The High-Stakes Diplomacy Behind the Smiles: What the Xi-Trump Call Means for Singapore and Regional Stability
As superpowers navigate Taiwan tensions and critical minerals disputes, Southeast Asia faces an increasingly precarious balancing act
SINGAPORE — The phone call between Chinese President Xi Jinping and U.S. President Donald Trump on February 4 lasted long enough for both leaders to describe it as “excellent” and “positive.” Yet beneath the diplomatic pleasantries lies a stark reality: the world’s two largest economies remain locked in fundamental disagreements over Taiwan’s future and control of the critical minerals that power modern technology.
For Singapore and its ASEAN neighbors, this conversation—and the April summit it foreshadows—represents far more than distant great power politics. It is a preview of the constraints and choices that will define Southeast Asia’s strategic environment for years to come.
The Taiwan Question: Beijing’s Non-Negotiable Red Line
In both the Chinese and American readouts of the call, Taiwan emerged as the central flashpoint. Xi’s message was unequivocal: Taiwan represents the most important issue in China-U.S. relations, and Beijing will never allow the island to be separated from China. The Chinese president urged Washington to handle arms sales to Taiwan with “extreme caution.”
This came just two months after the Trump administration approved a massive $11.15 billion arms package to Taiwan—one of the largest ever—including medium-range missiles, howitzers, and drones. China’s response has been predictably sharp, with military exercises near the Taiwan Strait continuing to escalate throughout 2025.
Taiwan’s Deputy Foreign Minister Chen Ming-chi attempted to project calm, describing the Trump-Xi dialogue as a necessary step to “stabilize the situation.” Yet the underlying tension is unmistakable. While Trump emphasized his “extremely good” personal relationship with Xi, the fundamental contradiction remains: Washington opposes reunification by force while providing defensive weapons; Beijing views such arms sales as interference in its internal affairs.
For Singapore, this tension hits particularly close to home. The city-state maintains longstanding military training arrangements with Taiwan—a relationship that has periodically drawn Beijing’s ire. In 2016, Hong Kong customs seized nine Singapore Armed Forces armored vehicles returning from Taiwan, in what was widely interpreted as a political signal from Beijing.
“Singapore’s position on Taiwan has become a tightrope walk,” notes a senior analyst at the ISEAS-Yusof Ishak Institute. “We maintain the One China policy, but we also have practical security relationships that Beijing finds problematic. As U.S.-China tensions intensify, these contradictions become harder to manage.”
The stakes extend beyond bilateral relationships. A 2024 survey by ISEAS revealed that during a conflict over Taiwan, most Southeast Asian respondents would prefer to use diplomatic measures rather than take sides. Yet the region’s geographic proximity and economic integration with both Taiwan and China make neutrality increasingly theoretical. Singapore, with its strong security partnership with the United States—including hosting U.S. military assets—could face excruciating decisions if tensions escalate into conflict.
The Critical Minerals Chess Game
While Taiwan dominated the official statements, the phone call also addressed what may prove equally consequential: China’s dominance in rare earth elements and other critical minerals essential to modern technology, from smartphones to fighter jets to wind turbines.
Throughout 2025, Beijing has systematically tightened its grip on these strategic materials. In April, China imposed export controls on seven heavy rare earth elements, causing immediate disruptions. By October, these controls expanded to include five additional elements and introduced extraterritorial provisions requiring export licenses for products made outside China if they contain Chinese-origin materials.
The impact was swift and severe. Following the April restrictions, rare earth magnet exports plummeted 74% in May compared to the previous year. Automakers in the United States, Europe, and elsewhere struggled to obtain permanent magnets, with some forced to reduce production or temporarily shut down factories. Prices in importing countries surged to six times Chinese domestic levels.
“China controls roughly 70% of global critical minerals refining capacity,” explains Rahman Daiyan, a senior lecturer at the University of New South Wales. “But that understates their leverage. For certain rare earths essential to permanent magnets—dysprosium and terbium—China holds a monopoly on separation. There are no alternatives in the short term.”
