The Theatre of Diplomacy and the Reality of Policy: The Xi–Trump Meeting, Question of Coupling, and the Direction of China

The photograph is always the same. Two leaders, a handshake, a table of smiling officials, and a caption that reads talks or breakthrough or a new chapter. The image circulates across every screen on earth within minutes, and by evening it has become evidence: of reconciliation, of convergence, of some grand realignment. This is the ritual of modern diplomacy, and it is almost always misread.

The Xi–Trump meeting was no exception. Within hours of the handshakes, commentators were announcing that the two countries had found common ground, that ideological differences had narrowed, that China was "moderating," that the United States had "won" something. Trump himself—in a remark that revealed more about his understanding than about the meeting—declared that China's policy and America's policy were essentially the same. No two countries with more opposed historical trajectories could be more different: one a colonial-imperialist power built on the dispossession of continents and the labor of enslaved peoples, the other an ex-colony that fought a century of anti-colonial and anti-imperialist wars and is now building socialism. To collapse them into "the same" is not analysis; it is the absence of it.

What such observers lack is the distinction between diplomacy and policy—and with it, the ability to see that the warmth of a meeting tells us almost nothing about the direction of the state.

Policy is the "what": a country's politics, domestic and foreign. It determines goals, priorities, and class interests. It answers the question of whose interests the state serves. Diplomacy is the "how": the process of carrying out that policy in relation to other states. It is also a performance—a presentation to the world, addressed not only to the interlocutor but to every observer watching. A state can smile while sharpening a knife. Indeed, the history of imperialism is largely the history of doing exactly that.

Lenin was explicit. In Imperialism, the Highest Stage of Capitalism, he wrote:

"Finance capital strives for domination, not freedom… It is fundamentally wrong, un-Marxist and unscientific, to single out 'foreign policy' from policy in general, let alone counterpose foreign policy to home policy. Both in foreign and home policy, imperialism strives towards violations of democracy, towards reaction. In this sense imperialism is indisputably the 'negation' of democracy in general."

This passage from Lenin tells us three things about the meeting. First, foreign policy cannot be separated from domestic policy—the corporate composition of the US delegation is the domestic class interest that drives US policy. Second, finance capital seeks domination, not mutual benefit—the firms in the room were not asking for "win-win"; they were asking for access. Third, imperialism is the negation of democracy—the United States is not a benign hegemon but a declining power whose foreign policy serves capital in its moment of crisis.

To read ideology off a diplomatic photograph is therefore not merely imprecise. It is what Lenin called "the itch"—the painful disease of "revolutionary phrase-making," in which the impatient demand for clear conclusions produces conclusions built on nothing. Those who see in the Xi–Trump handshake a sign that China has "restored capitalism" have not made an argument. They have projected a wish onto a picture.

The economies of the United States and China are, and remain, deeply interconnected. This is true and must be said plainly. But interconnection is not the same as convergence, and trade is not the same as surrender. The real question is not whether China will "couple" or "decouple." The real question is on whose terms, and for what purpose—and that question can only be answered by examining policy, not performance.

Diplomacy vs. Policy

The distinction between diplomacy and policy is not academic. It is the difference between appearance and substance, between the "how" and the "what."

Policy is a country's politics—domestic and foreign. It determines goals, priorities, and class interests. It answers the question: whose interests does the state serve?

Diplomacy is the process of carrying out policy in relation to other countries. It is also a presentation to the world— if the given country’s policy is peaceful or antagonistic, conciliatory or warmongering. It answers the question: how does the given state present itself?

The two are dialectically connected. Diplomacy without policy is empty theatre. Policy without diplomacy leads to war—the continuation of politics by other means. But they are not the same thing, and confusing them leads to serious errors of analysis.

Diplomacy can look friendly while policy remains antagonistic. The meeting’s warmth tells us little about the underlying direction of a country or the given subject on the agenda.

Just as the confusion between socialism and communism applies communist criteria to socialist reality, the confusion between diplomacy and policy applies diplomatic appearances to policy reality. Both are category errors. Both serve the same function: to discredit socialist construction.

The Xi–Trump Meeting as Economic Theatre

The meeting was dominated by business interests, and the delegation's composition exposes it: CEOs of global finance, tech, aerospace, and agriculture. On the other side of the table: representatives of the Chinese people, with a population of over 1.4 billion, 400 million of whom constitute a middle strata with disposable income, projected to reach 800 million within a decade. Thus, the core issue is access to the Chinese market for US corporations facing economic crises and loss of market share.

