Sino-US trade war hots up


Given President Donald Trump’s reluctance to read any briefing that takes up more than one side of a piece of paper and his addiction to sending short tweets, it is unlikely that he himself wrote much of his best-selling book “The Art of the Deal”. But whoever put together his thoughts produced a work that ought to tell those who come up against Trump a great deal about what he is going to do next.

The Chinese, however, work to different criteria and indeed a different time span. Even if the leadership in Beijing studied the book, they probably concluded that the man in the White House is a loud-mouthed vulgarian entirely lacking in subtlety and with no appreciation for the very Chinese value of “Face” - the protection of all-important reputation.

The increasingly bitter Sino-American trade war is beginning to point up the fundamental differences in outlook between Trump and his opposite number Xi Jinping. For Trump and his supporters the issue is simple. China sold America twice as much as America was permitted to sell China. Along the way, Chinese hackers, almost certainly state-sponsored, were busy vacuuming up both military and commercial secrets from America and other Western trade rivals. Unless Beijing was prepared to open its markets to US business and acknowledge and enforce intellectual property rights, Washington would impose tariffs. When trade talks stalled, Trump acted and the Chinese retaliated.

US business, particularly its farmers, are not happy to lose key Chinese markets. But Trump has boxed clever. He has added the extra focus of national security by homing in on the technology produced by China’s leading IT company Huawei. He has presented a credible argument that Huawei’s close ties to the government in Beijing mean that installing the coming 5G technology, in which the Chinese company is currently a world leader, will put at risk the security of all communications using Huawei equipment.

Beijing has not wondered aloud if, since America introduced the internet, US cyber-spies have not been busy snooping all around it, in much the same way that the UK’s post-war Cable and Wireless company was alleged to have monitored the international communications traffic it once carried for much of the former British empire.

Huawei bosses have denied any spying and vowed to defy US sanctions. Yet the company uses chips in its smartphones that are only produced in the US. Cutting off the supply of these components is sure to have a crippling effect on its factories. The solution, which is certainly being sought at this very moment, is for China to work up its own design and manufacture of these chips. The country has proved itself stunningly good at establishing high technology. There seems little reason to suppose that, even if not immediately, it will soon begin turning out replacements for the US-made components.

A China that is completely self-sufficient in advanced IT is going to prove an even greater challenger to American rivals than at present. But Trump may even have thought this through. In his view it is probably better that China is an open rival rather than an unreliable trade partner. At least the US technology sector will have been protected in its own backyard the same way Beijing has screened its own IT companies.