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There was a time, not so long ago, when every exchange between Washington and Beijing looked like another step toward a declaration of war. From the Chinese virus to tariffs and retaliations, the Cold War was warming up.
Then, almost overnight, everything seemed to calm down.
During Xi Jinping’s visit to Washington, Donald Trump did everything possible to let smiles and embraces prevail. There was a certain confusion in Washington. Were the two superpowers not engaged in a conflictual escalation, accelerated since Trump’s return to the White House?
The New York Times headlined: “While Xi is visiting Washington, Trump minimizes China’s actions against American interests”. One might almost interpret this as the victory of “soft commerce”—the commercial and economic interests of two systems that are becoming increasingly integrated quietly imposing themselves to pacify Sino-American relations?
That would be a mistake. In the eye of the cyclone, calm reigns. In reality, the cordiality surrounding Xi Jinping’s most recent visit to Washington mainly signals an intensification of the transpacific rift. When every force is mobilized to win the battle, even the pretense of negotiation becomes a costly distraction. Meanwhile, away from the spotlights, the cyclone intensifies and shakes the quiet infrastructures of the global economy.
Repositionings in the battle for the digital realm
In late spring to autumn 2025, the Sino-American rivalry reached its peak: actual US tariffs hovered around 40%, and Donald Trump was poised to substantially broaden the technology sanctions imposed on the subsidiaries of the firms involved. Beijing replied by announcing measures just as unprecedented: a substantial broadening of its export restrictions with extraterritorial reach and an outright ban on exporting certain strategic materials such as gallium and germanium. In the midst of the AI boom, Silicon Valley faced the threat of an imminent shutdown. Meanwhile, China must continue exporting massively and thus seeks to rid itself of the 40% tariffs.
The Korea ceasefire, negotiated at the end of October 2025 in Busan, thus benefits both sides. China celebrates the reduction of effective tariffs to around 30% and backtracks on export restrictions. The slight broadening and the extension of this ceasefire to January 2027 constituted one of the few tangible results of Xi’s very recent visit to Washington.
On the surface, since Busan, de-escalation is underway. But the battle for chips is still raging: China has merely rolled back its most drastic export restrictions on metals and strategic components; the United States maintains its sanctions against Chinese Tech. Neither Beijing nor Washington is under any illusion about the partial and especially temporary nature of the truce, and behind the scenes, each side takes advantage of the lull to reposition its forces and prepare new assaults.
In the weeks preceding the Busan meeting, Donald Trump was already signing mining exploitation agreements by the dozen with Australia, but also with Japan, Malaysia and Thailand; the aim was to bypass China’s near-monopoly on rare earths and other critical metals by securing alternative supply routes located in countries with friendlier relations to Washington. Since then, about ten mining deals have been added to this list, including the Democratic Republic of Congo and Morocco. In addition, Trump maintains the Biden administration’s financial support for the critical metals sector, buys stakes in mining companies, promotes storage of strategic minerals, and even sets up a system of floor prices to support domestic extraction.
These practices of mining reshoring and friendshoring fit into a broader strategy to maintain American control over the digital infrastructure of the global market. In July 2025, Washington published its action plan for artificial intelligence. This strategy, which embodies the tightening of the White House–Silicon Valley alliance, pursues the objective of “exercising global dominance by controlling the social production of information and knowledge in all its forms, from narrative construction to cutting-edge technologies.” The United States extends this approach by pressuring its European and Asian allies. The dependence of these countries on Big Tech is used to push for alignment with the American position at all levels (energy infrastructure, supply chains, semiconductor exports, metal purchases, data regulations). Such is the rationale behind the Pax Silica coalition, unveiled by the White House in December 2025, and which the European Union joined in June 2026.