Trump’s tariffs have hurt these corporations. US effective tariff rate on Chinese goods rose by 20.2 percentage points in 2025; China retaliated; US exports to China declined 25.8% in 2025. China’s overall trade surplus hit a record US$1.2 trillion in 2025.

·         Tesla needs China for affordable production. Tesla’s Shanghai Gigafactory: over 95% localized components; 263,400 vehicles sold in China in H1 2025.

·         Dell needs the Chinese market. Dell’s China market share almost halved in five years to 8%.

·         Microsoft needs to remain in China. Microsoft’s China revenue: only 1.5% of global sales, but still operationally reliant.

The US military-industrial complex needs rare earths and critical minerals dominated by China. The meeting had domestic US reasons and world-stage damage control after losing credibility. But the core was economic access.

The Corporate Delegation: Defensive, Not Triumphal

The US corporations in the delegation are not attending from a position of strength. They are driven by defensive imperatives. Eroding market share:

• Tesla’s NEV market share fell to 4.9% in 2025, fifth place, behind BYD (27.2%) and Geely (12.2%).
• Apple’s smartphone share: 16.2%, narrowly behind Huawei’s 16.4%.
• Intel lost consumer CPU dominance to AMD, which reached ~50% share in China in Q1 2025.
• Nvidia’s AI chip sales in China fell >20%; Huawei’s Ascend chips hold ~35.5% share.
• Micron was banned from China’s data center chip market; domestic rivals YMTC and CXMT benefit.
• Boeing’s China market share fell to ~44%, trailing Airbus at ~55%; no new commercial orders since 2019.

Structural barriers:

• Visa has no operating license in China; UnionPay dominates with 10.2 billion cards.
• Blackstone and other PE firms recorded zero complete exits from mainland Chinese portfolio companies in 2025.

Policy-driven exclusion:

• Illumina’s sequencers were banned in March 2025; BGI Genomics and MGI Tech are capturing market share.

So the US  delegation was a plea for access to Chinese market, not a victory lap.

The Real Policy Battlefield: Rare Earths and Dual-Use Controls

While diplomacy smiles, policy tightens. China’s rare earth export control regime is the concrete expression of its strategic direction.

Legal architecture:

• Export Control Law (2020).
• 2024 dual-use regulations.
• Announcement No. 18 (April 2025): seven medium and heavy rare earths controlled—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium—including oxides, alloys, compounds.
• Decrees No. 61 & 62 (October 2025): extraterritorial reach to foreign-made products with 0.1% or more Chinese-origin rare earth content; controls on extraction, separation, refining, magnet manufacturing, and recycling technologies.
• Five more elements controlled: holmium, erbium, thulium, europium, ytterbium.

Measurable impact:

• Yttrium exports at 42% of pre-control levels.
• Dysprosium exports at 41%.
• Terbium exports at 49%.
• Magnet exports to the US went down 21% in August 2026 to 512 tonnes.
• Yttrium prices up approximately 15-fold.

Dual-use loophole control:

• Validated End-User (VEU) system: licenses civilian buyers, blocks US military contractors.
• Criminal prosecutions for smuggling: Baotou case, 4.2 million yuan, false declarations, WeChat evidence, fund flow tracing.
• Administrative penalties: Beilun Customs, Tongle Customs, Shenzhen Customs, Liantang Customs.
• National security enforcement: Ministry of State Security case of rare earths smuggled in mineral water bottles; July 2025 special operation against strategic mineral smuggling.

The US cannot replace China’s rare earth supply chain quickly. MIT professor’s point: prohibitively costly, decades long. China has the leverage and is using it. The US is structurally dependent and has no near-term escape.

China will not supply the US Military-Industrial Complex directly. The chance is near zero. Indirect leakage is low and declining. This is not “both sides working together.” It is China’s strategic denial, compounded by US policy trying to catch up to a reality it created by trying to prevent it: a reality of its own aggression did more than any other force to create, and which it now cannot undo. Blowback, in the precise sense — the offensive produced the defensive capability that now constrains the offender. Every layer of China's control architecture has a US antecedent that provoked it:

• The Entity List against Huawei (2019) and the ZTE ban (2018) — China's tech self-reliance push accelerated from that point, not before.
• The chip export controls of October 2022 and October 2023, the CHIPS Act, the "small yard, high fence" strategy — these are the direct parents of the "Delete America" campaign and the Windows replacement drive.
• The dual-use export control law (2020) is itself a mirror of the US Export Control Reform Act of 2018 and the foreign direct product rule. China studied the US architecture and built a domestic copy — in self-defense. The mechanism China now uses to deny the US MIC was learned from the US.
• The rare earth controls are the latest turn of that spiral.