The semiconductor industry, vital to Singapore’s economy, found itself particularly exposed. While Taiwan’s Ministry of Economic Affairs initially claimed minimal direct impact on chip manufacturing, the indirect dependencies run deep. ASML, the only manufacturer of machines that make the most advanced semiconductors, faced potential weeks-long delays. Chipmaking equipment relies heavily on rare earths for extremely precise lasers, magnets, and other components.
Significantly, neither the official Chinese nor American readouts of the Xi-Trump call mentioned rare earths—a conspicuous omission given the escalating tensions throughout 2025. Some analysts interpret this silence optimistically, suggesting that China’s willingness to resume exports (which reached record highs of 62,585 metric tons in 2025, up 12.9% year-over-year) indicates the issue may be stabilizing.
Yet the November suspension of the most aggressive export controls for one year until November 2026 came with conditions. The underlying licensing system remains in place, giving Beijing discretionary control over supply flows. As Cory Combs, Head of Critical Minerals Research at Trivium China, observed, “We do not see licensing requirements themselves as negotiable. They are the means for Beijing to tighten or loosen control over particular countries’ supplies.”
Singapore’s Semiconductor Vulnerability
For Singapore, the rare earth situation carries particular strategic weight. The city-state has positioned itself as a crucial node in global semiconductor supply chains, hosting major manufacturing facilities and serving as a regional hub for chip design and testing. Any disruption to the flow of critical minerals reverberates through Singapore’s economy.
The broader picture is equally concerning. China’s dominance extends beyond rare earths to germanium, gallium, and antimony—materials heavily used in defense applications. In December 2024, Beijing banned sales of these minerals to the United States entirely, forcing major U.S. defense contractors to scramble for alternative suppliers.
Analysis by the International Energy Agency reveals the scale of concentration: for 19 out of 20 important strategic minerals, China leads in refining, with an average market share of 70%. This concentration has only intensified in recent years. For rare earth permanent magnets—critical to electric vehicle motors, wind turbines, and defense systems—China’s share has surged from 50% two decades ago to 94% today.
“Singapore’s role as a technology and manufacturing hub makes us inherently vulnerable to supply chain disruptions,” says a Ministry of Trade and Industry official speaking on background. “We’re working with partners to diversify sources, but the reality is that China’s position in critical minerals processing is nearly unassailable in the medium term.”
The geopolitical implications extend beyond economics. A recent analysis from War on the Rocks argues that while China’s rare earth controls create leverage, semiconductor export controls running in the opposite direction—limiting China’s access to advanced chips—may prove more durable and strategically significant. U.S. and allied firms control roughly 90% of global semiconductor manufacturing equipment and 92% of overall supply chain value, creating dependencies that Beijing cannot easily overcome.
The ASEAN Dilemma: Caught Between Giants
The Xi-Trump call occurred just hours after Xi held a video conference with Russian President Vladimir Putin, in which both leaders pledged to strengthen ties amid what they termed a “turbulent” international environment. The sequencing sent a clear message about Beijing’s alternative partnerships.
For ASEAN nations, this triangular dynamic creates profound strategic anxiety. The 10-member bloc has struggled to present a unified response to China’s growing regional influence, with member states pursuing divergent approaches based on their own economic dependencies and security concerns.
Recent events highlight the fractures. When China summoned ambassadors from ASEAN countries, including Singapore and the Philippines, in December 2025 to criticize Japanese Prime Minister Sanae Takaichi’s statements on Taiwan, it underscored Beijing’s willingness to pressure Southeast Asian nations on the issue. The Philippines, which maintains a mutual defense treaty with the United States, faces particularly acute pressure. Singapore’s more balanced approach—maintaining strong economic ties with China while hosting U.S. military assets—requires constant diplomatic calibration.
“ASEAN has recognized that intensifying great power competition is a blow to its centrality,” observes a research paper from the Singapore-based ISEAS institute. “Strategic anxiety has replaced cautious optimism.”
