Previewing the Trump-Xi Summit 

DOUGHERTY: Good afternoon and thank you for joining us for today’s media call as FDD experts preview Chinese leader Xi’s upcoming meeting with President Trump. My name is Joe Dougherty, Senior Director of Communications here at FDD. We’ve got a lot to go over today, so we’re going to get right to it.

Our two experts are Craig Singleton, Senior Fellow and Senior Director of FDD’s China Program, a former US diplomat who focused on China and East Asia issues. He serves as a professor at Stanford University. Rear Admiral (Retired) Mark Montgomery is a Senior Fellow focusing on China’s regional military expansion. Mark served as policy director for the Senate Armed Services Committee under the leadership of Senator John McCain. His flag officer assignments included director of operations at US Pacific Command and commander of the George Washington Carrier Strike Group.

This conversation is on the record. We will have time for Q&A and we will provide a transcript and video of the call as soon as both are ready. Okay, we’re going to get things started right away. Craig, over to you. Thank you.

SINGLETON: Yeah, thanks, Joe, and thanks everyone for dialing in today. I want to start with the basic state of the relationship because I think the easiest mistake is to confuse summit diplomacy with broader bilateral stabilization. I think my shorthand for describing the current dynamic is managed stalemate. We have a very narrow tariff truce. We do not have a broader strategic truce.

Tariffs remain historically high. Both sides continue taking significant competitive actions against the other. China is still using rare earths and other supply chain dependencies as leverage against us, and Washington is still tightening restrictions across technology, infrastructure and economic security. And many of the commitments from the Beijing Summit remain unfulfilled. China committed to address US concerns over rare earths and agriculture and agreed to establish new economic mechanisms including the Board of Trade, which we’ll talk about.

But the rare earth problem remains, excuse me, very real. It is a topic that will be raised in New York this weekend, I’m told. The Board of Trade is still embryonic and implementation across several other areas remains incomplete at best. Soybean purchases, for example, have accelerated recently, which is meaningful, but even there we are still talking about execution of an existing commitment rather than any sort of a breakthrough.

So as you can probably infer, I am skeptical about the phrase “strategic stability.” It has become a label without a particularly clear definition. From my vantage point, the relationship has stabilized at the top without stabilizing underneath.

That doesn’t make the current arrangement meaningless though. There’s actually a perverse logic to it for both sides. Washington is using this period to reduce critical dependencies and diversify supply chains and weaken some of the economic leverage Beijing has accumulated over decades. Beijing is doing almost the mirror image. It wants to preserve those dependencies, develop new tools of economic coercion, and make itself harder to pressure during the next round of confrontation.

So Washington is using the tariff truce to reduce Chinese leverage. Beijing is using the tariff truce to preserve it. That is one reason the competitive actions have continued, by both sides, despite all of the summit diplomacy. Both governments are just using this period of relative predictability to prepare for this next round of competition.

That brings us to Washington. My understanding is that the administration is leaning towards reciprocity and how Xi is received here. Trump remembers the treatment he received in Beijing. He wants to project calm and respect, and there is an element of wanting to showcase Washington and some of the changes that President Trump has made at the White House. That matters because the style will almost certainly be more impressive than the substance.

Even so, I would encourage folks covering this story to not mistake ceremony for convergence. The White House argument is that Trump and Xi expect to see each other repeatedly this year. So every one of these meetings doesn’t have to result in a large splashy package.

There is again, some logic to that. Regular leader-level diplomacy can have value simply by keeping channels open and preventing individual disputes from spiraling. But in my view, that explanation only gets you so far. The thinner agenda reflects a harder reality.

Many of the previous commitments remain unfulfilled and there are simply fewer areas where Washington and Beijing can meaningfully transact. Agriculture is one area, some non-tariff barriers are another. The US trade representative may be able to announce progress on the Board of Trade, but again, that concept remains at a very early stage. Many of the basic mechanisms and the mechanics, including the tariff categories, are still being negotiated and will be discussed this weekend in New York, I’m told, after which time both sides will need to confer with their respective bosses to get the final sign off. Again, these are really small potatoes issues compared with the structural disputes that are driving the relationship.

I think that creates a very different risk calculation for Xi Jinping. I think this is a very high risk summit for Xi. It’s certainly a higher risk summit for Xi than it is for Trump. Xi is traveling to Washington with relatively little guaranteed substantive upside. He is dealing with an American president who values unpredictability and keeps his options open.