The rare earth regime is not a tactic of the moment. It is a policy — legislated, enforced, and expanding across three years and two waves of controls. What it establishes is that China's economic relationship with the United States is no longer a single relationship, to be preserved or severed whole. It is a set of relationships, sorted by purpose and by end-use.

Civilian supply continues. Military supply does not. Market access for Tesla and Boeing is one question; access for Lockheed and Raytheon is another, and it is answered differently. This is not decoupling in the simple sense, nor coupling either. It is something the binary cannot name — integration and denial operating at once, on terms China sets and enforces.

Which means the question "will China decouple from the US economy?" was always malformed. The real question is on whose terms, and for what purpose — and that cannot be answered by reading trade flows. It can only be answered by asking what the Chinese state is willing to sell, to whom, and what it refuses to sell at any price. That is a question about policy. Which is to say, it is a question about direction.

Decoupling or Coupling? The Direction of China

The question of "decoupling" or "coupling" is really a question about China's direction: socialism or restoration of capitalism. But the binary obscures more than it reveals, because there are two distinct relationships being named by one word, and they point in opposite directions.

The "coupling" strategy was itself a product of US policy in the 1990s—the belief that economic engagement would liberalize China. That strategy has failed. The question is now whether China will "decouple" or "re-couple on its own terms."

The 'coupling' strategy was never about mutual benefit. It was about using economic engagement to transform China into a capitalist democracy. That strategy failed. What we are seeing now is not China 'decoupling' but China re-coupling on its own terms—and the US discovering that it no longer sets the terms."

Commercial interdependence exists and is not in question. Tesla builds cars in Shanghai; Dell sells servers in Shenzhen; Chinese exports reach American ports. A socialist state can trade with an imperialist one without ceasing to be socialist — Lenin signed Brest-Litovsk, and the New Economic Policy traded with foreign capital under terms far more compromising than anything on the table today. Trade is not surrender. If "coupling" meant only this, the question would be trivial.

Strategic subordination is the real question. It would mean China conceding on Taiwan, adjusting its position on Iran, Yemen, Gaza, or Lebanon, or lifting the rare earth denial — in exchange for market access and the preservation of US corporate positions. That is the indicator. And it is precisely what Washington is asking for.

The posture the United States wants China to adopt is the one Stalin described in 1939, and the description is exact:

"Let each country defend itself against the aggressors as it likes and as best it can. That is not our affair. We shall trade both with the aggressors and with their victims."

That is the demand. Not that China join the US camp — that would be too much to ask. Only that China remain neutral, quiet, and open for business while US corporations get their market access and their minerals, and while the wars in Ukraine, Gaza, Yemen, and the Persian Gulf proceed without Chinese interference. Trade with the aggressors and with their victims alike. The position Stalin described is not China's policy; it is the position the US is pressing China to adopt.

And note what Stalin says of that position in the same passage — that it "means conniving at aggression, giving free rein to war," that it "reveals an eagerness, a desire, not to hinder the aggressors in their nefarious work." This is the charge that would apply to China if it accepted the American offer. Not because non-intervention is always wrong, but because non-intervention purchased with market access and strategic denial suspended is not neutrality. It is a price.

The empirical test is available. If coupling in the strategic sense were occurring, the record would show it. Has China adjusted its position on Iran under US pressure? No — it continues to purchase Iranian oil and has brokered the Saudi–Iranian normalization. On Gaza? No — it has condemned Israeli operations and recognized Palestinian statehood claims more explicitly than the US. On Ukraine? No — it has maintained its strategic partnership with Russia despite sanctions pressure. On Yemen? No — it has not joined the US naval coalition against the Houthis. On Taiwan? No — military pressure has increased, not decreased, across the period in question.

The rare earth regime is the decisive case, because it is the one where the US is asking most directly. China is being asked, in effect, to supply the materials that arm its primary strategic adversary in exchange for continued commercial access. It has refused. The VEU system licenses civilian buyers and blocks military contractors. That refusal is the anti-economist position — the subordination of economic return to strategic and political goals.