The economic stakes are substantial. China is ASEAN’s largest trading partner, while the United States remains the largest source of foreign direct investment in Singapore. A conflict over Taiwan would force impossible choices. As one Carnegie Endowment analysis put it, “Singapore is another country that would have to make excruciating decisions as a result of its strong security partnership with the United States.”
Trade Deals and Diplomatic Theater
Amid these tensions, the Xi-Trump call produced at least one concrete outcome: agricultural trade. Trump announced that China had agreed to increase purchases of U.S. soybeans from 12 million to 20 million tonnes for the current season, with commitments reaching 25 million tonnes for next season. The president also touted agreements on oil, gas, and “airplane engine deliveries.”
These commercial arrangements serve multiple purposes. For Trump, they provide deliverables to tout to his domestic agricultural base. For Xi, they represent relatively painless concessions that demonstrate goodwill without compromising on core strategic issues like Taiwan or technological competition.
“This is transactional diplomacy in its purest form,” says a trade policy analyst in Singapore. “Soybeans are important, but they’re not strategic in the same way semiconductors or rare earths are. Both leaders can claim wins without actually resolving the fundamental disputes.”
The call also addressed other geopolitical flashpoints, including Iran, where Trump is pushing Beijing to further isolate Tehran amid escalating tensions over Iran’s nuclear program and crackdown on protests. Trump stated he discussed “the current situation with Iran” with Xi, though details remained scarce. Separate reports indicated that Xi and Putin, in their earlier call, discussed Iran alongside Venezuela and Cuba, suggesting coordination between Moscow and Beijing on these issues.
Looking Ahead to April: What’s at Stake
Trump’s planned visit to Beijing in April 2026 will mark the first face-to-face meeting between the leaders since their October 2025 encounter in Busan, South Korea, on the sidelines of the APEC summit. Both nations have significant events on their calendars this year: China launches its 15th Five-Year Plan while hosting the APEC Economic Leaders’ Meeting; the United States celebrates its 250th independence anniversary and hosts the G20 Summit.
Xi framed the call as an opportunity to “steer the giant ship of China-U.S. relations steadily forward through winds and storms.” His language emphasized “mutual respect, peaceful coexistence, and win-win cooperation”—formulations that Beijing consistently employs but which mask fundamental disagreements over Taiwan, technology, and regional influence.
For Singapore and ASEAN, the April summit represents both opportunity and risk. Successful management of U.S.-China relations could stabilize the regional environment and provide breathing room for smaller states to pursue their own interests. Conversely, a breakdown could accelerate trends toward bloc formation and force Southeast Asian nations to make the very choices they have long sought to avoid.
“The question isn’t whether U.S.-China competition will affect us—it already has,” says Singapore Prime Minister Lawrence Wong in recent parliamentary remarks. “The question is whether this competition will be managed or will spiral into confrontation. Our interests lie firmly in the former.”
Supply Chain Resilience: The Long Game
Beyond immediate diplomatic dynamics, both the Taiwan issue and critical minerals disputes point to longer-term structural challenges. The semiconductor industry’s concentration in Taiwan—with TSMC alone producing the majority of the world’s most advanced chips—creates what analysts describe as the “silicon shield.” Any military conflict would devastate global supply chains, affecting everything from automobiles to data centers.
Taiwan’s semiconductor manufacturers maintain substantial inventories of critical materials, with TSMC holding 12-24 month stockpiles. Yet these buffers assume normal consumption patterns and would not withstand prolonged disruption or accelerated military production demands. The company has diversified sourcing through European and Japanese intermediaries, but these suppliers ultimately depend on Chinese-refined feedstock.
In response to China’s rare earth controls, alternative supply chains are slowly emerging. The United States has invested heavily in MP Materials’ Mountain Pass facility in California and Lynas USA’s refinery in Texas. Australia is developing its Browns Range deposit to become the first significant dysprosium producer outside China. The European Union’s Critical Raw Materials Act sets targets for 40% of annual consumption to be processed within the bloc by 2030.
