On the second week of May 2026, the world witnessed the meeting of Presidents Trump and Xi Jinping. The last occasion a such high-profile meeting between these two leaders was in 2017.

The year 2017, could be described as the beginning of the “Geo-political Recession” with the US focused on “America First” notion and a rapidly rising China. This scenario could be called the “Kindleberger Trap”, popularized by globally noted Harvard professor, Joseph Nye. It fundamentally means the inability of the most powerful nation to provide global public good whilst the emerging power/nation is reluctant to extend global leadership, stability and direction. It is interesting to observe that a geo-political recession is almost always more perilous than an economic recession since it would invariably lead to an economic recession and global volatility.

This summit of the two leaders was contrastingly different global landscape to year 2017 with major global conflicts leading to unparalleled economic crisis with prices of oil and gas and commodities surging, thus engendering aftershocks across the world from Osaka, Oslo to Ottawa.

Unparalleled Rise of China and Profile of two Countries:

Even as relatively recent as in 1990, the GDP of China was less than USD 400 billion, slightly larger than that of India, whilst the GDP of the US was over USD 6 trillion (USD 6,000 billion) or over 15 times of the GDP of China. This was over a decade after China liberalized or opened the economy in 1978/1979 under Deng Xiaoping. Even in year 2000, the GDP of China was around USD 1.25 trillion whilst the US was well over USD 10 trillion. In the beginning of the Century, no major country considered China as a serious global player nor anticipated that it would become the 2nd largest economy in a decade surpassing Germany in 2008 and Japan in 2010.

Today, China has the largest foreign reserves in excess of USD 4.1 trillion or nearly three times as large as the second largest holder of foreign reserves, which is Japan (USD 1.4 trillion). China succeeded in recording double digit GDP growth, consistently, for three decades, which no major country has ever attained. Further, China is the largest trading nation in the world accounting over USD 8 trillion in 2025 as well as the largest exporter of goods and services amounting to around USD 4.5 trillion whilst the US is the largest importer and second largest trading nation.

Yet again, the US still maintains the status of the largest economy (USD 32 trillion) by far and contributes 25% to the global economy (USD 129 trillion) since 1980s with only 4.2% of global population.

Summit could be Summarized as “10 Ts”:

Trump and Xi meeting could be delineated or described as “10Ts”, meaning 10 issues deliberated, debated or ruminated, either directly or indirectly.

Trade: The US-China total trade was around USD 660 billion in 2024 with a significant trade surplus in favor of China. But in 2025, total trade has diminished to around USD 420 billion.

Tariffs: On “Liberation Day”, Trump announced tariffs on all trading partners having a trade surplus, thus imposing as much as 145% on China. China did not relent as total exports of China to the US was around 11%, probably the largest. China still is the largest trading partner of over 120 countries.

Technology: This was a key issue to both the countries with the dawn of the 5th Industrial Revolution (5th IR) including AI, ML, Big Data, micro-chips and quantum computing thus, fueling the so-called “Mag-7” corporates, amongst others.

Trade Blocs: This would focus, primarily, on BRICS, since those countries have begun to transact and trade in their own currencies without relying on USD. As Nobel Laureate, Robert Mundell stated “Great Powers have great Currencies”. The five founding members have, the so-called, “5R Currencies”, denoting Real (Brazil), Rubel (Russia), Rupee (India), Renminbi (China) and Rand (South Africa).

Thucydides Trap: This term was stated, unequivocally, by Xi, which means in geo-politics that an existing power is challenged by an emerging power. As Xi stated cooperation and collaboration would benefit both the countries opposed to rivalry.

Thalassocracy: This is also a geo-political term which means sea dominance and rule of the sea. In other words, power and influence are derived by naval supremacy, commerce and colonization leading to domination of the two major oceans i.e. Pacific & Indian. The QUAD was birthed in 2007 with the US and three other major countries with the objective of containment of China, as articulated by US diplomat, George F. Kennan, at the peak of the Cold War.

Taiwan: China considers, unreservedly and unconditionally, as a renegade province of China, which was non-negotiable. This is, probably, the most contested and seminal issue for China vis-a-vis the US.

Tehran: The US wished China to intervene and intercede in the war, thus attaining an ‘amiable’ resolution.

Transit Corridor: This is none other than the ‘infamous’ Strait of Hormuz, arguably, the most critical chokepoint in navigation and trade of oil and other commodities.

Trust: Since there has been a conspicuous trust deficit between Washington and Beijing, the US and China both wished to restore some degree of trust, sanguinity and cooperation. Today, the global defense spending has increased to an unprecedented USD 2.9 trillion, which manifests this thesis.

How Sri Lanka could benefit from this Summit:

Sri Lanka needs both these major economies i.e. US and China, as key and pivotal in all spheres ranging from economics, commerce, trade, military, diplomacy, assistance to investments. Since Sri Lanka exercises non-alignment policy and concept to the letter and spirit, Sri Lanka now has even a more comfortable route to engage, especially, with China without riling the US or major neighbors of South Asia. Since Sri Lanka crossed the psychologically significant GDP per capita of USD 5,000, a major milestone to achieve, if Sri Lanka records a GDP growth of 6% to 7% consistently, it could have a GDP per capita of USD 10,000 by the middle of next decade.

Currently, given the global instability and energy crisis, it would be most difficult to attain the aforesaid economic growth, but as any policymaker or political leader recognizes that crisis could unfold hidden opportunities as never before. Sri Lanka could leverage and unleash its strategic location, particularly in the context of maritime and navigational realm. This is well comprehended by the global community as scarcely visible passage on the world map in the Middle East i.e. Strait of Hormuz, could strangulate the global economy.

Intrinsic Vantage of Depreciated Currency:

In Sri Lanka, currently, one of the most discussed issues is none other than the depreciation of the currency but if managed with financial discipline and economic erudition, could accrue benefits from key economic pivots as exports, remittances, tourism and FDI, amongst others. As most would be aware that competitively managed exchange rate, with relatively low in value to major currencies, could be a viable pivot in global trade and commerce as one could witness in both China and Japan in 1970s and 1960s.

Japan was devastated in 1945 with the end of WW II but in only 23 years, less than a generation, in 1968 it emerged as the second largest economy only behind that of the US. It may be noted that Japan attributes its economic miracle for manufacturing and technology but more notably the depreciated and well managed Japanese Yen until mid-1980s. In 1985, the notable “Plaza Accord” increased the parity value of Japanese Yen against mostly the USD, thus leading to slower growth, which many, today, attributes Plaza Accord to the “Lost Decades” of Japan.

The 21st Century could be described as the “Asian Century” similar to that of the 20th Century as the “American Century” and the 19th Century as the “British Century”. The 15th to 18th Centuries were described as the “European Centuries” dominated by Britian, France, Spain, Netherlands and Portugal. It is most evident that the fulcrum of political and economic activity is shifting or pivoting in an inexorable manner towards Asia and away from the traditional growth centers of North America and Europe. That said, Sri Lanka is located at the very center of Asia and “Asian Century”.

Writer is a former Career Ambassador, Professor and Examiner of International Economics with specialization on Geo-politics and Negotiations and Corporate Advisor. He earned the MBA from San Francisco State/U of California, PhD from Indian Institute of Technology (IIT) Delhi and is a Senior Fellow & former Speaker/Guest Lecturer at Harvard. Author could be reached on mendissaj24@gmail.com

By Prof. A Saj U.Mendis, PhD