Donald Trump, Xi Jinping and the optics of G2

US President Donald Trump called his October interaction with Chinese President Xi Jinping a “G2” meeting – “a 12 on a scale of one to 10” was how he rated it. What was billed as a big-bang meeting ended almost in a whimper, with China agreeing to start buying 25 million metric tons of American soybeans every year for the next three years. Trump is happy because “the American farmers will be happy”. That China managed to leave the leader of a superpower pleased with this deal tells a story. But that has been the story of this meeting, where Xi has allowed Trump to walk away with an imaginary trophy. China has given away too little and too late – trade between the two countries is back to its position in May, when there was no tariff, no punitive fees on the use of ports, and no AI chips control.

While Trump has upgraded China’s status to G2, there is hardly any doubt in the minds of the strategists in the US administration or the anti-China hawks in Trump’s party and the White House about the president’s strategy. After he met with Putin in Alaska, Trump gave the impression that it was also a G2 affair. Though the meeting went off well, there was no outcome to write home about. Trump could not convince Putin not to trade with China or sell oil to India at a discounted rate. A short truce apart, the Russia-Ukraine conflict did not end. In this context, Trump needed to elevate his meeting with Xi to G2 stature, and both parties took it with a fistful of salt. Neither Putin nor Xi would trust Trump’s G2 branding.

China, grappling with headwinds impeding its manufacturing sector, urgently needs to re-enter the American market. Beijing is aware that Trump’s desire and appeals notwithstanding, American manufacturing, which lost its steam decades ago, cannot be revived any sooner. Yet, high tariffs and competition from other Asian economies can put China in a quandary.

While ensuring that it does not give much away, China has also evaded the tariff heat, at least for now. Meanwhile, like the US’s strong, decades-old dollar policy, Beijing is adopting a strong Yuan policy and furthering the idea of the ‘USD alternate’ in every forum where it has an upper hand, including BRICS. Chinese Yuan is one of the few least depreciated currencies and is matching the USD in every trade deal. In this trade war, China has certainly come out stronger, directly affecting emerging economies, especially the world’s fourth-largest economy, India.

There are important lessons for India in Trump’s G2 declaration and the way Beijing has handled the president. By equating China with America, Trump has sent a strong signal to India, and by that logic, to other Quad members, that Communist China has given him what the democracies of the Quad could not give: trade concessions. With Quad being relegated to the background, there is a big question mark on the Indo-Pacific Economic Framework (IPEF), which promised to remove bottlenecks and create a strong supply chain mechanism for stakeholders in the Indo-Pacific region.

The much-hyped Australia-United Kingdom-United States (AUKUS) has been put on the back burner even before it could operationalise its agenda. After participating in the pre-launch negotiating rounds of the Regional Comprehensive Economic Partnership (RCEP), India opted out of its membership, calling it a pro-China forum. But soon after the Shanghai Cooperation Organisation (SCO) meeting, where India, China, and Russia huddled to work on a strategy to counter Trump’s tariffs, New Delhi opened its door to trade with China. Now, with Trump elevating China to G2 stature, India can neither go back to the ‘no-trade’ days with China nor can it match the concessions, especially on agricultural products, that China can give the US.

The US-China bonhomie may not last long – the two countries are economically and culturally poles apart. The present camaraderie appears part of a long-term strategy to contain each other. Until one of them gives up, the contest for supremacy will continue. For India, it will be a long wait before it can normalise its ties with the US and, at the same time, do business with Beijing as equals. But it also gives us time to build our capabilities, reorient manufacturing, scale up defence strength, and reduce the asymmetries with both the US and China.

The writer reads between the lines on big national and international developments from his vantage point in the BJP and the RSS.

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.