In its first observation on the global reactions to Trump’s midterm defeat, the New York Times said the world wondered what the result might mean for trade, energy, and ongoing wars in Ukraine and Iran. But that is not what the policymakers in Beijing were thinking. A readers’ comment best summed up the debate in Chinese public opinion over China’s reaction: “Will China send a congratulatory message to the US Democratic Party?”

The Chinese Communist Party (CCP) leadership is faced with new questions. Should Beijing treat Trump as a “lame duck,” or should Xi Jinping continue to invest in “cultivating” (or, more bluntly, “entrapping”) him? More broadly, should Beijing change tack or carry on pursuing a “constructive relationship of strategic stability” with the United States?

The next U.S. Congress, which will be controlled by solid Democratic majorities in both houses, will face three pressing issues involving China policy. Taiwan, the artificial intelligence (AI) race with China, and China’s industrial “overcapacity.” As always, Taiwan is going to be the most contentious of the three.

Taiwan

Interestingly, two of China’s relatively influential voices on China-U.S. relations – Chen Dongxiao, president of Shanghai Institute for International Studies (SIIS), and Wu Xinbo, dean of the Institute for International Studies (IIS), Fudan University in Shanghai – hold contrasting views on the impact of the midterms on China-U.S. relations. Chen, who is also vice chair of the China National Association for International Relations, said, “The [midterm] results are unlikely to deliver a ‘disruptive’ shock to relations between Beijing and Washington, despite potential volatility over the issue of Taiwan.”

On the other hand, Wu categorically said the power shift in Washington would certainly affect the China-U.S. relationship. He told the South China Morning Post: “One possibility is that the Democratic Party would put pressure on Trump regarding the Taiwan issue.” He emphasized that the Democrats would not waste time in criticizing Trump for betraying Taiwan and developing ties with Beijing, and predicted that the new Congress would push Trump to approve a long-stalled $14 billion arms sale to Taiwan. Of note, Wu is considered by many in the United States to be close to the authorities in Beijing; he was on the guest list of invitees at the dinner hosted by Xi Jinping welcoming Trump to Beijing in May. 

China knows fully well that Taiwan is the most sensitive and crucial of all controversial issues in the bilateral relations with the United States – and that Taiwan is, for the same reason, a key bargaining chip in Washington’s political dealings with Beijing. China’s leadership is also well-aware of the delicate nature of the halted arms sales to Taiwan under Trump so far. Therefore, Beijing would refrain from exerting any further pressure on the “lame duck” Trump on the issue. 

Just as the midterm results made it clear that Trump had lost his majority in both houses of Congress, Beijing let it be known through the Foreign Ministry spokesperson that China will continue to work with Washington toward a “constructive relationship of strategic stability.” Chen further advised Beijing to continue to explain its view of the “constructive relationship of strategic stability” to the incoming Congress and “take ‘proactive’ steps to uphold the consensus.”    

The China-U.S. AI Race

The CCP is totally invested in winning the AI race. As The Economist observed: “During a visit early this year, China’s prime minister, Li Qiang, gushed that innovation like this was ‘the key to winning the future.’” The comment, made in Shenzhen in January, came in the context of China’s premier expressing appreciation for the progress made since 2018 – when the first World AI Conference (WAIC) was held in Shanghai. Li was effectively saying that China’s future depends on defeating the United States in the AI race.     

Over the past year or so, China has dramatically stepped up sector-wide efforts in adopting AI. In July 2025, China hosted its annual WAIC in Shanghai and announced the launching of the “Global AI Governance Action Plan.” Also in July 2025, the United States too launched its own America’s AI Action Plan which was aimed at tightening control on the export of advanced semiconductors to China. 

A month later, carrying forward this momentum, China’s State Council issued an “AI Plus” (人工智能+) policy directive aimed at guiding sector-wide adoption of AI domestically in China. China’s “AI Plus” plan is a call to action aimed at accelerating the application of AI across all areas of the Chinese economy, industry, and society.

A recent Al Jazeera report on “who is winning the AI race” between China and the United States concluded: “The US dominates AI spending and computing power, but China is ahead in research and closing the gap on advanced models.”

Experts in China are apprehensive about the AI competition between the United States and China heating up in the next two years, as the remainder of Trump’s presidency co-exists with a Democratic Party-controlled Congress. Zhao Minghao, an international relations professor at Fudan University in Shanghai, suggested to SCMP that, because AI was a major topic in the midterms, the debate – and its intersection with China-U.S. competition – was likely to take center stage once the Democrats gain control of Congress.

Export Controls and Industrial Overcapacity

Several experts in the United States and China feel the Democratic Congress will act more aggressively against China, especially on Taiwan and export controls. Professor Wu Xinbo, cited above, strongly feels the power shift in Washington would definitely affect U.S. relations with China. The “Democratic Party has the backing of labour unions, so it seeks to protect many industries, particularly the automotive industry. So they would oppose any discussion by [Trump’s] U.S.-China Board of Investment on easing of Chinese investment in the U.S.,” Wu said.

Additionally, as regarding increasing pressure and growing criticism in Europe and in the U.S. of China’s industrial “overcapacity,” experts in China are on the same page as their government. Dismissing the notion of overcapacity, these experts argue that Beijing’s thinking on the issue, especially in the context of “aggressive” new Congress would be to fortify itself and further diversify its trade ties. 

Zhao Ying, a foreign affairs expert, said in a recent interview: “What is overcapacity? … If a country manufactures certain goods more than it can consume domestically is not the definition of overcapacity. This is an integral aspect of international trade, especially under globalization.” 

The Perils of Personalized Diplomacy

It was clear from Xi’s visit to the United States, and second summit with Trump, in September that Beijing was forging a Trump-Xi friendship and seeking a friendly U.S. administration. The goal for China was to try and ensure stability in the bilateral relationship with the United States for the remaining period of Trump’s presidency. 

“If we can have two more years of stability, that’s already a good thing for China,” Shen Weizhong, a former Chinese Foreign Ministry official, told Reuters. Thinking of the next U.S. administration coming to office in 2029, Shen, who now works for a think tank in Beijing, added, “The Chinese are very realistic that a new president might be very different, but … the more time we have, the better prepared we might be towards ⁠a final showdown on Taiwan or maybe another trade war.” 

As Shen said, Chinese leaders are “realistic,” and they will find ways to adapt to the changing political environment in the United States. Besides, like many experts in the United States, scholars and analysts in China point out that the Democrats, like the Republicans, are deeply divided in their China policy. Already, there are signs of engagement between Beijing and the Democratic Party

As Cory Alpert, who served in the Biden administration, recently wrote in an op-ed that Beijing has begun planning for the Democratic shift in Washington. “Premier Li Qiang hosted a congressional delegation led by Democrat Adam Smith last year. Earlier this year, China’s ambassador to the U.S. met four of the most senior Democratic senators,” Alpert pointed out. 

These days of China-U.S. relations being defined solely by the Trump-Xi friendship are over. Now Beijing will have to forge connections with new actors. “That,” Alpert concluded, “is the danger in building the world’s most important geopolitical relationship on an assumption that both can control the domestic politics of their home country.”