China's Economy Unbalanced, AI Deal Hard to Envision, Stephen Roach Says

The recent state visit of Xi Jinping to Washington yielded significant pageantry but failed to produce substantive progress on critical issues including trade, artificial intelligence, and geopolitical tensions. Stephen Roach, a senior fellow at Yale University and former chair of Morgan Stanley Asia, observes that despite the frequency of high-level meetings, a durable framework for coexistence remains elusive. China’s current economic fragility—characterized by a collapsed property sector and an unbalanced reliance on exports—forces a continued, albeit strained, dependence on the U.S. market. While the two nations tentatively discussed AI communication hotlines, no strategic goals were established. Furthermore, China’s role as a primary purchaser of Iranian and Russian oil remains a major friction point that was largely avoided during formal talks. Roach warns that China’s rising debt-to-GDP ratio and asset bubbles increasingly mirror the structural risks that led to Japan's long-term economic stagnation.