And Beijing knows that many of these really difficult disputes remain exactly where they were before the last summit. So I think China’s incentive is straightforward. They want to do enough to keep Trump engaged, give him enough that the relationship remains functional, avoid major new American pressure where they can, and they want to keep buying time.

Beijing also understands the political clock in Washington though. Trump will eventually have less time left in office. And from China’s perspective, there is value in keeping the relationship manageable, avoiding unnecessary concessions and seeing what the American political landscape looks like in the next few months.

And this is, to me, the most important conceptual difference between Trump and Xi. Trump sees flexibility in this current dynamic and Xi sees precedent. Trump is, in my view, unusually comfortable delaying a decision today and then revisiting it tomorrow. He dislikes commitments that restrict his options. And for him, uncertainty itself can create leverage.

Xi Jinping has a different incentive. Beijing spends enormous effort trying to establish new baselines and gradually seeking to narrow the range of American behavior that it considers acceptable. Taiwan is the clearest example. Trump has deliberately delayed another major arms package for Taiwan and has publicly described pending packages as negotiating leverage.

And from his perspective, that logic is straightforward. In his mind, it removes an immediate source of friction. It creates space for diplomacy with Xi Jinping, and he does retain the ability to approve that package or a smaller part of that package later.

China has every incentive to read the same pause differently. For Beijing, one of the most valuable summit deliverables would be a continued pause in Taiwan arms packages. And in that sense, the absence of action can itself become a deliverable for China.

Continued leader level engagement gives, I think with Trump, gives Beijing more opportunities to press for further arms delays. The problem is that Beijing has shown little reciprocal restraint around Taiwan. Our tracking of Chinese air and maritime activity, which is on our website, finds very little evidence that leader level diplomacy has changed the underlying coercive trajectory around Taiwan. Median line crossings that once carried unusual significance have become routine. Chinese coast guard operations have expanded into areas east of Taiwan. Beijing continues changing the operational baseline around the island while simultaneously pursuing summit diplomacy with Washington. That creates the risk I worry about the most.

Trump may believe, and I suspect he believes, he is temporarily withholding an option. Xi is concluding that Washington has begun absorbing another Chinese red line and eventually another arms package gets approved or there’ll be some sort of high-level signal of support to the island. And Trump may view that as simply exercising an option he always retained. Beijing is going to view exactly the same decision as Washington reversing an understanding that China thought it had established. And so that danger in my view is really about the divergent interpretation between the two leaders.

So I would just say that I think we should be very clear about what we should not expect in the summit. I don’t expect a reset in US-China relations. I do not expect a grand bargain on trade. I don’t expect Washington and Beijing to resolve their technology competition, economic security disputes, or any fundamental disagreement over Taiwan.

And I also don’t expect the broader competition to pause because Xi is visiting Washington. We should continue to see and expect both governments take actions they believe protect their economic and national security interests. You can have a state visit, respectful rhetoric, a very good dinner, while both governments continue to build tools to compete with each other the next day.

So that’s my bottom line. I think it’s a summit about managing stalemate, not resolving it. I want to pivot to Mark who’s on the call as well. He and I are both heading to Taiwan in the next few days for a round of meetings with Taiwanese officials and to host a tabletop exercise discussing Chinese coercion in the communications domain. But looking forward to your questions at the end. Mark, over to you.

MONTGOMERY: Thank you, Craig. Thank you, Joe, for pulling this together. Look, I take a look at this from the summit that’s not happening, and that’s that I think every time we do a summit with China, we have to remind ourselves that there is no summit with Taiwan, that the president has never met his Taiwan counterpart and probably couldn’t pick him out of a lineup, which causes a lot of challenge for us, that causes challenges for the United States. Because my greatest fear is that this summit with China puts Taiwan’s security at risk. I think we got a notion of the president’s thinking as he flew home from the last, from China, during his interview with David Sanger — or during the press call with David Sanger peppering him with questions. And it makes people like me nervous that the president sees Taiwan’s security as something that’s negotiable.

And I think it’s worth reminding ourselves who Taiwan is. I just did a look at the last six month’s trade. I had been saying in some papers I put out that Taiwan was America’s fourth-largest trading partner in terms of US imports. That’s actually changed this year.

