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Whether you get your news from a newspaper or doomscrolling in bed, you’ve probably read a headline about the ever-changing relationship between the US and China.
‘Advantage China: Trump’s tantrums push US allies closer to Beijing’, reads a Guardian headline, while Time Magazine explores ‘The complicated stakes of the AI race between the US and China’. Politico proposes ‘Four ways China-US relations could fracture in 2026’, while Al Jazeera asks, ‘Just how “excellent” was Trump and Xi Jinping’s phone call, really?’
Public interest in what is going on between the US and China is hardly surprising, considering the two countries are the world’s largest economies – and by a large margin. Decisions made in Washington and Beijing don’t stay there – they ripple across global markets, including Australia’s. Missteps or miscalculations can shift the global balance – or, at worst, lead to military confrontation.
At a time when the US and China are competing more openly over trade, advanced technologies and strategic influence, understanding their relationship isn’t just academic – it’s urgent. So, what is going on between the US and China right now?
Well, after years of escalating tariffs, sharp rhetoric and growing mistrust, recent meetings between President Donald Trump and President Xi Jinping have signaled a possible shift towards economic cooperation – but tensions remain high.
To help make sense of what is going on between the US and China, we turned to Deakin University Distinguished Professor Baogang He. His research looks at not only why these tensions arise, but also what can be done to manage them.
Before diving deeper into what is going on between the US and China today, let’s take a step back.
The relationship has never been simply friendly or hostile. Instead, it’s shifted over time between cooperation, competition and cautious coexistence.
The US supported China’s Nationalist government during World War II, but relations deteriorated after Mao Zedong’s Chinese Communist Party took over and established the People’s Republic of China in 1949. From then on, the US-China relationship was shaped by both rivalry and moments of shared interests.
The two countries found themselves on opposing sides of the Korean War, and tensions continued to simmer throughout the 1950s over issues such as Taiwan and Tibet.
Things began to shift in the 1970s as China’s relationship with the Soviet Union deteriorated, creating an opportunity for Beijing and Washington to find common ground and counterbalance Moscow.
That’s where the famous ‘ping pong diplomacy’ comes in. In 1971, table tennis players from the US and China visited each other’s countries, helping to break the diplomatic ice. The following year, President Richard Nixon made his historic visit to Beijing.
By 1979, the US formally recognised the People’s Republic of China, marking the beginning of the ‘era of engagement’. Trade expanded rapidly, economic ties deepened and the two economies became increasingly intertwined.
But even at its warmest, the relationship rested on a fragile foundation. Events such as the Tiananmen Square crackdown in 1989, the 2001 spy plane standoff and ongoing disputes over Taiwan, technology and human rights continued to remind both sides that strategic suspicion never fully disappeared.
Roughly from 2008 to now, He argues the relationship can be described in a simple term: from a G2 to a new Cold War. The Group of Two, or G2, refers to the concept of the US and China work together informally to manage major global challenges.
‘After the financial crisis, Washington proposed that both countries form “G2” to manage the world economy. But now, it’s returned to the old Cold War,’ says He.
Understanding this pattern helps explain what is going on between the US and China today. It suggests that rivalry today isn’t inevitable, but rather part of a dynamic relationship that has repeatedly been reshaped by political choices, strategic calculations and changing global conditions.
Yes, and it plays out across economic, technological, military and ideological fronts.
Trade disputes in recent years have led to tariffs and export controls, particularly in sensitive sectors such as semiconductors and artificial intelligence. The US has restricted Chinese access to advanced chip technology, while China has sought to reduce its reliance on American supply chains. Economic interdependence remains, but trust has eroded.
Military tensions also persist, with Beijing viewing Taiwan as a breakaway province that must eventually be reunified with the mainland. The US, on the other hand, supports Taiwan’s self-defence. Unease is growing as both sides expand their defence capabilities and regional alliances in the Indo-Pacific.
And lastly, Professor He also argues that what makes this moment distinctive isn’t just economic and military friction – it’s the way that these tensions are being framed in ideological terms.
