As Donald Trump boards Air Force One for his May 14 summit in Beijing, Steve Hanke, an applied economics professor at Johns Hopkins University, delivers a blunt assessment: the president believes he has leverage, but China spent six years systematically ensuring he doesn't.
The strategic repositioning began in December 2018 with the arrest of Huawei executive Meng Wanzhou over Iran sanctions violations. That moment, Hanke argues, crystallized for Beijing the vulnerability of depending on international commodity flows that the U.S. could disrupt. China's response was methodical and massive.
The crown jewel of this strategy: a 1.4-billion-barrel strategic crude reserve, representing roughly 115 days of seaborne imports. That stockpile fundamentally altered the equation. When the U.S. blockaded the Strait of Hormuz as part of its confrontation with Iran, China didn't panic—it opened its reserves.
But Beijing's advantage extends far beyond oil. The country has built commanding positions across critical commodities, particularly rare earth elements essential to both advanced weaponry and electric vehicles. Hanke notes that China's control of neodymium, praseodymium, samarium, europium, gadolinium, and yttrium oxides is "virtually total." Every advanced weapons system in the American arsenal depends on these materials.
The diplomatic dividends are already visible. While the U.S. maintains its Hormuz blockade, Chinese firms have been reselling African crude and LNG to energy-hungry Asian nations. Seoul, Tokyo, and Jakarta haven't forgotten which country kept their economies running when traditional supply chains fractured.
The perception gap tells its own story. According to the Alliance of Democracies' Democracy Perception Index, China's global favorability stands at +7%, while American perception has collapsed from +22% two years ago to -16% currently. Those numbers reflect more than just messaging—they reflect tangible actions that affected real people and businesses.
Trump's negotiating playbook typically relies on threatening access to American markets and leveraging the dollar's reserve currency status. But when your counterparty has positioned itself to weather economic disruption better than your allies, that playbook loses effectiveness. China can now play a longer game than the U.S. can sustain.
The semiconductor restrictions and export controls that Washington has imposed certainly hurt China's advanced technology sector. But Hanke argues that Beijing has already adapted its economy to function despite these constraints, while the U.S. remains vulnerable to Chinese retaliation in areas where alternatives don't exist.
Timing matters here. The summit occurs against the backdrop of elevated oil prices, ongoing Middle East tensions, and European countries desperate for energy security. China is solving problems for American allies that Washington helped create. That's not a position of weakness.
None of this means China's economy is without vulnerabilities—its property sector remains troubled, demographic trends are unfavorable, and innovation constraints from political control are real. But on the specific question of trade leverage ahead of this summit, Hanke's assessment is hard to dispute.
Trump may believe he's flying to Beijing with a strong hand. The economic fundamentals suggest otherwise. And in high-stakes negotiations, what matters isn't what you believe your leverage is—it's what your counterparty knows you can actually deliver.