They’re now the third-largest partner. They passed China. They’re behind only Canada and Mexico. One might argue the president’s working hard on lowering those two, so who knows? But a country of 23 million people provides a significant amount of important imports to the United States.

Last year, it was about $175 billion worth of compute that drives trillions of dollars worth of US gross domestic product. This is something I don’t know that is fully… If it’s understood, it’s certainly not integrated in the thinking of the president when he talks with China, in my mind. So I worry a lot about that. I worry that the president could make decisions during this summit that would be detrimental to the maintenance of that economic security relationship we have with Taiwan.

On a more pedestrian level, Craig has it exactly right. The FMS [Foreign Military Sales] delay is a desired takeaway from the Chinese, and we’re reaching a very critical point. One week after the summit, October 1st, a series of the FMS agreements that have been reported to Congress but not executed have contractual challenges to execute. In other words, we’ll actually take a step backwards. Sometimes when you think, “Well, we didn’t do an FMS thing, we can just do it next month or next quarter or six months from now.” That’s not true for all of them. And these are for some of those important ones, ones that have to do with supply parts and maintenance equipment for existing Taiwan equipment. So this is a big deal.

The president is going to — at the end of the summit, you give Xi a chance, a day to fly home — the president then has about three days to make some really hard decision on FMS packages. So how he leaves this discussion with Xi in the summit is going to have a lot to do with whether we have increasing… We already have a dumpster fire of FMS, $30+ billion in yet-to-be delivered agreements. An FMS delivery rate that supports about a 2.5% spending of GDP on defense by Taiwan, and we want them to go to 3.5% and then 5%. If you want to do that, you have to significantly increase your delivery rates, not just your sales promises rates, but your delivery rates. And so there’s real work there. So I worry a lot about that.

And then finally… so my first issue is Taiwan is much more important than the presidencies. I think the second is FMS is a horrible negotiating tool from just the mil-to-mil relationships point of view. And the third one is that I think for the first time in a while, a US president is entering these negotiations with a severely weakened military hand. We just saw the US PACOM commander allegedly non-concur on a SECDEF order book. He did that because it once again represented the lack of forces in committing to the Middle East will mean we don’t have forces in INDOPACOM. There’s complicated math to that, but effectively, the [USS] Lincoln should have been in INDOPACOM for six months, in the first six months of this year, it wasn’t. Then the [USS] George Washington was supposed to do the back six months, it wasn’t. And then the ship that relieves the George Washington would’ve been doing the next six months, while George Washington goes back in a maintenance period.

So I think it’s realistic that [PACOM commander Admiral] Sam Paparo is looking at 18 months without dedicated carrier in the Indo-Pacific. And I think that has both a deterrent and an insurance implication. Complicating that, there is an actual munitions problem, certainly on the ground attack and air defense munitions, if not the anti-ship munitions, which have not been depleted in Iran. So there’s a munitions issue. And then third, there’s an overall military readiness issue. As we head past seven months of war, when you hit about nine months, you start having unrecoverable readiness bathtub challenges. And what that means is at a period two or so years from now, you cannot generate the aircraft carriers, destroyers, and Air Force fighter squadrons and Army air defense units that have been over-committed to the Middle East. They will not be available for a Pacific scenario.

So we have a president entering this with this real… playing a weak hand. I’m not 100% sure President Trump knows he’s playing a weak hand. I am 100% sure that leader Xi knows Trump is playing a weak hand. And so that to me is an important issue on this and how they’ll each go at these issues. So to me, those are kind of the three big things I’m thinking about. And like Craig, I’m looking forward to this visit to Taiwan to work on their societal resilience challenges.

DOUGHERTY: Mark and Craig, thank you very much for that excellent analysis. We’ll move over to the Q&A portion of the call. If you do have a question, you can do that via the chat feature. You can use the Q&A feature. You can also use the raise hand feature and we will unmute you and you can ask your question directly. I’m going to get things started real quick, and this one is for Craig. President Trump has said he wants Xi’s help on issues like Ukraine and Iran. Do you expect Xi to engage seriously on those crises at the summit?

