations and stabilize negotiation expectations with other countries. According to the Ministry of Commerce's statement, China has a clear understanding of this: "China has carefully evaluated the US information. Based on full consideration of global expectations, China's interests, calls from the US industry and consumers, China has decided to agree to contact with the US." "China has noticed that some economies are also negotiating with the US. It should be emphasized that appeasement does not bring peace, compromise does not earn respect, and upholding principles and fairness is the correct way to protect one's own interests."
China has made up its mind to take the initiative, and if necessary, will resolutely fight to the end with the US. This stance is unique globally and unshakable.
Both sides believe that high tariffs are unsustainable and need to cool down. However, since the US initiated this, and now the US is unable to sustain the tariff war and wants to talk, the direction of cooling and how to negotiate will be led by China.
In negotiations, one must be capable of fighting before negotiating. China has shown its capability and indeed stood up to it. China is the strongest in fighting against the US. Therefore, China is also the best in negotiating. Various signs indicate that the US has encountered difficulties in talks with other countries and has clearly lost its initiative. If talks go poorly and it continues fighting, China dares, but the US dares not. In terms of momentum, there has been a significant reversal between China and the US.
Once Trump's inner circle abandons fantasies about the "China collapse theory," they will turn their attention to their own numerous troubles. Seeing China's firm fighting posture, expectations have significantly decreased. There will be no suspense in contacts, talks, or negotiations between the US and China; China will take the lead. The US may have some proactive proposals, but they cannot be coercive; they need to consult with China and act in synchronization.
In the previous administration under Trump, the "Phase One Economic and Trade Agreement" was reached on January 15, 2020. From the text, tactically, it was US-led, with China compromising and maneuvering through concessions, strategically buying time without direct confrontation.
Since 2018, China has effectively prepared for responding, while the US has wasted years and accumulated problems. China has openly declared its intention to fight to the end, whereas the US cannot make bold declarations anymore. Carefully savoring the contrast, it is not hard to see that the offensive-defensive situation has reversed.
II. Decoupling Counteroffensive
Tactically assessing, the US wants to cool tariffs, and China agrees. Both sides believe that decoupling too quickly is inappropriate. Nearly $700 billion in bilateral trade suddenly almost directly interrupting, even if decoupling is necessary, it should not follow this "hard decoupling" pace.
However, in the long term, both China and the US are adjusting toward reducing reliance, but with different execution capabilities, resulting in vastly different outcomes. This progress may exceed the US expectations. I believe that China is actually seriously planning for possible decoupling. Ironically, the US has loudly advocated decoupling and risk reduction, while China has consistently called for "mutual approach," but in reality, it is China that has seriously prepared for it.
According to the trade data released on May 9 for the first four months of 2025, significant progress has been made in reducing dependence on the US. In April, China's exports amounted to $315.692 billion, increasing by 8.1% year-on-year. Exports to the US were $33.024 billion, decreasing by 19.2% year-on-year. The trade surplus in April was $9.618 billion, increasing by 33.6% year-on-year, and the cumulative trade surplus for the first four months was $36.8757 billion, increasing by 44.6% year-on-year.
The decrease in exports to the US in April was $8.8 billion, which is not large and constitutes only a small portion of the surplus. Even if Americans stop buying Chinese goods altogether, China would still have a surplus of over $500 billion annually. To ensure economic operations, the US has exemptions for various Chinese goods including ICT products. Even in extreme scenarios, exports to the US would not completely disappear. Therefore, even under the extreme impact of Trump's tariff war, China's surplus in 2025 will still be an astonishing number.
This is a structural issue. From a production perspective, the global economy greatly depends on Chinese goods. China's manufacturing capacity far exceeds foreign countries, making it difficult to find many worth importing manufactured goods. China has pushed raw material imports to an extremely exaggerated extent, importing over half of the global demand for iron ore, soybeans, and other raw materials and agricultural products, yet still maintaining a trillion-dollar surplus.
Exports to the US account for only 10.5% of China's total exports. Many Americans mistakenly believe that China needs to earn money from Americans to survive.
