Former U.S. Treasury Secretary Henry Paulson has strongly urged Washington and Beijing to carefully manage their escalating strategic competition to prevent it from spiraling into a broader military or economic conflict. Speaking at a lunch gathering in Beijing hosted by the Centre for China and Globalisation on Wednesday, Paulson described the U.S.-China relationship as the most consequential in the world. He warned that deepening geopolitical distrust now poses a far greater risk to global stability than traditional trade imbalances, noting that “we have to be careful that decoupling does not become dysfunctional.”
Post-Summit Reality and Economic Strained Ties
Paulson’s remarks arrive immediately following a closely watched Beijing summit between Chinese President Xi Jinping and U.S. President Donald Trump, who was accompanied by 17 American CEOs. While the historic visit—the first by a U.S. president to China in nine years—concluded with an agreement to build a “constructive relationship of strategic stability,” the meeting yielded few substantial structural breakthroughs. Aside from a commitment by China to purchase 200 Boeing aircraft, restore some U.S. beef imports, and expand dialogue mechanisms, the core economic frictions remain largely unresolved.
Despite the Trump administration’s heavy tariff offensives, China’s global export engine has remained remarkably resilient, reporting a record overall trade surplus of nearly $1.19 trillion in 2025. Chinese firms successfully bypassed heavy U.S. duties by rapidly expanding into alternative global markets and rerouting complex shipments through Southeast Asia. Paulson emphasized that because intense competition between the two economic giants is inevitable, establishing firm diplomatic guardrails is critical to avoiding a catastrophic miscalculation.
Addressing the Transnational “Trust Deficit”
A primary concern highlighted by the former Goldman Sachs chief executive is the severe erosion of mutual trust, particularly regarding national security and technological dominance. Paulson asserted that the bilateral “trust deficit is bigger than the trade deficit.” To mitigate these escalating risks, he called for consistent, high-level engagement and emphasized the importance of having the right leadership channels open to actively monitor risk and stabilize relations during sudden international crises.
Drawing on his extensive experience establishing the U.S.-China Strategic Economic Dialogue in 2006, Paulson expressed optimism regarding the newly proposed trade and investment councils emerging from the Xi-Trump summit. The Chinese Ministry of Commerce recently confirmed that these bilateral councils are specifically designed to shift economic consultations away from erratic “crisis response” and toward institutionalized, predictable management, which Paulson believes could help foster a baseline of reciprocity and long-term stability.
Reference
Jiaxuan, C., & Jiaxuan, C. (2026, 11 junio). Do not let US-China ties spiral out of control, ex-Treasury chief Paulson warns. South China Morning Post. https://www.scmp.com/news/china/diplomacy/article/3356720/do-not-let-us-china-ties-spiral-out-control-ex-treasury-chief-paulson-warns?module=perpetual_scroll_0&pgtype=article