SINGLETON: Yeah, I mean the Treasury Secretary said yesterday that the issue of Iran and China’s financial ties are going to come up in his private meetings with the Chinese vice premier, He Lifeng in New York this weekend. That is probably the more appropriate venue for discussions of that sensitive nature and potentially to warn or foreshadow to the Chinese that there are risks of continued support for Iran. But I think the threshold for major treasury action against Chinese targets remains extremely high. At the leader level, I would be surprised if Trump… I guess I’d be more surprised if Xi spends time trying to resolve either Ukraine or Iran for Trump. I think those crises matter to Beijing, but they are not where Xi’s core bilateral equities sit. I would expect his strongest message to center on Taiwan. Beijing regards it as the red line in the relationship and Xi’s going to want Trump to hear that again directly.

So Trump may want Xi’s help resolving these various world crises. I think Xi is more likely to use the meeting to remind Trump about China’s crisis, and that’s Taiwan.

DOUGHERTY: Thank you, Craig. We do have a couple of questions in the queue, so we’ll get started. This first one is from George Condon at National Journal. George asks, “Do we expect President Trump to raise with Xi the Chinese support for Iran? And should he? When asked about this, he has brushed it aside saying that we spy on China as well.”

SINGLETON: I suspect it’s possible that Trump may raise it in passing, and that was my understanding of how he approached it in Beijing. I think one thing that is clear from what we’ve heard this week at least is that the president just downplayed reporting that Chinese entities supplied imagery to Iran and that that imagery was potentially used to attack and perhaps kill US service members. If something like that doesn’t produce a major response from the White House, I just think it’s difficult to see President Trump suddenly sanctioning a major Chinese bank or entity on the eve of a summit or afterwards. I think the rhetoric on secondary sanctions has been much tougher than the willingness to absorb the China costs that serious enforcement would entail. And so I suspect the president may raise this issue, but also wants to project publicly and privately that he has the issue under control and that it is a conflict that will be resolved, in his mind, in the next few weeks.

MONTGOMERY: Joe, I’d add one thing to that. I agree with everything Craig said. I do think Trump’s the kind of guy that might ask Xi about the alleged intel support just to see Xi squirm, because I don’t think Xi will handle that answer well. I don’t think Xi wants to look him right in the face and lie, but otherwise that’s kind of a painful question as you sit in the US White House trying to explain to the president how anything you’re sharing with Iran that leads to the death of American citizens is okay, because despite what the president said, I think Xi’s aware that the United States is not providing intelligence to anyone who is killing Chinese citizens right now. The president used his kind of Russia-Ukraine logic to answer a China question when he was confronted with this. And I’m hoping that over time he sorts that out in his head and at least asks Xi the question directly.

DOUGHERTY: George, great question. We may have had a couple of reporters that joined us a few minutes late. Just a reminder that we are recording this, this is on the record and we will share the transcript and video of the call as soon as both are ready. Let’s jump over to… It’s actually an anonymous question. “What do you make of, that after slashing oil imports in the first months of the Iran war, Chinese consumption is ticking up again? Is that worrisome for the rest of the world and Trump, that have benefited from prices not hitting doomsday levels early in the war, in part because of China’s oil strategy since the start of the war?”

SINGLETON: Yeah, I mean look, the US and I would also argue Europe have benefited from China’s unusually weak oil demand because when they pulled out of the market, it took a major buyer out of what is already a tight market. I think that cushion is starting to fade. Chinese refinery throughput jumped pretty considerably in August, although Chinese domestic demand is still very weak and China is drawing extensively from onshore inventories. That’s my understanding at least. I think China’s end game in all this is resilience. Chinese interlocutors I’ve engaged with feel quite confident and happy that they have weathered the storm in the Middle East. I think that ultimately Beijing wants enough supplier diversity, they want enough inventories, domestic production, and alternative routes that no single war or choke point can threaten their economy. And it’s buying more from Africa and Canada and Latin America as Iranian and Russian barrels become harder to access.

I think China ultimately is trying to turn energy dependence into energy optionality right now, and by and large, they’re succeeding.

MONTGOMERY: One thing I’d add is that the Chinese deserve credit. They did in 10 years what took us 25 years after the 1973 oil crisis, to really build a kind of strategic petroleum reserve that could allow you to weather this. And they did it pretty rapidly, I think. And so I think their leaders probably, I think Craig’s right, think back and pat themselves on the back a little bit that they did a good job. I agree as it goes on longer, it becomes slightly more painful and I don’t think that we’re getting complete transparency on their SPR levels, their strict petroleum reserve levels, as that becomes a difficult national security decision for them as they continue to release from that to meet their domestic needs.

