By: Faris Al Hadidi
Jordan Daily - For much of the past two decades, the economic relationship between the United States and China was discussed mainly through the language of trade. The questions were familiar: How large was the US trade deficit? Was the Chinese currency undervalued? Were American manufacturing jobs moving to China? And, more recently, could tariffs change the balance?
The latest meeting between Presidents Donald Trump and Xi Jinping in Washington suggests that this framework is becoming increasingly outdated.
Trade still matters, of course. The two countries remain deeply connected through hundreds of billions of dollars in annual commerce, and tariffs continue to be an important instrument of economic policy. The latest summit itself produced agreement on more favorable tariff treatment covering around $30 billion of non-sensitive goods in each direction, alongside efforts to improve market access and investment discussions. Although the real US-China economic competition has become much larger than trade.
Increasingly, it is about technology, artificial intelligence, semiconductors, critical minerals, energy, supply chains and industrial capacity. In other words, the competition is gradually shifting from a question of who sells more goods to whom, towards a much more important question: who will control the technologies and resources that drive the next generation of global economic growth?
The United States currently possesses huge advantages in advanced semiconductor design, computing infrastructure, capital markets and many of the companies at the frontier of AI development. China, meanwhile, has built formidable capabilities of its own, supported by a large domestic market, manufacturing depth, infrastructure and an increasingly sophisticated technology ecosystem.
This makes semiconductors much more than another traded product. Advanced chips have become strategic economic assets.
China's position in rare earth processing has demonstrated something important about the changing nature of economic power. A country does not necessarily need to dominate every stage of production to possess strategic leverage. Control over a critical point in the supply chain can sometimes be enough.
That helps explain why rare earths have become such an important issue in US-China economic negotiations. Modern economies need them for products ranging from electric vehicles and electronics to advanced industrial and defense technologies. The latest summit did not remove this structural issue; Washington and Beijing continue to discuss supply shortages and shipment levels.
For years, much of the discussion in Washington centred on reducing America's dependence on China. Terms such as “decoupling”, “de-risking”, “friend-shoring” and supply-chain resilience entered the economic vocabulary.
Yet the experience of recent years has also demonstrated how difficult complete economic separation would be.
The United States can diversify supply chains, encourage domestic semiconductor production and develop alternative sources of critical minerals. China, similarly, can accelerate its efforts to reduce dependence on American technology.
There is therefore a contradiction at the center of the US-China relationship. Both countries want greater strategic independence, but both continue to benefit from economic interaction with the other.
The meeting should not necessarily be interpreted as the beginning of a new era of economic friendship. The fundamental areas of competition remain. Technology restrictions have not disappeared. Strategic concerns remain unresolved. Competition over AI, semiconductors, manufacturing and critical minerals will continue.
What may be emerging instead is something different: managed economic competition.
During the original era of globalization, the assumption was that greater economic integration would gradually reduce strategic rivalry. Economics and geopolitics were often treated as separate subjects.
A semiconductor export restriction can be a national-security policy. A rare-earth export control can become a negotiating instrument. A tariff can serve industrial as well as trade objectives. An investment restriction can influence technological development. Even energy policy is increasingly shaped by strategic considerations.
Economic policy has therefore become an important part of national power.
But there is another side to this equation. Economic interdependence, often described as a vulnerability, can also impose discipline.
The cost of uncontrolled confrontation between the world's two largest economies would not remain confined to Washington and Beijing. It would travel quickly through global supply chains, commodity markets, currencies, investment flows and inflation.
A serious disruption in US-China trade could raise production costs for businesses thousands of kilo meters away. Restrictions on critical minerals could affect manufacturers in Europe and Asia. A semiconductor confrontation could disrupt industries far beyond the technology sector.
For emerging and middle-income economies, this creates both risks and opportunities.
As companies diversify supply chains, new investment destinations may emerge. Countries capable of providing political stability, skilled labour, infrastructure and access to major markets could benefit from the restructuring of global production.
At the same time, a world divided into competing technological and economic blocs would create difficult choices, particularly for smaller economies that maintain important relationships with both the United States and China.
This is why the most important outcome of US-China summits may eventually be measured not by the number of agreements signed, or even by the tariffs reduced.
The more important question is whether Washington and Beijing can construct a framework in which intense economic competition remains compatible with a functioning global economy.
Competition between the two countries is unlikely to disappear. In many areas, it may intensify.
The old US-China relationship was built largely around trade and globalization. The emerging relationship is being shaped by technology, security, resilience and strategic dependence.
Perhaps, therefore, the central lesson from Washington is not that the United States and China are moving closer together.
It is that the world's two largest economies may be discovering that neither can easily dominate the other, and neither can afford the economic consequences of allowing competition to become uncontrolled confrontation.
Faris Al Hadidi is an economist and banker.
