There’s an old saying in diplomatic circles: the best weapon in geopolitics is not a missile, but a well-placed deal. The adage holds true for the bitter confrontation raging between the US and China.

Contrary to popular belief, it is a dignified Beijing – not a belligerent Washington DC – that appears to be holding all the cards in a spiralling economic war between the two superpowers.   

US President Donald Trump loves projecting himself as a crusader on a mission to save America from nations he believes are bleeding the US economically, especially China. And he does that through chest-thumping antics, impolite rhetoric, and self-destructive tariff wars.

But Trump’s grandstanding hides a reality that contradicts the hyped picture of US supremacy peddled by the White House. 

Scratch the surface of US-China equations on economy, and the illusion of American power makes way for the truth. A truth that shows China has a firm, full-spectrum, and tightening grip on vital aspects of the US economy.

China’s silent sweep

With retaliatory tariffs, bilateral trade, critical supply chains, US treasury bond holdings, BRICS, de-dollarisation, ownership and influence over US corporations and US universities – China is in the driver’s seat in all these areas, without firing a missile.   

Unlike during Trump’s first term, China’s rhetoric has responded sharply to the White House’s 2025 tariff war. Stern statements rang out from Beijing, such as China is ready for “any type of war,” it is prepared to “fight till the end,” fentanyl is a “flimsy excuse,” and “intimidation does not scare us.”

China followed up with retaliatory actions to damage the US economy. It slapped 10-15 percent tariffs on $20 billion worth of agricultural imports from the US. It also launched a probe against Google and Nvidia for antitrust violations while mulling similar action against Intel.

The world is being told to debate how soon Trump’s tariffs will derail China. But there is a quiet confidence in the power corridors of Beijing. It stems from China’s defining trade surplus over America – something underreported by the Western media.

A week before Trump returned to the White House in January, China reported an unprecedented trade surplus of nearly $1 trillion with the rest of the world, clocking $992 billion for 2024. Crucially, its trade surplus with the US for that year was $361 billion. It wasn’t good news for the US economy. 

Apart from trailing China on trade, Trump’s America fails to feature among the top 10 countries with the highest overall trade surplus. 

China’s domination of trade with the US comes with its resolve to diversify dependence on overseas sources. Chinese Premier Li Qiang recently remarked that Beijing was confident of tackling the “shocks that exceed expectations,” referring to the impact of America’s tariff war on trade.

Importantly, Li called upon countries around the world to open up their markets so that they can collectively absorb the shocks dealt by Trump’s actions. 

Food and critical minerals

Interestingly, China has chosen to use food and farming as an area to counter US provocations. The agricultural tariffs Beijing has hurled on farming products from America include fresh produce, cotton, grains, and proteins.

China also halted soybean imports from US firms. It was a big blow as soybeans were America’s main farming exports to China, with $13 billion of the agricultural produce bought by China in 2024. To diversify, Beijing is exploring BRICS ally Brazil as a soybean source. 

Controlling critical supply chains is another major area in which China has cornered the US. From rare-earth minerals to pharmaceuticals to electronics, China has unmatched control over these supply networks, leaving Washington helpless and upset.

Today, China has the deepest access to critical minerals that the US and other nations are scrambling for. These minerals are in high demand as countries need them for achieving net-zero emissions.

Copper, cobalt, nickel, and lithium serve as raw materials for EV batteries and solar panels. China has taken special care to corner them, especially the copper and cobalt mined in Peru and DR Congo, Argentina’s precious lithium, and Indonesian nickel.

From pharma to tech

On pharmaceuticals, China is dictating terms to the US. It is an indispensable supplier of major pharma goods to America, exporting products worth $10.2 billion between 2017 and 2022. 

Additionally, US pharma producers rely too much for profits on China alone. In the same period from 2017 to 2022, they exported pharma products worth $9.3 billion to China. Beijing knows too well how easily it can turn off the tap for US pharma exporters through bans and tariffs.

China has an advantage over the US in technology-related supply chains. Having almost matched America in AI technology, such as with DeepSeek’s success, Beijing is pursuing self-reliance. It wants to stop relying on Western technology.

In the past, US tech giants AMD, Nvidia, and Intel banked on supply-chain exports to China for profits. Last year, Beijing pulled the plug on that, banning the use of microchips from AMD and Intel in government computers. It brought similar restrictions on Nvidia’s processors. 

Staredown from BRICS

A major sore point for the US economy is the rise of BRICS, in which China is a key influencer. The alliance started with Brazil, Russia, India, China, and South Africa and quickly gained traction. Last year, it welcomed four new members and a dozen partner nations.

The developments prompted an alarmed Trump to threaten 100 percent tariffs on BRICS nations if they seek to replace the US dollar with an alternative currency.

BRICS stood firm in the face of brickbats from the US. It vows to widen the drive to de-dollarise international trade. Given its rise, it could soon go on to further weaken the clout of G7 – the US-led hegemonic alliance.

Talking about currencies, what is the possibility that China, in the face of constant provocations from the White House, will retaliate aggressively by selling off all of its enormous US treasury bill holdings?

It is an uneasy question that is often asked. The answer is that it is not a matter of ‘if’. Rather, it is a matter of when and how much. The sell-off by China has already been underway since 2016.

Last December, China brought down its holdings of US treasury bonds to $759 billion. It is part of Beijing’s mission to reduce US bond holdings, accumulate gold, and decouple from the US economy.

The White House hasn’t yet addressed this awkward development. But China’s bond sell-off has surely left Washington’s economic hawks scratching their heads, wondering who will fund the US government’s gigantic borrowing spree if Beijing retreats completely. 

Harvard to Chicago Stock Exchange

China’s stranglehold on the US economy extends to other areas. A sweeping look at Chinese investments in US industries and institutions shows the extent of Beijing's financial penetration into rival territory.

News of Trump’s verbal intimidation of China often reaches wide audiences. The same audiences aren’t equally aware that major US enterprises such as the Chicago Stock Exchange, AMC, Smithfield Foods, GE Appliances, Motorola Mobility, and Legendary Entertainment Group are owned by Chinese investors. It emerged in 2022 that nearly 5,000 Chinese-owned firms operated on US soil at that time.

There is substantial Chinese influence in America’s celebrated colleges and universities, especially Harvard. Chinese entities gave US universities almost a billion dollars in deals and donations between 2013 and 2020. About 115 colleges received financial benefits from Chinese sources.

Harvard received donations to the tune of $93.7 million. Others who benefited generously include University of Southern California, University of Pennsylvania, University of Illinois, and Arizona State University.

The longer the US chooses to ignore this reality instead of addressing it, the more inroads China could make into the American economy.

During Trump and after him, the US might perhaps carry on with its historical obsession to flaunt its muscle power and diplomatic megaphone. But at the same time, its economy is quickly, quietly, and surely losing ground to Chinese domination.