DOUGHERTY: Emily Hung of MS NOW reaches out. She asks, “President Trump says he has a great relationship with President Xi. He’s marveled at Xi’s power and talked about him as a friend. I’m wondering if you think China and Xi see this relationship the same way that Trump does or if Xi doesn’t really care too much about the optics of the relationship and having that personal rapport with Trump?”

SINGLETON: Yeah, great question. I think President Trump puts more weight on the personal relationship than Xi does. Xi values access and predictability, but he is much less sentimental about rapport. For Beijing, a warm relationship with Trump is useful if it produces space, it delays pressure, it keeps the bilateral relationship manageable and predictable. And so I think President Trump sees personal chemistry as an asset and Xi sees access as a form of leverage. And that’s why I think the relationship can look warm at the top while the systems underneath remain intensely competitive, Xi does not need friendship from Trump. He needs room to maneuver. And so that’s what the summit’s going to produce for him.

DOUGHERTY: I see Scott Waldman has his hand up.

Scott, let’s go over to you for your question, please.

SCOTT WALDMAN: Thank you for taking my question. I just had a question. I just was wondering if either of you could just talk about which role do you think energy will play in these talks? Obviously, China has done quite well in terms of exporting its clean energy technology to the world, whereas the Trump administration is a bit more challenged with its sort of fossil fuels first approach here, just because of the volatility of the markets, as American consumers are certainly realizing every day when they go fill up the car at the pump. But if you could just talk about which role do you think energy might have, especially in terms of like a source of strength for either country in these talks?

SINGLETON: I guess my take is energy is relevant, but I would not expect it to dominate the summit. The most immediate issues are Iran, Hormuz, China’s exposure to both Iranian and Russian energy. And those are more likely to surface, I think, as pressure points than as areas for like a grand bargain. There is also a commercial track here. Chinese firms are still signing long-term US LNG deals even while tariffs remain in place, which tells you both sides still see value in selective energy trade. I think energy is more likely to be leveraged than a deliverable during this summit, at least for now. That’s my take.

DOUGHERTY: Thanks, Scott. Great question. Scott, of course, from Politico.

I’ve got another question from, this one’s from Megan Cassella. Megan, thanks for checking in. “Do you expect there to be any real substantive discussion on AI? Is there anything that could get done on that front either in Bessent’s meetings this weekend or when the leaders meet on Thursday?”

SINGLETON: I think the AI dialog is being substantially over-hyped here. I think Beijing recognizes real AI risks primarily to the party’s grip on power, but I don’t think that means China wants a nuclear-style arms control regime with the United States on AI. China is simultaneously trying to diffuse its models faster, build global open source ecosystems and expand, obviously, adoption of Chinese AI abroad. There may be very narrow overlap around misuse and cybersecurity, maybe bio or autonomous systems, but I see very little evidence that Beijing wants an agreement that constrains capability growth or slows diffusion. Those are exactly the areas where China sees strategic opportunity. And so my guess is that this gets more serious attention in side conversations than at the leader level. And even there, I would expect principles and process before anything resembling binding guardrails.

MONTGOMERY: Yeah. On that, Joe, I’d say, first I agree with Craig on their approach to treaty, it’s highly unlikely that if you’re not willing to really enter into nuclear weapons treaty agreements, it’s hard to imagine that you’re going to start first with artificial intelligence. What I do think is you could see an agreement to have technical working groups that look at challenges, and I think China would see opportunity in that without much risk. And we may look at as something that to meet the President’s goal of pushing forward aggressively to caveat that we are doing these technical groups with China. I could see some kind of, as Craig would say, a sidebar done by lower-level people that get you to something more than nothing.

But I would say in general, this will have nothing to do with treaty arrangements. It’s just we’ve observed this for too many years that they’re not willing to enter into those, and they certainly don’t enter into them when they’re in a slightly weaker position. I mean, that’s been the number one reason for not entering, I think, the nuclear weapons ones. And so why would they enter the AI one in a slightly depressed position?

DOUGHERTY: Megan, great question. Thank you.

