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The Obama administration’s ‘pivot to Asia’ intends to rebalance resources and strategic attention to focus more on US interests in the Asia-Pacific after a decade-long ‘war on terror’. But in the eyes of the Chinese and the rest of the world, it is also an effort to contain or balance against the rise of China in the region. The ‘pivot to Asia’ coincided with President Xi Jinping taking over the supreme leadership role in China. His response to the US rebalancing strategy is non-confrontational but also non-compromising in defending China’s national interests in the Asia-Pacific region. President Xi Jinping proposed to build a ‘new model of major power relations’ with the United States in order to ‘reset’ the strained Sino–US relationship. Washington was initially positive to the proposal but turned lukewarm later due to profound strategic distrust. Unless Beijing and Washington can find ways to reduce mutual distrust and manage competition, it is unlikely they will build an enduring stable and cooperative relationship.