DEFAERO Strategy Series [May 19, 26] IISS’ Nigel Inkster

Key Takeaways

• Trump‑Xi summit hinted at a “grand bargain” swapping Taiwan for stability
• Washington’s depleted missile stockpile raises risk of miscalculation in Indo‑Pacific
• Beijing is learning from U.S. interventions in Venezuela and Iran
• China may seek to replace the post‑WWII rules‑based order
• AI’s rise intensifies cyber‑security challenges for both superpowers

Pulse Analysis

The Trump‑Xi summit in Washington marked a rare diplomatic overture amid years of tension, with Inkster suggesting the dialogue may have produced an informal "grand bargain"—a tacit agreement to keep Taiwan out of the immediate flashpoint in exchange for Chinese restraint elsewhere in the Indo‑Pacific. Such a maneuver, if real, would represent a pragmatic pivot from the longstanding U.S. policy of strategic ambiguity, potentially reshaping regional security calculations for allies like Japan, South Korea, and Australia. Analysts are watching closely for any concrete policy shifts that could either stabilize or destabilize the delicate balance of power.

Inkster also warned that Beijing is extracting strategic lessons from recent U.S. interventions in Venezuela and Iran, interpreting them as signs of American overreach and waning resolve. This perception fuels Beijing’s ambition to erode the post‑World War II rules‑based order that underpins global trade, finance, and security institutions. By leveraging its economic clout and military modernization, China may seek to construct a parallel framework that privileges its interests, challenging the United States’ ability to project influence and maintain alliances across Europe and Asia.

Finally, the conversation turned to the accelerating impact of artificial intelligence on cyber‑security. Both superpowers are racing to integrate AI into offensive and defensive cyber capabilities, raising the stakes of digital espionage and potential disruption of critical infrastructure. Inkster emphasized that the convergence of AI and cyber tools could shorten decision cycles, increasing the likelihood of inadvertent escalation. Stakeholders must therefore prioritize robust cyber‑resilience strategies and international norms to mitigate the heightened risks of an AI‑augmented conflict landscape.