Donald Trump’s return to the White House ushers in a precarious new chapter for U.S.-China relations, with heightened risks of economic decoupling, military escalation over Taiwan, and strategic shifts in global power dynamics. In a recent Wikistrat webinar, Dr. Minxin Pei discussed the challenges posed by hawkish policies, potential flashpoints such as Taiwan, and the critical decisions facing Beijing as it navigates this volatile landscape
Dr. Minxin Pei is a professor of government at Claremont McKenna College, an expert on U.S.-China relations, and editor of China Leadership Monitor. His notable works include China's Crony Capitalism and The Sentinel State.
Overview of U.S.-China Tensions
Dr. Minxin Pei emphasized that Donald Trump’s return to the White House could herald a period of unprecedented volatility in U.S.-China relations. The next 12 months are critical in defining whether these relations stabilize or deteriorate into a more dangerous phase. Dr. Pei explained that the first year of any new administration often sets the tone for bilateral relations, but Trump’s hawkish cabinet and the complex challenges around Taiwan and technology elevate the risks significantly. “If we survive the next 12 months without a military confrontation... we should consider ourselves lucky,” he noted, reflecting the heightened stakes in managing tensions.
Not Just Trade—A Clash of Competition and Conflict
While economic decoupling is a prominent element of U.S.-China tensions, Dr. Pei emphasized that the core dynamic is not transactional but adversarial. “This is not just about trade; it’s about competition, confrontation, and potentially conflict,” he warned. Taiwan is at the heart of this competition, with its strategic importance making it a flashpoint for direct confrontation. “Taiwan is not just a bargaining chip for Beijing; it’s a red line, and provocations like high-profile arms sales or senior U.S. visits could cross that line,” Dr. Pei explained. The escalation is driven by Trump’s hawkish advisors, who may push for bold actions that Trump himself might approve without fully grasping their consequences.
South China Sea – Managing Regional Flashpoints
The South China Sea presents another critical arena for U.S.-China tensions. Dr. Pei highlighted recent developments, including China’s attempts to de-escalate certain maritime disputes, such as the Second Thomas Shoal standoff with the Philippines. However, U.S. naval operations, particularly those aimed at supporting Philippine resupply missions or conducting joint exercises, could provoke a sharp Chinese response. Dr. Pei noted, “If the U.S. starts escorting Philippine ships with its naval forces, we could see ugly incidents, including potential clashes.” The hawks in Trump’s administration may advocate for a more aggressive posture, further complicating the regional dynamics.
A Hawkish Cabinet, but an Unpredictable Trump
Dr. Pei underlined a key paradox: while Trump has assembled a hawkish cabinet, he himself is not inherently ideological. His focus remains transactional, driven by short-term gains and personal victories rather than a cohesive long-term strategy. “Trump is a mercantilist, not a strategist,” Dr. Pei remarked. This creates a significant risk of inconsistency, as Trump may either escalate tensions rapidly or pursue a sudden diplomatic overture depending on his immediate priorities. This unpredictability leaves Beijing uncertain about U.S. intentions, heightening the risk of miscalculations.
Future Scenarios and Strategic Takeaways
Dr. Pei outlined four interconnected scenarios, emphasizing that while each has distinct characteristics, they are not mutually exclusive and could evolve into one another.
Best-Case Scenario: Deal-Making Pragmatism In this scenario, Trump seeks a legacy-defining deal, avoiding full decoupling for political and economic reasons. “Trump doesn’t want chaos; he wants to win, and leaving office with a positive legacy would suit his style,” Dr. Pei noted. Pragmatic advisors and intermediaries, such as Treasury officials or figures like Elon Musk, could facilitate backchannel negotiations.
Worst-Case Scenario: Escalations Spiral Out of Control In this scenario, a single event—such as an arms sale, a military clash, or financial sanctions—triggers a breakdown in communication and control. “The worst-case scenario is when both sides lose control of escalation, leading to a direct military confrontation,” Dr. Pei warned. The transition from the Gray Rhino scenario to this worst case is fluid, as unchecked provocations can easily cross critical thresholds.
Gray Rhino Scenario: Continuation of Tensions and Escalations in Relationship The most likely scenario Here, both sides engage in a tit-for-tat cycle of provocations, stopping short of catastrophic conflict. “One modest bad move leads to another, locking both sides into a downward spiral,” Dr. Pei explained. This scenario could see escalations over Taiwan or trade, ultimately stabilizing at an unstable but manageable status quo.
Black Swan Scenario: Trump Visits Moscow Low likelihood, high impact This scenario explores the potential for an unexpected, high-impact event. Dr. Pei suggested that “Trump’s relationship with Putin could create a reverse-Nixon moment, where the U.S. aligns with Russia against China, leaving Beijing strategically isolated.” Conversely, a surprise diplomatic breakthrough could de-escalate tensions, though the probability remains low.
The connections between these scenarios are key, Dr. Pei emphasized, as actions in one domain—such as trade or diplomacy—can cascade into broader dynamics, pushing the relationship toward either escalation or resolution.
Final Thoughts
Dr. Pei concluded by stressing the importance of prioritizing security over economic disputes. “We’re not just talking about money or trade deals; we’re talking about managing tensions between two nuclear powers,” he said. If the U.S. and China can avoid a military confrontation over the next four years, it would be a significant achievement. However, the stakes are high, and the next year will be decisive in determining the trajectory of these relations.
* This event is part of a series of webinars by Wikistrat on the global implications of Trump's new administration. Learn more about it here.
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