George, we’re going to get to your second question in a moment. I’ve got one from James over at the Wall Street Journal. James asks, “What do you make of Xi’s decision to avoid the UN during the same week, considering his stated support for the multilateral system and effort to lift China’s profile? Was there downside for Xi at the UN or indifference?”

SINGLETON: I know that officials at the UN were quite frustrated and surprised by Xi’s decision that he’s coming all the way over and blowing them off. I wouldn’t over-read it though. I don’t think Xi is retreating from diplomacy. He just spent a month at the Shanghai Cooperation Organization summit, the BRICS summit. He’s coming to Washington next week. I think the pattern that he engages with is, it’s like selective engagement. He prefers forums where Beijing can shape the agenda, control the choreography, and extract a clearer strategic return. And I think that he doesn’t necessarily see the UN as doing that. I think the UN still matters to Beijing institutionally, but Xi does not need to personally attend every multilateral venue to signal China’s global role. What he chooses to attend tells you where he thinks leader-level diplomacy is most useful. That’s my take on Xi.

DOUGHERTY: If I can follow up, do you think they have any comment or weighing in on the next Secretary General at the UN?

SINGLETON: A high-level Chinese delegation will be at the UN, and it’s actually quite possible that we would have two Politburo Standing Committee officials in the United States at the same time, which don’t fact-check me on this, but I believe is unprecedented. Again, I’m sure that they’re going to want to make sure that the UN doesn’t become a hindrance to them, but they also recognize its limits.

DOUGHERTY: George Condon’s second question, “President Trump has a tendency to declare every summit a great victory for his diplomacy. Do you have any recommendations on what we should look for when it’s over to assess it correctly?”

SINGLETON: Yeah, great question. I’d like to separate the pomp from the policy outcomes. Ambassador Greer said himself that the objective today with China is relationship management. It’s not a comprehensive trade deal. So I think the test in my view is fairly concrete, do rare earths start to flow? Does the flow meaningfully improve after this trip? Do Beijing’s agricultural commitments get implemented that they promised? And do the two sides actually operationalize things like tariff reductions and the Board of Trade?

So I don’t like to judge these summits by what happens at the podium. I judge it by what changes the next day. And I think if all the ceremony is very impressive, but the unfinished commitments remain just that unfinished, and if the competitive pressure resumes immediately thereafter, then the summit produced atmospherics rather than much substantive change.

MONTGOMERY: Yeah, I’m sure this summit will obliterate the performance of all previous summits, and then, he’ll probably thank us for our attention to this matter. I’m confident that he’ll declare victory at the end. I’m with Craig that I think it’s very likely that there is almost no positive, aggressive takeaway being planned right now — deliverable being planned. So I think it’s very hard to describe this other than as a pedestrian meeting. But that’s probably not how we’ll read the final Truth Social post on it.

DOUGHERTY: Craig, you mentioned earlier, and Mark, I think you have weighed on this in the past as well, the possibility of absorbing a red line. Can you flush that thought out a little bit more?

SINGLETON: Sure. I mean, for years, the Chinese have sought to have the United States agree to both the One China principle as opposed to the One China policy, but also the notion that arm sales to Taiwan are inherently volatile and destabilizing in the relationship. So every day that we don’t approve an arms sale is further confirmation to Xi Jinping that perhaps this administration has absorbed that red line and will respect it going forward. The problem is that, again, Trump has very little sort of respect for precedent. He doesn’t view precedent in the same way as previous US presidents do and did. And as a result, the Chinese, who place tremendous emphasis on precedent, sit there and they say, “Well, it looks as if we’re all in agreement here that providing an arms package to Taiwan would breach the bottom line of the bottom line,” is what they say. And they’re trying to normalize this notion that any sale legally required by US law in the Taiwan Relations Act to Taiwan is a breach of that.

The reality though is that at some point, either Trump or a future President is going to approve another arms sale, and there’s going to be some other show of support for Taiwan. And when that happens, the Chinese will read it as a betrayal. Now, that’s their problem, but ultimately their reaction will likely be out-sized. So the longer these delays lag and the longer we allow China to believe we’ve absorbed that red line, I think the greater likelihood that the reaction from the Chinese will be explosive, if and when. Well, it’s a matter of if, when not if we do approve another arms package or demonstrate some other sign of support for Taiwan.

