The scheduled summit next week between US President Donald Trump and Chinese President Xi Jinping will almost certainly include proclamations about cooperation, friendship and respect between the leaders of the world’s two largest economies, but beneath the surface, major trade conflict is building, said trade experts on Wednesday.
In the past, a weaker China was forced to grit its teeth and grudgingly accept US tariffs, export restrictions and other restrictions, but Beijing has quietly and methodically amassed increasingly effective tools it believes will counter what it sees as Washington’s heavy-handed behaviour.
“It kind of looks calm, like OK, maybe the summit could cement this agreement, and everything will be fine. But actually, underneath the surface here, we see a lot of pressure brewing,” said Marcus Noland, executive vice-president with the Peterson Institute of International Economics (PIIE).
“It’s a very dangerous game of chicken that we’re getting into here.”
Semiconductors are a prime example of the high-stakes face-off, analysts said. Over the past decade, starting with Huawei and ZTE, the US built an entity list that would eventually include over 1,000 Chinese companies, which were forbidden from buying advanced chips or semiconductor manufacturing equipment.
Trump stopped updating these, banned Nvidia’s H20 chip, then, a few months later, unbanned the H20 and subsequently allowed the much more advanced H200 chip. The administration sought to counter this by imposing restrictions on the subsidiaries of entity-list companies, but China retaliated.