In the eyes of Chinese traders, the money from the US market is relatively easy to earn. Once American merchants place orders, the quantities are large. However, this does not mean that Chinese people can only earn money from the US. If Americans stop doing business, Chinese merchants will firmly seek other markets or shift to domestic demand.
Many people have not noticed that China is the most fully competitive market economy environment in the world. The US market is highly monopolized, disregards competition, has numerous trade barriers, and its market monopolists ruthlessly extract high profits. Chinese enterprises are accustomed to managing market risks, with ups and downs being common. If they cannot operate, they close down and switch to new fields. American scholars observe that Chinese enterprises often complain bitterly, facing重重 risks and walking on thin ice, providing endless material for pessimism. At the same time, they discover that Chinese enterprises are highly competitive, mercilessly driving foreign brands off the market.
I believe that global scholars still have systematic misconceptions about the Chinese economy. Just like the US sanctions on Chinese high-tech industries, it can now be concluded that this is a very foolish move, completely contrary to market economics principles. The sanctions have provided Chinese high-tech industries with an unprecedented market opportunity, essentially giving away the most precious market.
Take semiconductor equipment manufacturers as an example. Their global market share was below 1% and virtually non-existent. In 2024, Northern China Advanced Technology's revenue was 29.838 billion yuan, increasing by 35.1%, ranking sixth globally, and it entered the top ten for the first time in 2023, ranking eighth. By 2024, China's semiconductor equipment manufacturers already accounted for 8% of the global market, significantly enhancing the biggest weakness in the chip industry.
China's chip industry, now preliminarily forming its own system, is actively innovating. Huawei's CloudMatrix 384 super node surpasses Nvidia GB200 NV72 servers in computing power, and Shengteng 910D matches H100. Against the US's extreme sanctions on advanced Chinese chips, these achievements are unimaginable, demonstrating the strong vitality of the Chinese market and technology ecosystem.
One of the greatest assumptions in market economics is that companies aim to make money. For China's market economy environment, a major problem for a long time has been the weak competition from foreign companies, making it too easy to earn money from exports, especially from the US. This has led many companies to become addicted to exporting and earning money, focusing solely on securing export orders with little challenge, which objectively hinders the development of the market economy.
A major problem is that domestic demand is harder to develop than external demand. Export companies do not need to cultivate domestic markets. As long as they produce well with the best support from the Chinese government and secure deals externally, they can relatively easily make money, avoiding the brutal competition of the internal market. Some companies' earnings are not reinvested into domestic consumer markets but are invested overseas. Therefore, the significance of external demand to China's economy, given the surplus breaking one trillion US dollars, is not as great as it used to be.
However, changing this is not easy. It makes no sense to prevent companies from making money from exports. They also solve many jobs. It's like when Chinese companies got used to using foreign chips and didn't want to give opportunities to domestic chip companies. Switching requires extra effort. This time, Trump has brought the most needed development momentum to China again.
Even if the tariff war cools down, the impact has already been significant. Export companies to the US will not have sustained confidence in the US market, not knowing what will happen next. Maybe another tariff war will occur, or US merchants may find alternatives. For survival, they must consider other global markets and domestic demand. Developing new markets may not be as large or as quick to pay as the US market orders, but success will have lasting effects.
Recently, developing domestic demand in China feels different from the past atmosphere, and各地are actively looking for solutions. It won't be harder than developing independent technologies. At least production is not a problem. There are plenty of market development strategies, and economic enthusiasts can think of many. I believe the reason why these haven't been used yet is because the timing hasn't come, and waiting for changes in international conditions will make it easier to act. For example, promoting independent innovation was previously difficult to implement without Trump's help. Now the time is right, and all conditions are in place.
Many overseas markets used to be cautious about relations with the US and relied on the dollar system. Now, it's not China pushing, but organizations like the BRICS nations and many other countries want China to take the lead and handle big affairs. All countries have a desire to decouple from the US, whether it's supply chain decoupling or market decoupling. At least, they want to diversify, back up, and mitigate risks.
