US-China deals offer short-term market relief only

The recent high-level meeting between US President Donald Trump and Chinese leaders in Beijing produced a set of limited economic agreements. While these deals might reduce volatility in global financial markets for a short period, experts warn that deeper structural tensions between Washington and Beijing remain unresolved and will continue to strain third-party nations.

From trade war to systemic rivalry

Relations between the world’s two largest economies have evolved beyond a simple trade dispute into a multidimensional power struggle. Competition now spans critical raw materials, artificial intelligence, energy security, and supply chain realignments—partly accelerated by the ongoing Middle East conflict. Trump’s visit, the first by a US president to China since 2018, signaled what analysts call “controlled systemic competition,” where both sides avoid direct confrontation while engaging in intense rivalry.

Energy as a geopolitical weapon

Professor Arzu Al from Istanbul’s Marmara University told the agency that energy has replaced industrial manufacturing as the primary driver of geopolitical power. “China is the world’s largest energy importer and gains a massive cost advantage by buying discounted oil from sanctioned Iran, Russia, and Venezuela,” she said. “Washington’s goal is to slow China’s long-term economic rise.” Tensions in strategic corridors like the Strait of Hormuz, along with US sanctions on Iran and Venezuela, appear designed to disrupt Beijing’s alternative energy networks.

Global South caught in the middle

Al noted that China has maintained export capacity by shifting production to ASEAN countries, Mexico, and others—a process called trade diversion. “This makes global production networks more complex and increases shipping costs and geopolitical risks,” she said. The World Trade Organization’s rules-based system has weakened as countries now prioritize national security over free markets, adopting friend-shoring, de-risking, and tech embargoes. “Limited US-China deals may ease risk perception in the short term, but serious pressures will emerge on third-party economies in the medium to long term,” she added.

Excess capacity and bloc-based order

The professor highlighted that Europe’s biggest risk from China is excess industrial capacity flooding EU markets with cost-effective electric vehicles, solar panels, and green tech products. The “China Plus One” strategy allows countries like India, Vietnam, Indonesia, Mexico, and Brazil to attract new investments, but they are forced to choose between two competing blocs. “The Global South faces both economic opportunities and secondary sanction risks. The world is moving away from single-polar globalization toward a more fragmented, bloc-based order shaped by geopolitical risks,” Al concluded.