The Rose Garden
On September 25, 2015, Xi Jinping stood beside Barack Obama in the Rose Garden after an arrival ceremony on the South Lawn. Both governments wanted to finish a bilateral investment treaty, and Washington reiterated its commitment to encourage exports of American commercial high technology for civilian use in China. Agriculture, aviation, health, climate, infrastructure and finance all produced agreements or working groups, the usual machinery for keeping a state visit alive after the motorcades had gone home.
Obama also pressed Xi on cyber theft and Beijing’s construction campaign in the South China Sea, where dredgers were turning reefs into islands large enough for runways and military facilities. The governments announced that neither would conduct or knowingly support cyber theft of trade secrets for commercial advantage. Xi said China did not intend to militarize its South China Sea outposts, an assurance that became harder to defend as missile systems, radars and military aircraft followed. None of that prevented the same visit from producing plans for more investment and more technology trade; Washington still expected the difficult parts of the relationship to fit inside a much larger economic one.
Trump hosted Xi at Mar-a-Lago in 2017, and Joe Biden met him near San Francisco in 2023. Washington gives us the cleaner comparison. On Thursday, Trump will host Xi at the White House, four months after visiting him in Beijing and less than a year after the two men met in Busan. Treasury Secretary Scott Bessent and Vice Premier He Lifeng met in New York on Sunday, with trade, critical minerals and artificial intelligence still on the table. The state visit will begin with plenty of business unfinished.
What Grew
The United States imported $483.2 billion in goods directly from China in 2015 and ran a $367.3 billion goods deficit. By 2025, imports had fallen to $308.7 billion and the deficit to $202.7 billion. That decline is real, though anyone tempted to read it as a clean retreat from Chinese manufacturing should spend a little time with the rest of the Asian trade tables.
Vietnam’s exports to the United States have tripled since the 2018–19 tariff increases. Much of that growth reflects genuine production in Vietnam, including by Chinese-owned firms. A Federal Reserve analysis found that those firms accounted for about a quarter of Vietnam’s goods exports to the United States in 2020–23, up from 11% immediately after the tariffs, while many still bought inputs from China. The customs label records where a product underwent its legally significant transformation; it does not identify every supplier or investor behind it.
Four months before Xi’s 2015 state visit, the State Council released Made in China 2025. Beijing’s diagnosis was unusually blunt: China had become a manufacturing giant, “large but not strong,” and still depended too heavily on foreign technology higher up the value chain. The plan targeted semiconductors, robotics, electrical equipment, aerospace, ships, machine tools and new-energy vehicles, among other industries. A U.S.-China Economic and Security Review Commission assessment at the end of the plan’s first decade found that Beijing missed some targets and met or exceeded others; across most of the sectors it singled out, Chinese firms gained ground.
China had about 1.5 terawatts of installed generation capacity at the end of 2015; by the end of 2025, it had 3.89. Its solar capacity went from about 42 gigawatts to 1,200, and wind rose from roughly 130 to 640. The solar capacity added in those ten years alone equaled more than three-quarters of China’s entire power system when Xi stood beside Obama in the Rose Garden. Installed capacity is not the same as electricity delivered, particularly for solar and wind, but it tells us how much equipment and construction the country brought into service.
China installed 295,000 industrial robots in 2024, 54% of the worldwide total, pushing its operating stock past two million. Japanese and European manufacturers once supplied most of the robots automating Chinese plants; Chinese makers now supply a majority of their own domestic market. The production equipment has become another Chinese industry, rather than merely something imported to make Chinese factories more efficient.
Chinese yards already delivered 36% of the world’s ships by tonnage in 2015; by 2024, their share had reached 53%, according to the U.S.-China Commission. Foreign owners took delivery of more than 70% of the tonnage those yards produced between 2019 and 2024, so global commerce keeps much of the system busy whether Beijing places a naval order or not. Roughly 40% of China’s annual ship production comes from yards with strong military links; civilian orders keep welders, suppliers and facilities working at sites that also build for the navy and other maritime forces. The Commission counts 78 additions to China’s navy between 2015 and 2023, against 20 for the United States.