Recently, currencies in Asia have appreciated against the dollar, driven by official reserves and "dollar risk exposure" in the private sector. Whether US debt and the dollar carry risks, the world will assess. Whether to tie oneself to the US for development or explore other paths, what countries worldwide think isn't hard to guess.
China has been forced into decoupling from the US, with strong motivation for supply chain de-Americanization and significant achievements. After the tariff war erupted in April, China swiftly transferred beef and soybean orders to Brazil, which could not be done without prior preparation in technology and logistics. Market decoupling from the US, risk reduction, and diversification were already progressing significantly before, and now efforts will be fully accelerated. A high-level global economic system independent of US technology, finance, and markets will inevitably emerge under China's leadership.
American institutions struggle to find essential US commodities China needs, identifying ethane as an example where the US supplies 80% of China's imports, claiming that China has no alternative to American ethane cracking plants. However, importing US ethane is merely an economic choice. If decoupling or retaliatory tariffs make prices too high, domestic alternatives and international cooperation solutions are available.
Anticipating US encouragement, Chinese enterprises will shift to other markets, launching a grand de-Americanization movement globally. Supply chain de-Americanization and market de-Americanization, not earning money from the US, still allows earning money elsewhere. Although it may be harder than earning money from the US, since the US no longer allows it, the decision becomes easier.
In contrast, the US is theoretically daydreaming about decoupling from China, de-risking supply chains, and moving foreign enterprises out of China, creating a big show. However, from the perspective of market economics principles, US decoupling actions have not genuinely earned the sincere support of enterprises. Enterprises' primary goal is to make money. If decoupling from China can make money, naturally they will actively participate. If it leads to losses, then it's awkward.
The US hopes to see a global supply chain shift, which is still ongoing on the surface. The biggest recent move is Apple's plan to relocate all iPhone production for the US market to India by the end of 2026, which could account for 40% of shipments, including local demand and exports to other markets. However, this is merely relocating phone assembly to India. The main supply chain, namely Apple's hundreds of suppliers, remains unchanged. In India, Apple's suppliers still number only over ten, and most are not本土 companies, except for those acquired by Tata. India increasingly needs to purchase intermediate goods from China, feeling troubled but unable to find a solution. Semiconductor factory plans and PLI production incentive programs have been canceled.
Another very active US supply chain initiative is rare earth elements. Various agreements related to rare earths have been signed, with many countries claiming huge rare earth wealth. Rare earths hold an important position in the US-Ukraine mining agreement. However, the global economy still heavily relies on China's rare earth production. During this tariff war, China significantly tightened its rare earth exports, and US companies felt the real "throat-cutting" experience. Establishing a complete rare earth supply chain will take a long time and involves many technical issues.
Chinese enterprises act extremely quickly, succeeding in countless fields by acting fast. Recently, there have been shocking events in areas such as artificial intelligence and military high-tech. Execution ability is one of China's greatest advantages, achieving results often exceeding expectations.
However, many things in the US have been planned for a long time, merely wasting time and money. Especially in manufacturing, action capabilities are problematic. Many American companies' achievements are the result of collaboration with East Asian manufacturing enterprises. Wanting to decouple from China but lacking action ability is baffling.
Major breakthroughs in the US decoupling efforts are unlikely to be seen in the future, as economic principles suggest it won't work. Currently, countries purchasing components from China and reselling them at higher prices to the US is the result of economic principle-driven outcomes. The US trying to investigate supply chains and prevent detours is complicated to explain.
Even if the US extends its reach, it cannot manage all the countries in the world. And even if it manages to control them, it still needs to solve production issues. Managing so many enterprises globally requires significant effort, and the US government has only so many people. It's economically nonsensical. Each enterprise just needs to provide qualified proof to satisfy the US government's face. Some American enterprises with deep backgrounds will naturally have ways to circumvent, as there are always "Smith Commissioners" profiting from the middle.
In fact, the tariff war itself is not that impactful. Trump realizes something is wrong and pulls back, and if China and the US cool down a bit more, the US stock market will be fine, seemingly returning to normal.
However, the