Singapore has joined these diversification efforts, albeit on a smaller scale appropriate to its needs. The government has launched programs to develop local refining capabilities, with the Industrial Technology Research Institute researching recycling and refining technologies for neodymium and dysprosium. Production is expected to reach 0.5 tons annually by 2028—about one-third of Taiwan’s current demand of 1.5 tons per year.
Yet experts caution that even with sustained political will and billions in investment, breaking China’s dominance over rare earth supplies will take at least a decade. “Post-2030, if all planned projects, recycling initiatives, and stockpile strategies succeed, Western powers could secure the majority of demand,” notes one analysis. “But complete decoupling would be complex and strongly dictated by cost and market dynamics.”
The Broader Pattern: Economic Interdependence as Constraint
The February 4 phone call and the issues it addressed illuminate a fundamental tension in the contemporary international system: profound economic interdependence coexists with deepening strategic mistrust. China and the United States are simultaneously indispensable economic partners and geopolitical competitors.
For Singapore, this tension manifests in concrete policy challenges. The city-state is the top destination for Chinese investment among Belt and Road Initiative countries, while also maintaining robust security cooperation with the United States. Singapore serves as a crucial node in supply chains connecting both economies. This position provides opportunities but also exposure.
“We’ve built our prosperity on openness, connectivity, and serving as a neutral hub,” reflects a veteran Singaporean diplomat. “But neutrality becomes harder to maintain when the system itself is fragmenting into competing blocs. We’re not large enough to shape these dynamics, so we must be smart enough to navigate them.”
The diplomatic optimism surrounding the Xi-Trump call should be understood in this context. Both leaders have incentives to manage tensions and avoid catastrophic miscalculation. The personal relationship Trump touts—however genuine or performative—provides a channel for communication. The agricultural trade deals create stakeholders in cooperation.
Yet the fundamental drivers of competition remain unchanged. China views Taiwan as a core interest and will not compromise on reunification as a long-term objective. The United States regards China as its primary strategic competitor and has settled on technological containment as a central pillar of that competition. Both nations are investing heavily in military capabilities while maneuvering for advantage in critical supply chains.
Conclusion: Singapore’s Strategic Imperative
As Singapore and its ASEAN neighbors watch the delicate dance between Washington and Beijing, several imperatives emerge. First, continued investment in strategic autonomy—developing alternative suppliers, building stockpiles, and investing in technological capabilities that reduce dependence on any single partner. Singapore’s push for local rare earth refining capacity, though modest in scale, exemplifies this approach.
Second, intensified multilateral cooperation. Singapore’s chairmanship of ASEAN in 2027 will provide an opportunity to champion deeper economic integration through existing frameworks like the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. These arrangements can create buffers against bilateral tensions.
Third, sustained diplomatic engagement with all parties. Singapore must maintain its credibility as a neutral venue and honest broker, even as that neutrality becomes more difficult to sustain. The city-state’s ability to host dialogues, facilitate communication, and bridge divides represents a strategic asset.
Finally, realistic expectations about the limits of small-state influence. Singapore cannot determine whether the United States and China cooperate or conflict. But it can shape how regional institutions respond, how supply chains evolve, and how middle powers collectively manage in an era of great power competition.
The “excellent” phone call between Xi and Trump bought time and established a framework for continued dialogue. The April summit may produce additional agreements and confidence-building measures. But the underlying competition over Taiwan, technology, and regional influence will persist.
For Singapore, the challenge is to navigate these turbulent waters without being capsized—to preserve its model of openness and connectivity in a world increasingly defined by closure and confrontation. The stakes, quite literally, could not be higher. As one senior government official put it, “We’re a small boat in a sea where the whales are fighting. Our job is to avoid getting crushed.”
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Additional reporting contributed by wire services and regional correspondents. This analysis incorporates market data, academic research, and government statements current as of February 6, 2026.