Ahead of APEC, the case for a steadier US-China relationship By Qaiser Nawab

When the leaders of the Asia-Pacific economies gather in Shenzhen on November 18 and 19, the most closely watched relationship will inevitably be the one between China and the United States.
For much of the past decade, relations between the world’s two largest economies have been defined by tariffs, technology restrictions, investment controls and an expanding debate over national security. Yet the months preceding the 2026 APEC summit have also produced something less dramatic but potentially more consequential: an effort by Beijing and Washington to establish a more predictable way of dealing with one another.
President Xi Jinping’s state visit to the United States in September produced agreements on trade consultations, counter-narcotics cooperation, artificial intelligence dialogue and military crisis communication. The two governments also committed themselves to supporting each other’s hosting of APEC and the G20. President Donald Trump has said he expects to meet Xi again in China in November.
None of this means that US-China rivalry is disappearing. It is not. Washington continues to tighten restrictions in areas it regards as strategically sensitive, while Beijing continues to object to measures it considers discriminatory. The more realistic question ahead of APEC is whether competition can be managed without allowing every disagreement to become another crisis.
That may sound modest. In the present international environment, however, modest stability between Washington and Beijing would itself be valuable.
A relationship too important for permanent crisis
The idea of complete economic separation between China and the United States has always been easier to articulate politically than to implement economically.
Trade between the two countries remains deeply connected to wider production networks. Intermediate goods move through supply chains that involve manufacturers, ports, technology companies and consumers across several economies. One of the background papers for the current debate notes that a significant part of bilateral trade consists of goods embedded in such supply chains, meaning tariffs can impose costs far beyond the company or country initially targeted.
This does not mean either country will abandon industrial policy or national-security protections. The United States is unlikely to remove controls in strategically sensitive technologies simply because relations have improved. China, similarly, will continue strengthening domestic capabilities in areas where dependence on foreign technology is considered a vulnerability.
Competition is therefore likely to remain a permanent feature of the relationship.
What needs to change is the assumption that competition necessarily requires disruption across the entire economic relationship.
There are already signs of a more differentiated approach. The September understandings included mechanisms for trade consultation and a reciprocal tariff-reduction arrangement. At the same time, disagreements continue over US restrictions on outbound investment in Chinese technology sectors. Beijing has criticised proposals to expand those restrictions, while Washington argues that certain technologies raise legitimate security concerns.
These positions are not easily reconciled. But the existence of structured dialogue matters because it allows both governments to distinguish between areas requiring safeguards and areas where normal commercial relations can continue.
The alternative is a cycle in which every restriction produces retaliation, every retaliation generates another restriction, and businesses are left trying to plan investment around political uncertainty.
Neither economy benefits from that indefinitely.
Where cooperation is possible
The encouraging development is that Washington and Beijing have begun identifying areas where their interests overlap even when their broader strategic perspectives differ.
Artificial intelligence is one example. China and the United States agreed in September to establish a bilateral AI dialogue covering both the risks and benefits of the technology, with another exchange scheduled for November. They also agreed to create a communication channel for AI-related incidents.
This is precisely the kind of cooperation that should be expanded.
The two countries will remain major competitors in artificial intelligence. But competition does not remove the need to discuss safety, misuse, system failures, and the consequences of increasingly autonomous technologies. The nuclear age demonstrated that strategic competitors sometimes have the strongest reasons to establish communication mechanisms precisely because they do not trust one another completely.
The same logic applies to military crisis management. An agreement to improve communication between the two militaries will not resolve differences over regional security, but reliable channels can reduce the danger that an incident at sea or in the air escalates because intentions are misunderstood.
Counter-narcotics cooperation offers another practical area. During the September meetings, the two governments highlighted joint efforts involving precursor chemicals and new psychoactive substances. The White House and Chinese foreign ministry each presented this cooperation as an area where measurable results were possible despite broader disagreements.
Trade, AI safety, public health, agriculture and crisis communication may seem unrelated, but together they point towards a workable model for the relationship: cooperate where interests converge, negotiate where differences can be narrowed and establish guardrails where disagreements are unlikely to disappear.
APEC is particularly suitable for this approach because it was never designed as an alliance.
Its 21 member economies represent different political systems, levels of development and strategic orientations. Decisions are built around consultation and consensus rather than rigid treaty obligations. The reference material prepared ahead of the summit rightly identifies this flexibility as one of APEC’s enduring strengths.
That may be exactly what US-China relations need at this stage: not an unrealistic grand bargain, but a framework in which practical cooperation can become routine again.
Why APEC matters beyond Beijing and Washington
The significance of a more stable US-China relationship extends far beyond the two countries.
APEC’s members account for roughly 62 per cent of global GDP and nearly half of world merchandise and commercial-services trade. China has made openness, innovation and cooperation the three priorities of its 2026 host year, with discussions covering supply chains, connectivity, artificial intelligence, the digital economy and sustainable growth.
For smaller and middle-sized economies, the most important outcome would not necessarily be a headline agreement between Washington and Beijing. It would be greater predictability.
Countries across Asia depend simultaneously on Chinese manufacturing, American finance and technology, regional production networks and access to multiple export markets. They have little interest in being forced to choose between economic relationships that have developed over decades.
A prolonged confrontation between the United States and China raises costs throughout these networks. It encourages duplication of supply chains, complicates investment decisions and turns ordinary commercial choices into questions of geopolitical alignment.
A more stable relationship, by contrast, gives other economies greater room to pursue their own development priorities.
This is why the argument for US-China cooperation should not be confused with an argument against competition. Competition can encourage innovation and investment. It becomes destructive when economic interaction is treated primarily as a zero-sum contest.
China and the United States will continue to disagree over technology, trade, security and the future shape of the international order. Neither side is likely to surrender its interests, nor should serious diplomacy be based on such an expectation.
The more achievable objective is coexistence with boundaries.
The months ahead will test whether the understandings reached in Washington can survive the pressures that routinely affect this relationship. Recent US measures concerning Chinese technology and investment show how quickly friction can reappear. Yet the fact that disagreements continue is precisely why sustained dialogue matters.
Shenzhen will therefore be important not because APEC can settle every dispute between the two powers, but because it can help normalise the idea that rivalry and cooperation can exist at the same time.
The Asia-Pacific has prospered because trade, investment and connectivity allowed economies with very different political systems to work together. Preserving that tradition requires its two largest powers to resist the temptation to turn every difference into a dividing line.
The most useful outcome from APEC would consequently be neither a dramatic declaration nor the suggestion that a new era of friendship has begun.
It would be something more durable: an understanding that neither China nor the United States benefits from permanent confrontation, and that responsible competition requires channels through which cooperation remains possible.
For the wider world, that would be more than diplomatic symbolism. It would be an investment in stability.

The writer is the Chairman of the Belt and Road Initiative for Sustainable Development (BRISD) and can be reached at qaisernawab098@gmail.com