Missile production leaves fewer convenient numbers behind. Bloomberg traced listed Chinese companies connected to the country’s two principal state-owned missile conglomerates and found 81 that disclosed producing important missile components in 2025, up from 32 in 2013. The firms reported 189 billion yuan in combined sales, much of it from businesses other than missiles. That figure cannot tell us how many weapons rolled out the factory door, though the expanding supplier network deserves attention in its own right.
China still imports some of the machinery needed to make its most sophisticated products, especially high-end computer-controlled machine tools and leading-edge semiconductor equipment. Nor can a commercial shipyard casually switch from containerships to modern destroyers, or an electric-vehicle plant become a missile factory on command. The useful overlap lies farther down: electronics, batteries, motors, specialized materials, machine tools and workers accustomed to making complicated things in large quantities.
China accounts for more than 90% of global refining for gallium, graphite, manganese and rare earths, according to the International Energy Agency. It also supplied more than 90% of the growth in global copper-smelting capacity since 2005, lifting its share of capacity from about 15% to half. A mine in Australia, Africa or the United States solves only part of the problem if its output still has to pass through Chinese processing before a manufacturer can use it.
The property sector has meanwhile suffered years of losses, household demand remains weak relative to production, and China’s population continues to shrink and age. Beijing subsidized inefficient firms and built excess capacity along with useful capacity; industrial policy never acquired a magical exemption from bad investment. What stands out is how much physical capability China added while carrying those problems at the same time.
Busan
When Trump and Xi met in Busan on October 30, 2025, their agenda had moved a long way from the investment treaty of 2015. China had announced new rare-earth export controls; Washington was restricting advanced technology; Beijing had retaliated against American semiconductor companies. Agricultural purchases and fentanyl precursors sat in the same negotiation as minerals used in motors, electronics and weapons.
The Busan arrangement suspended or deferred some Chinese mineral controls, addressed retaliation against American semiconductor companies, restored agricultural purchases and brought commitments on fentanyl precursors. Washington adjusted portions of its tariffs in return. Both governments retained the industrial leverage that had brought those issues to the table.
Trump’s May visit to Beijing created a Board of Trade and a Board of Investment and brought agreements on rare-earth supplies, agriculture and Boeing aircraft. The White House described its aim as a “constructive relationship of strategic stability.” That language leaves plenty of room for competition, while giving negotiators somewhere to take problems before the presidents have to settle them personally.
Some problems have made it back onto the presidents’ desks anyway. Bessent, He Lifeng and U.S. Trade Representative Jamieson Greer met in New York ahead of this week’s summit, and the tariff truce faces a November deadline. The American side proposed a channel for notifying each other about serious AI incidents, while Washington continued pressing Beijing for more dependable critical-mineral supplies. The two governments still trade hundreds of billions of dollars in goods each year, yet increasingly negotiate over which technologies, materials and equipment should cross the Pacific at all.
The Machine Behind the Model
American private AI investment reached $285.9 billion in 2025, more than 23 times the Chinese figure measured by Stanford. Government guidance funds make that an incomplete comparison of the two countries’ total spending, but American companies remain central to advanced accelerators, cloud computing and frontier-model development. They can also raise capital for absurdly expensive computing projects at a speed few countries can match.
Chinese systems have nevertheless stayed close to the frontier. American and Chinese models traded places near the top of major rankings repeatedly beginning in early 2025; Stanford put the leading American model only 2.7% ahead of the leading Chinese model on its measure in March 2026.
Training and serving large AI systems takes chips and data centers; the data centers need transformers, cooling equipment, transmission and generation. Semiconductor fabs need electricity, water, chemicals, specialized machinery and skilled workers of their own. The United States holds formidable advantages in chips, capital and research, but thousands of megawatts of new demand are trying to connect to electrical systems where permitting, interconnection and equipment can hold a large project up for years.
China’s leading-edge chip industry still depends on foreign equipment, which American export controls deliberately make harder to obtain. At the same time, Beijing spent the last decade adding generation, electrical equipment, batteries, power electronics, mature-node chip capacity and industrial machinery on a scale that gives its technology companies a very different physical environment in which to work. Compute has to run somewhere, even when the models and chips receive most of the attention.
