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By Jamie McGeever
(Reuters) – With much of the world’s focus this year fixed on U.S. President Donald Trump’s controversial foreign policy agenda, many may have missed China’s quiet – but significant – economic renaissance.
The U.S. president was originally scheduled to meet China’s President Xi Jinping for a summit in Beijing on March 31-April 2, but Trump on Monday confirmed that he has requested a delay of around a month, citing the need to be in Washington to prosecute the war on Iran.
Beijing hasn’t officially responded yet. But when the two leaders do eventually meet, Trump may find that Xi’s position has strengthened considerably since the start of the year.
SITTING PRETTY
At the start of the year, China’s domestic economic activity was still shackled by the fallout from the world’s largest property bust and lingering deflation.
While the country’s booming exports delivered a trade surplus above $1 trillion in 2025, business investment ended the year contracting at the fastest annual rate on record, excluding pandemic-blighted 2020. Pressure was mounting on Beijing to inject a powerful dose of fiscal and monetary stimulus.
But official data for January and February has shown a surprisingly strong rebound in economic activity, especially in retail sales, industrial production, and business investment. Moreover, annual consumer inflation has leaped to a three-year high, and producer disinflation is the lowest in 18 months.
The external picture remains rosy too, with goods shipments to Europe and Asia continuing to more than offset the tariff-driven loss of sales to the U.S. If the January-February export boom is maintained, last year’s record trade surplus will be bettered this year.
Meanwhile, China’s long-standing focus on energy security has put it in a strong position to weather the current oil shock created by the U.S.-Israeli war in Iran. Although some 45% of its oil imports come via the Strait of Hormuz, its huge stockpiles mean it’s in no rush to answer Trump’s plea to help reopen the Strait and get oil supplies flowing again.
China’s oil imports rose to around 12 million barrels daily in January and February, up almost 16% from last year. Its commercial and strategic crude reserves are now an estimated 1.2 billion barrels, enough to keep the world’s second-largest economy ticking for roughly four months.
If Trump thought he would hold all the aces when he finally sits down with Xi, he might want to lower his expectations.
“When he eventually goes, he will find an economy that was not as damaged by his trade war as he was led to believe this time a year ago by his advisors,” said economist Phil Suttle.
CHOKEPOINT CHARLIE
But China is not an island, nor is it immune to global shocks. Europe and Asia, the two export destinations making up for China’s lost U.S. trade, are highly exposed to surging global energy prices. If these economies experience slowing growth, rising inflation and negative wealth effects, the impact will ripple through to China soon enough.
Trump’s recent foreign policy moves may also be aimed at weakening China’s strategic position. Analysts at Rabobank say it’s hard to ignore that the U.S. has been exerting its power in areas where China had been increasing its influence: Venezuela, the Panama Canal, Cuba, and Iran.
If the Trump administration is successful in all these foreign forays – and that is still a big “if” – the U.S. could gain a certain degree of control over several key maritime “chokepoints” for Chinese energy imports.29dk2902l
“The message to Beijing couldn’t be more clear: if you attempt to leverage rare-earth supply chains against U.S. interests, the U.S. will leverage energy supply chains against Chinese interests,” Rabobank’s team wrote on Sunday.
But, if this is the strategy, it could backfire if Trump gets bogged down in the Iran war or if he appears to be acquiescing to some Iranian demands to reopen Hormuz.
Whenever the summit between Xi and Trump is held, neither will be holding all the cards. But Xi’s hand will be quite a bit stronger than even he probably thought possible a few months ago.
(The opinions expressed here are those of Jamie McGeever, a columnist for Reuters)
By Jamie McGeever; Editing by Marguerita Choy
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