U.S.-China Trade Relations: Beijing’s Self-Reliance Strategy

The United States and China reportedly reached a framework agreement on trade this week. The exact contours are unclear, and the overall trajectory of U.S.-China trade relations remains shrouded in uncertainty. That said, the U.S.-China trade war has revealed several lessons about China's vulnerabilities and power, say RAND's Gerard DiPippo and Benjamin Lenain.

The trade war has been “as much a test of China's economic resilience as it is of U.S. pressure.” Although Washington retains meaningful leverage over Beijing, its influence is diminishing. That’s because China is reducing dependence on U.S. markets and technology: It is focusing on manufacturing goods for China’s internal market and deepening its control over critical global supply chains, including those for smartphones and batteries.

If tensions re-escalate, then China could endure the shock, but it would be doing so at a fragile moment, according to DiPippo and Lenain. This highlights “the limits of U.S. leverage and the stakes of Beijing's self-reliance strategy.” Whatever happens with future negotiations, China's approach is unlikely to change.