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THIS WEEK:

Han Zheng goes to Washington, U.S.-China economic relations under Trump 2.0, Beijing’s chance to lead on climate, cautious move on capital account, and Xi on economic reform

1. Han Zheng Goes to Washington

What Happened: Chinese Vice President Han Zheng attended President Donald Trump’s inauguration ceremony. During his U.S. visit, Han also met with Vice President J.D. Vance, Tesla CEO Elon Musk, and Asia Society Board of Trustees Co-Chair John Thornton.

Why It Matters: Han became the highest-ranking Chinese official to attend a U.S. presidential inauguration, signifying China’s commitment to fostering a new, constructive relationship with the United States during the second Trump administration. He emphasized that China pledged to “work with the United States to adhere to the strategic guidance of the head-of-state diplomacy” and “push for the steady, healthy, and sustainable development of bilateral ties.”

By Lyle Morris, Senior Fellow on Foreign Policy and National Security, Center for China Analysis (@LyleJMorris)

Han’s warm reception in Washington and the growing possibility of a Trump-Xi meeting within the next 100 days signal that a short-term ‘rapprochement’ in the U.S.-China relationship is possible, if not likely. – Haolan Wang, Research Assistant, Center for China Analysis

Learn More: Lyle wrote about U.S.-China relations in China 2025: What to Watch.

2. U.S.-China Economic Relations Under Trump 2.0

What Happened: Donald Trump’s second term began with a surprising thaw in U.S.-China relations. Chinese Vice Premier Ding Xuexiang pledged to import more goods and improve the investment climate, while Trump delayed tariffs on Chinese imports and gave TikTok a 75-day extension to find a U.S. partner.

Why It Matters: This brief détente underscores both sides’ desire to avoid early escalation, but it does not signal a lasting reset. Trump’s reprieve is likely temporary — a calculated pause before he begins seeking concessions. For Beijing, Ding’s charm offensive masks a fragile economy dependent on exports and limited domestic consumption.​​​​​​​

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi) 

Learn More: Lizzi and CCA Fellow Neil Thomas discussed prospects for bilateral relations in “Red or Blue: What’s at Stake for Asia in the U.S. Election.”

3. Trump Gives Beijing a Chance to Lead on Climate

What Happened: After President Donald Trump signed executive orders on his first day in office mandating the United States’ withdrawal from the Paris Agreement and reversing other energy and climate policies, a spokesperson for the Ministry of Foreign Affairs said that China is concerned but remains committed to addressing climate change.

Why It Matters: Although Trump’s withdrawal from the Paris Agreement will complicate international climate cooperation, it presents China with an opportunity to bolster its climate leadership. By peaking its carbon emissions this year and reducing them over the coming decade, Beijing can demonstrate its political resolve and enhance its global credibility.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Taylah explores China’s climate leadership opportunities in “The U.S. Will Leave a Void in Climate Leadership. Can China Fill It?”

4. Cautious Move on Capital Account

What Happened: China’s central bank and financial regulators announced a pilot program allowing the “free remittance” of all legitimate investment-related funds in designated free trade zones. The policy includes transfers of profits, dividends, capital gains, and liquidation proceeds, representing an ambitious move toward capital account liberalization.

Why It Matters: China’s closed capital account has hindered yuan internationalization and the development of a “Petroyuan” system. If fully implemented, the policy could accelerate de-dollarization by making yuan-denominated assets more attractive to international investors, particularly in Gulf states where China is actively cultivating investment relationships. However, the selective nature of the pilot suggests Beijing remains cautious about broader capital account opening.

By Diana Choyleva, Senior Fellow on Chinese Economy, Center for China Analysis (@choyleva)

Learn More: For more on how capital account liberalization could affect global currency dynamics, read Diana’s new report, “Petrodollar to Digital Yuan: China, the Gulf, and 21st Century Path to De-dollarization.”

5. Xi and Ongoing Reforms

What Happened: On January 16, Qiushi published Xi Jinping’s speech from the ministry-level Third Plenum study session in late 2024. Xi highlighted China’s significant achievements over the past decade, including GDP growth from 54 trillion RMB in 2012 to 126 trillion RMB in 2023, as well as the importance of patience and pragmatism.

Why It Matters: Xi is aware that Chinese elites are becoming increasingly frustrated with his reforms. However, he has yet to find an effective way forward, prompting a public response. Xi faces a classic power dilemma and must effectively navigate both the oligarchs and the broader public.

By Lobsang Tsering, Senior Research Associate, Center for China Analysis

Learn More: Lobsang and Neil Thomas describe how “Pressure Will Grow Between Xi’s Political Power and His Ability to Deliver Results” in China 2025: What to Watch.