New five-year plan, same battle
The Chinese side did not idle either. While Trump and Xi staged the end of the conflict in Busan, the crème de la crème of Beijing’s senior civil service drafted the new five-year plan—the 15th since the founding of the People’s Republic—for 2026-2030. Remember that it is planning that has allowed China, not only to secure a near-monopoly in mining, but also to rise from a dwarf to a technological giant in less than twenty years. The 15th plan calls for pushing the envelope with “exceptional measures to achieve decisive advances in key central technologies,” with artificial intelligence at the heart of these efforts.
This acceleration in technology, designed to promote the self-sufficiency of the Chinese economy in advanced technologies, is also enabled by a series of measures taken earlier. Indeed, in 2025 China pumped a record $213 billion into countries along the New Silk Roads, representing a 75% rise compared to 2024, which had itself been a record year.
If the energy sector remains the prime target of these investments—particularly to fuel the other material pillar of digital infrastructure, the data centers—mining activities come just behind. In addition, Beijing supports its national champions of artificial intelligence by substantially subsidizing data-center operating costs, and above all by mobilizing its public banks to grant favorable loans to firms in the sector. The approach appears to yield tangible effects: Morgan Stanley estimates that by 2030, China’s semiconductor market will triple in volume and be 86% supplied by domestic firms; and Chinese open-source AI models are spreading worldwide at a record pace.
Yet despite these advances, Chinese Tech faces two major bottlenecks. On the one hand, despite the workarounds, American technology sanctions deprive Chinese digital giants of broad access to advanced semiconductors. On the other hand, the United States retains a substantial lead in notable AI models. According to the latest Stanford AI Index, they count 59, against 35 for China. The outcome of the digital battle will therefore depend on each side’s ability to accelerate AI development and to circumvent the bottleneck imposed by the other. In this framework, the American position remains advantageous because it is easier to replace a provider delivering relatively less complex activity, such as extraction.
Framed this way, the recent warnings by American AI giants about the “existential risk” that this technology could pose to humanity make sense. Lacking intrinsic intentionality, AI acts within predefined parameters. It gains room to maneuver when precautionary measures are loosened to unleash performance, which is what the AI race drives. The existential threat is not so much technological as geopolitical. This is the level of conflict reached by the Sino-American confrontation.
The digital turn in monetary antagonism
Artificial intelligence is not the only battlefield. Monetary antagonism has also expanded into the digital space. Far from the early musings around the Miran plan—according to which dollar supremacy would weigh on the United States—the rest of the world poured nearly $680 billion in subsidies into the American economy in 2025 alone, thanks to the exorbitant privilege of the dollar. Aware of this advantage, the White House intends to lock it in through a particularly aggressive approach based on dollar-backed stablecoins. That is the essence of the Genius Act of July 2025.
Easily usable worldwide—because they operate not through the interbank system but on blockchains—these stablecoins hold considerable potential for corporate adoption (which shapes consumers’ payment practices). By being pegged one-for-one to the U.S. dollar, they would reinforce the dollar’s position in international payments and encourage the dollarization of other countries. With broad adoption, the United States would multiply the benefits already drawn from dollar supremacy in financing the state, businesses, and households, and in terms of extraterritorial power. Admittedly, it is a high-risk approach. If confidence in the stability of digital tokens collapses, the payment system could become disordered and, by contagion, quickly paralyze financial markets or even halt economic activity.
Facing American attempts to consolidate their already outsized grip on the international monetary system, Xi Jinping spoke in early 2026 with unprecedented clarity in favor of internationalizing the renminbi. To achieve this, China’s monetary infrastructure that operates in opposition to the dollar is running at full tilt. The value of transactions processed by the CIPS payment system rose from 26 trillion yuan in the last quarter of 2022 to 45 trillion in the last quarter of 2025. Even though the gap between CIPS and its dollarized counterpart remains substantial, it is narrowing. In parallel, foreign capital has flowed in to the extent that China’s capital market has reached the second place worldwide by volume, just behind Wall Street. The 15th Five-Year Plan underscores the move by accelerating Shanghai’s establishment as an international financial center offering a more diverse array of securities.