In other words, what’s going on between the US and China isn’t only about trade or territory; it’s also about how each country understands the other’s political system and global ambitions.
Once rivalry is cast as a struggle between systems, it can become zero-sum – even when shared interests still exist.
It’s true that the US and China hold different views on governance, human rights and the role of the state. The US emphasises civil and political freedoms, competitive elections and individual rights, while China operates under a one-party system and places stronger emphasis on economic development, state-led coordination and sovereignty.
Given these differences, it’s not surprising that political leaders in both countries sometimes frame what is going on between the US and China in ideological terms. In China, leaders argue they are defending national sovereignty, while the US sees itself as defending democratic norms.
‘The events in Tiananmen had a great impact on the bilateral relationship. Former President George H. W. Bush believed only one path would deliver prosperity and human dignity to the Chinese people: “free markets, free speech, free elections”. Currently, the Trump administration is less ideological and more pragmatic toward China,’ says He.
So, how can these differences be managed?
According to Professor He, the approach shouldn’t be to pretend ideological differences don’t exist, but rather to practice a concept called deliberative strategic empathy to de-escalate conflict in an increasingly polarised global environment. In his research, Professor He defines strategic empathy as an effort to understand the other side’s perspective without necessarily agreeing with it.
Ideology does matter. It shapes diplomatic language, influences alliance-building and affects how each country presents itself on the world stage. However, over-ideologising the relationship can narrow the space for cooperation. When rivalry is framed as a clash of political systems rather than a series of policy disagreements.
For Australia, what is going on between the US and China isn’t just a distant geopolitical story – it has real, everyday implications.
The US remains Australia’s primary security ally, strengthened through arrangements such as AUKUS. At the same time, China is Australia’s largest trading partner. When diplomatic tensions between Canberra and Beijing escalated in recent years, trade restrictions on key exports such as wine, barley and coal quickly followed.
That experience highlighted Australia’s economic vulnerability, and the delicate balancing act it faces. So, what is Australia to do? Well, that’s where some of Professor He’s research comes in.
He suggests that middle powers like Australia shouldn’t just sit on the sidelines, but can play a role by encouraging strategic empathy.
‘The defining condition of the twenty-first century is planetary entanglement. Climate instability, ocean acidification, pandemics, cyber disruptions and orbital congestion are not discrete national problems but interconnected systemic risks,’ says Professor He.
If ideological competition is intensifying, does that mean conflict is inevitable? According to Professor He, the answer is no.
Rather than eliminating differences, Professor He’s research focuses on how those differences can be managed. He suggests that competition becomes most dangerous when political leaders and media narratives frame the other side as an existential threat.
To counter this, he proposes moving beyond reactive diplomacy toward more structured forms of engagement. That includes sustained dialogue between policymakers, academic exchange and public-facing conversations that reduce caricatures of ‘the other side’.
In his work on deliberative strategic empathy, Professor He also outlines what he describes as a ladder of engagement, which begins with understanding the other’s reasoning, progressing toward recognising shared interests and ultimately building goodwill where possible.
Importantly, this approach doesn’t assume harmony. It accepts that competition will continue, but that competition does not have to mean hostility.
Ultimately, what is going on between the US and China isn’t set in stone. It can be shaped by political choices, public narratives and the willingness of leaders to see rivalry as something to manage, not something to win at all costs.
This, he suggests, points to a deeper issue in how countries think about security in an increasingly connected world.
‘Few bilateral relationships illustrate this contradiction more clearly than that between Australia and China: two Asia-Pacific powers whose security doctrines are increasingly antagonistic, even as their survival depends on shared planetary systems. To escape this security trap, the relationship must be reconceptualised through the lens of planetary stewardship – a governance paradigm that treats Earth systems as shared security infrastructure.’
Seen this way, what is going on between the US and China isn’t just something happening ‘over there’ – it also shapes the choices Australia has to make, and how it might build more stable and cooperative relationships in the region.
Distinguished Professor
School of Humanities and Social Sciences
Faculty of Arts and Education
Deakin University
