China’s quest for partnership rather than rivalry with the U.S. was an attempt to clarify and stabilize the world’s most important bilateral relationship.

Settling for peaceful competition falls far short of that objective. Some may even see that as a semantic trap, or a strategic ambiguity, but the alternative would have been a dangerous path to conflict of nuclear armed adversaries.

Either way, this is a very delicate relationship that must be managed with utmost care and attention.

The recent meeting of G20 finance ministers and central bank governors in the U.S. is an example of a tenuous nature of U.S.-China relations. The joint statement could not be issued because China opposed the implied conclusion that its “non-market policies” and “cheap exports” were causing trade imbalances in world economy.

That was a very serious incident alleging that China’s systemic differences were offering competitive advantages unacceptable in a trading system of market economies.

It, therefore, should not come as a surprise that the U.S.-China bilateral trade keeps shrinking. Last year’s 29 percent decline was followed by a 15 percent drop during the first seven months of this year. A similar pattern was also observed in trade balances: In 2025 China’s surplus on U.S. trades fell 32 percent, with another 29 percent decline in this year’s January-July interval.

The burden of trade adjustment should be equally shared

Interestingly, the U.S. is carrying the burden of this trade adjustment. So far this year, there is zero growth in U.S. sales to China, while China’s sales to the U.S. are two and a half times higher than what China bought from the U.S.

There may be structural causes to this imbalance, but the U.S. should still be getting a better deal through economic cooperation compatible with the mutually agreed concept “on the basis of fairness and reciprocity.”

A more productive G20 discussion could have led to that objective by focusing on the share of China’s foreign trade in the composition of its aggregate demand. Indeed, a sudden surge of China’s exports since the beginning of this year is a clear indication of an increasing imbalance in the country’s externally driven economic growth.

China’s exports in the first seven months of this year accounted for more than two-thirds of last year’s total exports. As a result of that, the share of exports in China’s GDP will significantly overshoot its earlier ratio of about 20 percent, and Beijing’s current account surplus will exceed an estimated 4 percent of GDP by the end of this year.

All that will put the world’s second largest economy in an awkward position of actually living off its G20 partners and being a drag on the global economic growth.

Focus on trade

Those are the G20 topics because the global economic policy coordination would require China to contribute to world economic growth by stimulating its domestic demand (private consumption, investments and government spending) instead of riding on external demand to support its economic development.

Trade will remain a major source of U.S.-China tensions as strategic and systemic competition continues to drive an evolving new world order. Economic pressures on Iran, punctuated by intermittent military assaults, and secondary U.S. sanctions on countries trading with the Islamic Republic, are the latest example of Washington’s broadening conflicts with China.

Apart from that, the status of Taiwan and China’s territorial disputes with Japan and the Philippines, the U.S. treaty allies, are the most flammable issues challenging the “constructive strategic stability” and testing supposedly agreed guardrails.

Beijing is also stepping up its assertive statements by calling on Arab states to shake off foreign interference in Middle East affairs and using a powerful regional platform like the Shanghai Cooperation Organization to coordinate efforts that would “eliminate the causes and consequences” of the war in Ukraine.

The forthcoming U.S.-China summit in Washington, D.C. on September 24, 2026, is unlikely to spend much time discussing strategic issues underlying the two country’s relations.

It appears that the meeting will focus on trade and a follow up on China’s commitments taken during last May’s summit in Beijing to purchase about $17 billion of American agricultural products each year in 2026, 2027 and 2028. China also committed to buy 200 Boeing aircraft, General Electric engines and parts.

That apparently will be enough to meet the requirements of “constructive strategic stability” -- and the rider America added “on the basis of fairness and reciprocity.”