Much to the relief of markets, US President Donald Trump and Chinese President Xi Jinping finally met on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea. The friendly meeting indicates both sides prefer a mode of “controlled” confrontation.
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The bilateral relationship remains confrontational, nonetheless. Some give and take on trade certainly helps to de-escalate tensions, but China has no illusions about the US’ fundamental hostility.
Trump prides himself on his ability to end conflicts by coercion, but the US no longer calls the shots everywhere all the time. Smaller nations may have to succumb to his tariff threats, but the big powers can afford to defy him.
Despite his isolationist image, Trump’s agenda differs from the aspirations of some Maga (Make America Great Again) supporters. Deep down, he is an opportunist. Having used his presidential powers to subdue domestic opposition, he now has a freer hand to flex American muscle on foreign soil. Under him, the US will not hesitate to weaponise anything to twist the arms of allies and adversaries alike.
The rest of the world is adjusting to Trumpian disruptions and harassment. As Singapore’s former prime minister Lee Hsien Loong pointed out in July, we must learn to live with “the world, temporarily minus one”, namely a framework without the US, at least for the time being.
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The global economy continues to be unstable. But the International Monetary Fund’s latest forecast of 3.2 per cent growth for 2025 and 3.1 per cent growth for 2026, revised upwards from April this year, suggests economies are making policy adjustments to navigate the changing landscape. Meanwhile, the emergence of central bank digital currencies will weaken the dominance of the US dollar.