The tendency to subordinate political struggle to economic demands is what Lenin called economism in What Is to Be Done? — the reduction of the movement's tasks to what is immediately profitable within the existing framework. Applied to foreign policy, economism would mean: China should keep trading, keep growing, keep access open, and not let political or strategic considerations interrupt the flow. The rare earth controls reject that logic. They sacrifice revenue, destabilize supply chains, and invite retaliation — in service of a political goal. That is the opposite of economism. It is politics commanding economics, which is what a socialist foreign policy is supposed to do.

Lenin's critique of economism in What Is To Be Done? was that it reduced the working-class movement to what was immediately profitable within the existing framework—subordinating political struggle to economic demands.

So where does this leave the question of direction? A state that armed its strategic adversary and subordinated its foreign policy to that adversary's interests in exchange for market access would be a state whose foreign policy serves capital accumulation rather than national or class interest. That is what "restoration" would look like in the diplomatic register. The evidence does not show it occurring. What the evidence shows is a state that trades where trade serves it and denies where denial is necessary — re-coupling on its own terms, integrating civilian supply chains and severing military ones, and refusing to let the price of access be paid in strategic concessions.

That is not the behavior of a restored capitalist state. It is the behavior of a state that still commands its own policy — and that is the only answer to the coupling question that matters.

The question is not whether China will couple or decouple. It is who sets the terms — and on the evidence, the answer remains Beijing.

What are the evidences of coupling or decoupling?

Evidence of strategic decoupling:

The theoretical argument is one thing; the record is another. And the record shows that strategic decoupling is not a hypothesis about China's direction — it is an ongoing program, documented, funded, and scheduled.

The operating system replacement is the clearest case. China's Ministry of State Security ordered select government agencies and state-linked organizations to remove the customized Windows 10 China Government Edition and replace it with domestic Linux distributions — KylinOS, developed by Kylin Software with roots extending from FreeBSD and independent Linux builds, or UnionTech's UOS, built on the Deepin desktop environment and Debian Linux. The order set a deadline ahead of a planned February 2027 software retirement. This is not a pilot program or a policy aspiration. It is an operational directive with a date attached.

The "Delete America" strategy generalizes it. The initiative aims to remove US and foreign technology from critical state infrastructure entirely — hardware and software alike — by 2027. Microsoft, Dell, Cisco, and Oracle are the named losers. The scope is the entire state apparatus, not a single agency.

Dual circulation provides the economic architecture. The strategy prioritizes internal economic self-reliance while maintaining selective global trade integration. Its stated purpose is to insulate the domestic economy from external geopolitical conflicts and crises — which is to say, from exactly the kind of pressure the US has applied through tariffs, entity lists, and export controls. It is a hedge against dependency, and it is official policy.

And the whole-of-nation innovation drive provides the mechanism. China has elevated science and technology into a core pillar of its comprehensive national security concept, using a whole-of-nation system to drive indigenous innovation and end critical foreign dependencies. This is the "comprehensive national security concept" — a framework in which technology is not a commercial sector but a security domain, and dependency is a vulnerability to be eliminated.

Now notice what this means for the delegation. Every one of these measures directly and negatively impacts the corporate CEOs sitting at the table with Xi. Microsoft loses the Chinese government desktop. Dell loses the state procurement market. Oracle, Cisco, and the rest lose their positions in critical infrastructure. These are not abstract losses; they are revenue, market share, and strategic positioning — the very things the delegation came to Beijing to protect. The men in that room were asking for access to a market that Chinese policy is deliberately closing to them, on security grounds, by design.

But the decisive case remains rare earths and critical minerals. The operating system replacement, the "Delete America" campaign, dual circulation, indigenous innovation — all of these reduce Chinese dependence on the United States. The rare earth regime does something more: it increases US dependence on China, and then weaponizes it. The other measures are defensive. This one is offensive. It is the difference between locking your own door and holding the key to someone else's.

And it is the case that answers the coupling question definitively, because it is the one where China has the most to gain commercially from compliance. Lifting the rare earth controls would ease trade tensions, restore export revenue, and satisfy the US demand. China has not done it. It has tightened instead — three waves of controls in eighteen months, each broader than the last, each with an enforcement mechanism attached.