Modern weapons draw from parts of that same economy. Autonomous systems need sensors, batteries, communications equipment, motors and software; missiles need guidance components, chemicals, metals and machine tools; ships require engines, steel, cable, pumps and thousands of ordinary industrial parts before anybody installs the combat system. Beijing’s military-civil fusion policies seek to pull researchers and suppliers beyond the traditional defense firms into the PLA’s orbit. A submarine component or specialized missile seeker still needs its own narrow supplier base, but the depth of the surrounding industrial system matters as soon as demand rises beyond what peacetime defense lines were built to handle.
The Window
The PLA’s centenary goals make 2027 a useful marker for measuring Chinese capability around Taiwan, though Xi did not set an invasion appointment. Geography will matter in the opening fight: Taiwan sits close to Chinese airfields and missile forces, while much of the American military would have to cross the Pacific. Ships, aircraft, submarines, launchers and ready magazines would determine what either side could do first.
If the fighting continued, those inventories would start to disappear. In CSIS Taiwan wargames, American stocks of some long-range precision munitions ran out in less than a week; aircraft would need parts and maintenance, damaged ships would need yards, and cratered runways would need repair crews. RAND has examined how an intense U.S.-China war could also become a prolonged one. China would face serious disruption if attacks damaged its ports, factories, transport links or power supply; neither side would get to mobilize its industry under laboratory conditions.
An unclassified Navy briefing estimated that China has roughly 230 times the shipbuilding capacity of the United States measured in gross tons produced over time. That measure largely captures commercial construction. It says nothing about a 230-to-one ability to build nuclear submarines or destroyers with advanced combat systems. The Congressional Research Service still treats the underlying gap as a serious concern, especially if both navies take heavy losses and then have to repair or rebuild what remains.
Public information cannot tell us how efficiently a Chinese yard could repair a battle-damaged destroyer while an adversary was also trying to destroy the yard. A large commercial dry dock helps, but it cannot produce a specialized radar or propulsion system on demand. Missile production presents the same difficulty: the supplier network has grown, while finished production rates, stockpiles and the resilience of individual plants remain largely opaque. China enters that uncertainty with a much larger maritime and manufacturing system than it had when Xi last visited Washington.
The United States has put money into missile plants, submarine suppliers, shipyard workforces and Pacific infrastructure. Guam is receiving new defenses; Japan is fielding longer-range weapons; and the Philippines has opened additional locations to American forces. GAO reported in August that maintenance delays and idle time cost the Navy more than 15,000 attack-submarine operational days over the previous decade. As of June 2025, Virginia-class yards were building at roughly one submarine per year, half the Navy’s target; the two boats delivered in 2025 both arrived more than three years late.
Congress can fund a program much faster than a yard can train welders, qualify suppliers, install equipment or finish a submarine already years behind schedule. That lag matters before a conflict. After both sides begin using what they have already bought, it may matter even more.
What Xi Sees
Xi returns after eleven years that included the trade war, Huawei, COVID, semiconductor controls, Hong Kong, Xinjiang, repeated Taiwan crises, rare-earth restrictions and a revival of American industrial policy. Much of the commercial relationship survived. American consumers still buy Chinese goods; Chinese manufacturers still need some American and allied technology; American industry still relies on Chinese processing and components. The two presidents have reasons to preserve room for business and to prevent the competition from turning into a military crisis.
The immediate agenda is crowded enough: minerals, tariffs, semiconductor controls, AI and a truce with a November deadline. An agreement on any of them could matter to the companies waiting on a shipment or a license. China’s factories and shipyards will keep operating after the ceremony, however, and American submarine yards will keep working through the backlog they already have. New semiconductor fabs must qualify equipment and ramp production; mineral projects outside China must build competitive processing capacity; utilities must connect new loads to generation and transmission that often have yet to arrive.
None of the peacetime output figures tells us how China’s industrial system would perform under wartime attack, and the American equivalents look less comfortable once existing stocks and spare capacity run down. China has spent the eleven years between state visits building many of the systems that would sustain both its technological ambitions and its military power. The American response has begun, but a large share of it remains somewhere between appropriation and output. Those schedules will still be there when the motorcade leaves.