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
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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.
