China is no longer a rising power that’s seeking accommodation within the existing international system. It is increasingly acting like a state that believes history has turned in its favour. Beijing is confident it can shape the rules of the next era.
That shift has been on full display in recent weeks. Beijing hosted a summit with President Donald Trump on 14 and 15 May that framed the US–China relationship not as one between a hegemon and challenger but as one between two powers managing the world’s most consequential strategic rivalry. Chinese President Xi Jinping then moved directly into high-profile diplomacy with Russia and other strategically aligned states, reinforcing the image of a confident China operating at the centre of an emerging geopolitical network.
The sequencing was deliberate. Beijing was signalling that stabilisation with Washington and deeper coordination with revisionist partners are not contradictory objectives. China increasingly believes it can avoid direct confrontation with the US while working with others to shift the balance of power in its favour.
The most important outcome from the Trump–Xi summit was not any individual agreement or tariff arrangement; it was the apparent convergence around the idea of strategic stabilisation. Chinese state media described the meeting as advancing a ‘constructive China–US relationship of strategic stability’, language that sounds reassuring but in practice reflects that both Washington and Beijing appear increasingly accepting of the fact that they are long-term strategic competitors. The key now is to manage that competition.
For Xi, this framework is attractive because it buys time. China is grappling with major domestic challenges, including debt, demographics and slowing growth. Strategic stabilisation reduces the risk of US disruption while Beijing continues strengthening its industrial base, military capabilities and technological self-reliance.
But Washington may also be more comfortable with this equilibrium than many assume. The Trump administration’s 2026 National Defense Strategy outlines an intention to seek ‘a favorable balance of military power in the Indo-Pacific’, not to ‘dominate, humiliate, or strangle China’ but to ensure China cannot dominate the US or its allies. Washington is prepared to compete with Beijing, provided it maintains a favourable balance of power in Asia.
The problem, of course, is that Beijing and Washington have very different views about what constitutes a favourable balance.
For the US and its allies, it means preventing Chinese regional dominance and preserving an open Indo-Pacific. For Beijing, it likely means steadily weakening US alliance structures, constraining Western military access and expanding Chinese influence until the regional order becomes more accommodating to Chinese interests.
Xi’s rhetoric during the summit reflected this growing confidence. His warnings on Taiwan and references to Western decline (including invocations of the Thucydides Trap) suggest a Chinese leadership that no longer speaks cautiously about competition. Beijing once sought to avoid overt rivalry with Washington, fearing premature confrontation would derail China’s rise. Today, China appears increasingly comfortable acknowledging that competition is enduring and unavoidable.
That does not mean Beijing seeks conflict. In many respects, China likely views ongoing strategic stability between Beijing and Washington as a favourable condition that enables continued accumulation of national power and advancing a future in which the East is rising and the West is in decline.
This is why the deeper structural issues in the China–US relationship will remain unresolved despite summitry and temporary detente. Narrow commercial agreements involving agricultural products or tariffs do little to alter the trajectory of competition. Beijing has not retreated from its industrial policies, state subsidies or efforts to dominate critical supply chains, nor has it abandoned the view that economic interdependence can be weaponised for strategic advantage.
Despite complaints from many countries, China continues to double down on manufacturing and export-led growth. Industrial depth, technological self-sufficiency and supply-chain leverage remain central to Beijing’s domestic and geopolitical strategies.
China is also expanding its military, political and security activities across the Indo-Pacific. Beijing does not compartmentalise statecraft. Rather, it integrates economic engagement, military activities and elite cultivation into a broader strategic campaign.
For Australia, these developments carry major implications. Canberra should expect Chinese activity across the Indo-Pacific to intensify in the years ahead. The next phase of strategic competition will unfold inside a deeply globalised system where economic integration coexists alongside geopolitical rivalry.
This reality sits at the centre of the next iteration of ASPI’s Pressure Points project, to be released on 16 June. The report details how China is expanding its military and security footprint across the region. It forecasts Beijing’s likely activities across the Indian and Pacific oceans and illustrates how they form part of a wider campaign designed to complicate allied operations, weaken coalitions and gradually shift the regional balance of power in China’s favour.
Australia is already beginning to speak more openly about these challenges. Defence Minister Richard Marles has adopted sharper language on coercion and regional security, and the latest National Defence Strategy makes clear that the US is key to maintaining an effective balance of power in the Indo-Pacific.
But China believes time is on its side. Beijing will use this period of stabilisation to strengthen its position for the long contest ahead. The challenge for Australia and its partners is to ensure they do not mistake temporary equilibrium for lasting strategic resolution.