The strategy also foresees advancing the development of the digital renminbi. China is at the forefront of central bank digital currency development and is thus well positioned to set standards in this area. This is why it has participated since 2021 in the mBridge project, which aims to connect the digital renminbi to its foreign counterparts. Thailand and the United Arab Emirates participate in the project, and twenty-five other countries, including France and Italy, are observing it. Because of the efficiency gains it offers, such a direct linkage could give rise to a monetary infrastructure that would replace the current dollar-centered interbank settlement system. The national currencies of the involved countries, and especially the renminbi, would be used for transactions.
In short, the battle for control of the global monetary infrastructure has fully extended into the digital space where two initiatives compete. For now, dollar supremacy remains largely intact while the Chinese approach remains fragile. It has also suffered a political setback: by mid-September, Saudi Arabia left the mBridge project. Saudi monetary authorities deny any American pressure. Nevertheless, as Fortune magazine notes, the Bank for International Settlements had already withdrawn from the project in 2024 following an American lobbying campaign.
The persistent externalization of macroeconomic imbalances
After the tariff lull, Sino-American antagonism returns to the quieter but more decisive grounds of the digital, physical, and monetary infrastructures of the global market, and intensifies there. For the constraints—political-economic forces promoting confrontation—are stronger than ever, particularly in the United States.
In China, there is a certain stability: the strategy of externalizing internal macroeconomic imbalances by conquering foreign markets has been confirmed by the latest plan. In the United States, on the contrary, the relationship with the global market has become explosive. To grasp this, one must remember that from Washington’s perspective, globalization was meant to play the role of a political stabilizer. Born in a context marked by intense redistributive conflicts in the 1970s, it was supposed to allow households to keep up with consumption standards even as real incomes stagnated, thanks to the importation of cheap goods. At the same time, companies were to be able to access a multitude of lucrative opportunities across all continents and thus restore profitability.
Today, this tool of social pacification is broken. In a context of near-stagnant incomes, inflation is politically explosive. If Trump could win the White House in 2024 thanks to Biden’s inability to fight rising prices, he is now caught in the same trap. Worse, the combination of his tax reform that widens income inequality and the inflationary effects of his trade policy (and the Iran war) that companies pass on to households intensifies the cost-of-living crisis. This configuration is plainly visible: according to the latest data, the share of labor in value added has collapsed to 52.8%—a record low since statistics began in 1947. Mechanically, the share of capital has reached new heights.
The acute crisis in the United States stems from the fact that globalization’s promise of social pacification has, in fact, been double-broken: besides household discontent, firms see globalization as increasingly dysfunctional. True, it has allowed American firms to reap soaring profits from abroad, but that dynamic is faltering under the impact of China’s technological ascent. Never before in nearly 50 years has the ratio of foreign profits to domestic profits fallen so low. It now hovers around 46%.
Even more, nothing indicates that China’s upgrade to higher value-added activities will be a temporary phenomenon. Of course, American firms still reap enormous benefits from the global market. Nevertheless, the trend of recent years is seen as a decline that may intensify in the coming years. The pressure in Washington to find levers to slow China’s rise is thus mounting.
If Trump bears direct responsibility for the worsening cost-of-living crisis, and has so far failed to loosen the tightening grip on fuel costs, he is fully mobilized, through a series of infrastructure initiatives, to make globalization once again functional from the perspective of American firms. In this respect, he follows the same line of foreign economic policy as his predecessors. Unlike them, who sought to anticipate and avoid the negative effects of China’s rise on American firms’ profitability, the Trump administration faces intensified pressure because the negative impact is now a reality. On this front, Xi Jinping has no concessions to offer, as he must himself ensure the reproduction of an outward-facing economic model. By attempting to externalize internal macroeconomic imbalances, each of the two superpowers relentlessly fuels the cyclone.