Beijing and Washington will continue to circle each other warily in 2026 even as China’s leadership struggles to balance economic growth against its control fixation, according to a report on next year’s outlook for China released on Wednesday by the Asia Society.

“As we look towards 2026, the story is not one of rises or triumph. It’s not black or white,” said Lizzi Lee, a fellow at the Society’s Centre for China Analysis and one of the report’s co-authors. “It is a story of transitions, trade-offs and tensions.”

But any stability ahead is “rooted not in accommodation but in a shared recognition of each side’s capacity to inflict significant economic harm on the other”, said the report. “Both sides are racing to eliminate the other’s strategic chokepoints.”

Even as Washington works overtime to circumvent China’s dominant position in rare earth minerals, Beijing is determined to break the US lock on the most advanced semiconductors. That suggests any bilateral deal will be tactical rather than strategic as the world’s two largest economies elbow for position.

“Mutual suspicion will endure, and the political space for compromise will remain fragile and limited,” the report said.