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This article examines the rising prominence of strategic nuclear deterrence in Sino-US relations. China is the only major nuclear power that has been actively expanding its offensive capabilities. Its nuclear modernization has inevitably caused concerns in the United States. The article suggests that China's nuclear programme is driven significantly by US missile defence, which has fundamentally altered the incentive structures for Chinese nuclear deterrence. The article also assesses the latest Chinese perception of US strategic adjustment under the Obama administration and its potential impact on arms control. It reveals that recent measures by the United States to restrain its missile defense could be conducive for achieving a strategic nuclear understanding between the two countries. The article then suggests a number of concrete actions for China and the United States to realize such an understanding.