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Technology is set to be the main front in the US-China trade war

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Despite the fanfare, the phase 1 agreement that the US and China signed last week does not represent a truce in the ongoing trade “war". It is not even a temporary ceasefire, as tariffs mostly remain in place and there is no indication how or when they will be lifted. The deal is at best a waypoint in the increasingly adversarial relationship between the world’s only superpower and its prospective challenger.

China promised to buy an additional $200 billion of US agricultural and energy products in two years, but it is hard to see how the Chinese economy can re-direct trade patterns of such magnitude in such a short period. As one US think tank expert told me, it’s not even clear if the US has “that much farm and energy stuff to sell" in the first place. China also solemnly promised not to steal intellectual property from high-technology companies, but how this will be enforced remains an open question. Moreover, Beijing astutely refused to make any commitment on hacking and cyber aggression, taking refuge in the argument that this is not a trade issue. In return, the US agreed to hold back from further increases in tariffs on Chinese goods.

While the optics of the deal gives US President Donald Trump something to boast about in his re-election campaign, the US has used the “constructive ambiguity" to acquire leverage over China. The........

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