Halving its exports to the US in the first two months of this year, while raising total export sales by 22 percent is a result of China’s successful trade diversification policy.

The way Beijing has achieved that trade adjustment process deserves particular attention.

For the first time, one can see that China’s total foreign trade is not an almost entirely export-driven variable. A 21 percent increase in China’s overseas trade transactions also came as a result of a 19.8 percent increase in the country’s purchases of foreign goods and services.

That led to a significant narrowing of China’s trade surplus, made a growing contribution to economic development of its trade partners, and set the stage for a more balanced composition of the country’s aggregate demand.

A world of difference compared with earlier evidence showing China’s soaring foreign sales and its declining purchases from the rest of the world. Such developments invalidated China’s constant claims of its strong support to global economic growth.

China’s economic restructuring

In fact, that was a China growing on the back of the rest of the world and qualifying as an inglorious practitioner of “beggar-thy-neighbor” trade policies. According to IMF’s original articles of agreement, China would be liable for penalties as it failed to restore its trade balance.

But Beijing now seems to have realized the dangers of its export-driven growth strategies where the country’s entire development policy was betting on external demand from partners – mainly the US and the European Union – increasingly turning to restrictive trade practices.

Washington and Brussels, therefore, can be credited for contributing to China’s vitally needed economic restructuring that should increase the share of household consumption and residential investments in the country’s huge domestic markets.

That restructuring should now lead to wider and more generous welfare reforms as befits what Beijing calls a “moderately prosperous society.”

Healthcare and education coverage most probably will be further extended, leaving more disposable income for consumption spending. A painfully slow resolution of real estate problems could also accelerate as China’s urbanization drive picks up speed.

And a careful opening to international trade and finance must also be stepped up in line with China’s apparent quest for leadership in the new world order.

That’s what will be tested during next month’s summit in Beijing (May 14-15, 2026) President Trump has qualified as a “Monumental Event” (sic).

Guardrails to crisis management

China’s trade adjustment with the US looks like its summit preparation because bilateral trade issues appear to have been relegated to technical, cabinet level, consultations -- clearing the way for heads of state diplomacy to deal with political and security problems.

The summit is an important event, but don’t expect a smooth sailing.

Washington seeks “strategic stability” with China, while Beijing wants a constructive dialogue and a “win-win cooperation” with the US. And Beijing’s intention to do that in the general context with the UN at its core does not seem to be acceptable to a more fluid, transactional, and reciprocal approach favored by the US.

The key issues for discussion are likely to be Taiwan’s status quo, China’s contested maritime borders, the armistice on the Korean Peninsula, Japan’s more assertive power projections, Middle East conflicts, and America’s Western Hemisphere Monroe Doctrine.

One cannot expect any of those questions to be resolved. The most likely outcome will be restatements of well-known positions or glossing over unbridgeable differences.

Going forward, there will only be temporary fixes to avoid conflicts and to work around the reciprocal red lines in order to maintain a precarious modus vivendi.

The US and China are worlds apart. Summits, presidential meetings during international gatherings and occasional phone calls will only set guardrails through heads of state diplomacy.

The US is going into this summit with (a) intractable Middle East hostilities, (b) anticipations of crucially important mid-term Congressional elections (November 3, 2026) and (c) a work in progress for the West’s global security architecture.

China will follow up with a Russia summit to leverage the Shanghai Cooperation Organization (SCO) as a principal security instrument to shore up BRICS and its Global South projects.

Meanwhile, the Cold War MAD (Mutual Assured Destruction) doctrine will continue to prevail. And China will resist US approaches to discuss limits and transparency to its allegedly rapidly expanding nuclear arsenal.