MONTGOMERY: So I agree completely, and I think this is where you’ll see this red line challenge. It’s two things. One, we have to approve. it’s going to be really dicey, I’m not sure how they can do the contractual two-step to get around not having to approve one of these before October 1st. Now, it could be very small, in the hundreds of millions of dollars, not in the billions, but there’s going to be a challenge. And almost many of these weapon systems like Patriot, like NASAMS that are teed up, as we don’t approve these, Taiwan is falling farther behind in a very long line. So China is getting a double benefit from these deliveries, not just that they’re delayed, but then the announcement being delayed, but then the delivery being kind of double delayed beyond that. So there’s a significant value to China in these delays, which is why I think that it’s a significant risk to deterrence and assurance in the Western Pacific that we don’t do this.

And then finally, what I’d say is the United States is in its own conundrum because we repeatedly tell Taiwan, “Increase your defense spending.” The only logical way to increase your defense spending without just burning money in a 55-gallon oil barrel is to buy American weapons since no other country will sell them weapons. Taiwan has to buy these weapons. And my estimation, I think broadly out here at FDD is they have to buy somewhere between $12 and $15 billion a year and have delivered $12 to 15 billion a year worth of weapons year after year after year after year to get to 5% spending of gross domestic product on defense. It’s something we’re insisting they do. So you’re going to have this conundrum between the post-summit desire to not offend by approving FMS packages conflicting with the US demand signal to Taiwan to increase their defense spending. And just for the mathematics of it, we’ve been delivering about 4.7 or 4.8 billion a year over the last 10 years. That supported about 2.2, 2.3% spending on defense. So to get to 5%, you can see the math on that is we’re going to have to just about triple it. And that conflicts and it’s going to create that discomfort in Beijing that Craig just mentioned.

DOUGHERTY: Tomorrow, FDD hosts an event on “Axis of Aggressors,” a new book that both of you contributed to. What would you say that Russia, Iran, and North Korea might be thinking and what they might be looking at as we prepare for this summit?

MONTGOMERY: I’ll take the first whack at that one. And I authored that with Brad Bowman, who runs our [center on] military power, and Elaine Dezenski who runs our [center on] economic power, and Brad led our effort on that.

Look, that book does a pretty good job of explaining that while we say there’s an axis of aggressors, what we say is that there’s six highly developing bilateral relationships between each of the countries. This is not NATO, it’s not an alliance based on a shared deep set of values. It’s an alliance of convenience that’s grown dramatically, particularly since the Russian full-scale invasion of Ukraine.

So look, I think they watched it. I think this summit is a signal. The actions we’ve taken leading up to it of denying FMS sales and not calling China out on issues like the intelligence support to Iran is a strong signal to the other three countries that the United States is in a weakening position. And I think broadly all three countries think that, North Korea, Iran, and Russia. Iran probably slightly less as they look at a lot of their former military forces, but still, I think politically they see us in a weaker position.

So all three of them, it’s reinforced by the conditions being set at this summit that the United States is in a weaker position as the leader of the democracies that might oppose an axis of aggressors.

SINGLETON: Yeah, I think my sense is that Russia, Iran, and North Korea are probably watching less for a US-China breakthrough than any signs that Xi could be trading away their interests to stabilize ties with Trump. Moscow is looking for reassurance that Beijing is not going to distance itself over Ukraine. Tehran wants China to resist US pressure on oil and finance, obviously. Pyongyang will be on alert to any return on US-China coordination on denuclearization on the peninsula or sanctions.

And so I personally believe that there’s very little evidence that Xi is preparing to make any of those sorts of trades. China is obviously still coordinating very closely with Russia, engaging Iran while resisting Washington’s pressure campaign and opposing renewed pressure on North Korea. So I think the reason that they are watching it from that angle speaks more to the fact that while they have a mutual loathing of the United States, there is still deep skepticism amongst all four axis partners. And I think that sort of inherent paranoia and skepticism does drive some parts of their relationship and is inherently unstable, and that’s why they aren’t alliances and that’s why it’ll never be a NATO.

DOUGHERTY: Let’s turn our sights back inward domestically. Lisa from CBC asks, “How will the midterms factor into what can be achieved at this meeting and the focus of the meeting?”