That is what strategic decoupling looks like when it is real: not a declaration, but a schedule. Not a slogan, but a procurement order. And not a rejection of trade in general, but a sorting of trade by end-use — civilian access maintained, military access denied, and the terms set in Beijing.

Evidence of continued coupling:

Trade among nations is not a symptom of dependence. It is the ordinary practice of every economy. No country possesses the resources, technology, and labor to produce everything efficiently, so each produces what it can make affordably and reliably and imports what would cost too much to make at home. The relevant distinction is not between trading and not trading, but between interdependence — where each side has alternatives and can walk away — and dependence, where one side has no alternative at all. What is often called interdependence is dependence under another name. Interdependence means each side has alternatives and can walk away. Dependence means one side has no alternative at all. What is often called interdependence is dependence under another name. The test is not whether trade occurs. The test is whether either party can leave the table. The test is not whether trade occurs. The test is whether either party can leave the table. China can leave the table; the US cannot. This is the asymmetrical dependence. The US needs Chinese rare earths, Chinese markets, Chinese production. China needs US markets less. This asymmetry is the measure of China's sovereign policy.

By that test, China is not decoupling in the simple sense. It still trades with the United States and with the world. Outside the security-military domain, civilian supply chains remain integrated, and foreign corporations still operate in China. What China is doing is re-coupling on its own terms: market access for civilian goods, denial for military use; integration where it benefits China, decoupling where it threatens China's security. The relationship is being sorted, not severed.

This is not dependence — not political, not economic — and it is not the restoration of capitalism in the diplomatic register. A restored capitalist state would subordinate its foreign policy to capital accumulation: it would lift the rare earth controls, concede on Taiwan, adjust on Iran and Gaza, and accept the American offer of neutrality-for-access. China has done none of these things. What it practices is state-guided economic security — a socialist-oriented strategy of self-reliance in a hostile imperialist environment, in which economics serves politics rather than the reverse. This is the precise inversion of economism: politics commanding economics, not economics dictating politics.

The hypothesis is falsified. China is not coupling in the strategic sense.

Conclusion: Diplomacy Without Policy Is Theatre

The Xi–Trump meeting was a product of diplomacy: the "how." It was conciliatory in form, not in policy — business-friendly, and on the US side aimed at damage control after the credibility it has lost and continues to lose.

The policy remains the “what”: China is building socialism after a century of anti-colonial and anti-imperialist struggle. The US is a declining empire clinging to financial dominance while economically, politically, and militarily losing ground.

The meeting's corporate delegation reveals US weakness, not strength. They came to ask for access. China came to defend its strategic interests. And the test the article set — whether China would adjust its positions on Iran, Gaza, Ukraine, Yemen, or Taiwan in exchange for that access — was applied, and China did not adjust. The rare earth regime tightened rather than loosened. The direction question is not answered by the warmth of a handshake. It is answered by the record.

The real question is not whether China will supply the US Military Industrial Complex. China will not supply them unless it wants to commit suicide with its own gun. The real question is how fast the US can build alternatives—and the answer is: not fast enough to avoid short-term pain, and perhaps not ever at scale.

China’s direction is clear: socialist construction with strategic self-reliance, not capitalist restoration. Socialist construction does not mean the absence of markets, trade, or inequality. It means the state power remains in the hands of the working class and its allies, and that the commanding heights of the economy are directed toward the construction of socialism—the transitional period from capitalism to communism. The rare earth regime, the operating system replacement, the dual circulation strategy—these are not capitalist policies. They are socialist policies of self-reliance in a hostile imperialist environment.

China is an industrialized/producer country; its interests lie in a stable world with minimal conflicts and no wars. The United States is a deindustrialized/consumer, financialized power whose dominant sectors — finance, military production, and technology — profit from a destabilized world. One economy is built on making things; the other is built on extracting from a world it must keep unsettled. In this, the interests of China and the United States are in fundamental conflict.

Diplomacy without policy is theatre. Policy without diplomacy is war. China is pursuing policy with diplomacy—and the policy is not what Trump thinks it is.

Just as the confusion between socialism and communism applies communist criteria to socialist reality, the confusion between diplomacy and policy applies diplomatic appearances to policy reality. Both are category errors. Both serve the same function: to discredit socialist construction. To see China clearly, one must refuse both confusions.

 September 24, 2026
Erdogan A

I acknowledge using DeepSeek for data on China, validation of data, checking the structural flow and playing devil's advocate for the arguments.