U.S./China relations are likely to remain locked in a recurring pattern of confrontation and compromise, according to Nomura’s Chief China Economist Lu Ting.
Lu said the world’s two largest economies appear to be settling into a “tension–escalation–truce” cycle that will define their relationship for the foreseeable future. Recent trade talks in Kuala Lumpur suggested a temporary easing in friction, with both sides reportedly considering modest concessions such as extending tariff truces and resuming Chinese purchases of U.S. soybeans.
However, deep-seated disagreements — including rare earth export controls, compliance with trade commitments, and broader geopolitical disputes — continue to cloud the outlook. Lu warned that while short-term cooperation is possible due to economic interdependence, strategic rivalry between Washington and Beijing is set to intensify over time.
- The cyclical nature of tension and détente may well become the new normal in U.S./China relations
—
Nomura’s outlook suggests persistent volatility for markets sensitive to U.S./China trade developments, particularly in commodities and tech sectors. Investors may see recurring bursts of optimism followed by renewed tensions as the two powers alternate between compromise and confrontation.
This article was written by Eamonn Sheridan at investinglive.com.