The recent U.S.-China summit kicked off with U.S.-China relations at a low point. The ongoing shift in U.S. policy towards China—hastened under the Trump administration with the support of both political parties—was long in the making and effectively ended the U.S. doctrine of strategic engagement that facilitated China’s global rise during the preceding four decades.
• With this context, we touch upon three focal points—investment, technology, and national security—that will likely define the U.S.-China relationship in the years to come.
• While the diplomatic tone may moderate and the two sides may find commonground in areas of mutual interest, we do not anticipate any fundamental changes in the U.S. stance towards China.
• Furthermore, China’s response to the increasingly fraught relationship remains an open question and a key underappreciated risk within financial markets.