SINGLETON: I guess from my take, obviously I think the Chinese sometimes understand us a little better than we understand ourselves. They, for example, on rare earths, the Chinese have been looking to lock in a two-year deal with Washington on rare earths. It’s my understanding that that’s not going to happen. I think the Trump administration has a very good reason to prefer something that’s much shorter, maybe as short as six months. A two-year extension for the rest of the administration would tell industry that the pressure is off and that they could maybe slow their diversification away from China, which is what Washington’s trying to accelerate. I think shorter extensions keep Beijing on a much shorter leash while keeping companies focused on reducing their exposure. And I think the administration wants breathing room from China without giving industry permission to breathe easy.

I think the Chinese are going to be looking and realizing soon that Trump will be a lame duck, and that might change some of their political clock. They might start to realize that as Trump is constrained domestically, that China has even less incentive to make durable concessions.

DOUGHERTY: Great question, Lisa. Again, if you want to submit a question, we do have a couple more minutes. You can do so via the chat feature, you can do so via the Q&A feature, and you can do so via the raise your hand feature, and you can ask that yourself.

Mark checks in from SCMP. Thanks Mark. Great to hear from you. What’s your take on the APEC, A-P-E-C, meeting in Shenzhen and any Elvis sighting between Trump, and Putin, Kim Jong Un that might be discussed next week? Was not expecting that question, so I’m going to turn that one over to you, Craig.

SINGLETON: Yeah, no, I mean I don’t expect an Elvis sighting. I mean, APEC matters because it gives both leaders a built-in follow-on meeting, a guaranteed next meeting only weeks after meeting in Washington. I think that lowers the pressure on next week’s summit to produce some sort of grand bargain. I do think that reinforces the White House’s argument that these meetings can be iterative rather than transformational. I think the summit is late November, so after the midterms. So we’re all going to know whether Trump is approaching the APEC meeting from a position of strength or perhaps having just suffered some political blowback here.

Obviously for Xi, Shenzhen is the more comfortable venue. It’s on Chinese soil, it’s under Chinese choreography, and it gives Beijing, I think, another chance to shape the agenda after seeing what Washington produces — the Washington Summit and what it produces. So I think if Washington is about managing the relationship, probably Shenzhen is about testing what actually carries over, if anything.

DOUGHERTY: Copy that. I think we’re running to the end of today’s call. First of all, thank you to everybody who joined us. You could have been a lot of places and you joined us, so thank you for doing that. Mark and Craig, we’re going to give each of you an opportunity to just wrap things up, 35-, 45-second wrap up in a moment with your final thoughts. I do want to thank my colleague, Ellie Bufkin, and the rest of the FDD Comms team for their great work behind the scenes.

A reminder that FDD is a nonpartisan research institute focused on national security and foreign policy. If you’d like to reach out to Craig or Mark separately, please shoot me an email at [email protected] and I’ll be happy to connect you with them. Reminder that they do leave for the trip to Taiwan in the next couple days, so please get that email in as quickly as possible.

Gentlemen, let’s wrap things up. Craig, we’ll start with you and then conclude with Mark. Craig?

SINGLETON: Yeah, I mean, I think if I were to leave you with one thought, it’s that I would really treat this Washington Summit as a waypoint or a checkpoint, not a destination. A lot of the substance is still being negotiated days before Xi arrives, from rare earths to tariff reductions to the Board of Trade. The real test is going to be after Xi leaves. Do rare earth shipments improve? Do the economic commitments actually get implemented? And do the competitive actions slow or simply resume and pick back up? And so I think the summit may buy both sides time. What matters is what they do with it, and so that’s what I’ll be looking for.

MONTGOMERY: Again, I study mostly Taiwan. I take a Taiwan-centric approach to this. This is risk. It would be an error of… I don’t think the President would do this, but if he made significant concessions on Taiwan in terms of how he sees the Six Assurances or how he discusses FMS or what he agrees to, that would be an error of really, I don’t want to say historic, but significant proportions. And the reason I say that is that Taiwan is much more important to the United States than the President publicly acknowledges or I fear, even understands. And as a result, he tends to be somewhat dismissive of the risks associated with treating Taiwan cavalierly.

So I hope that doesn’t happen. I’m voting for a really boring non-news producing summit, which I’m pretty confident, by law, you’re not allowed to, but that’s how I look at it.

DOUGHERTY: Mark, Craig, thank you for your outstanding analysis. This does conclude today’s call.