SINGAPORE (Dec 24): For months now, the ongoing trade war between the US and China has had the world on tenterhooks. Global markets have sold off heavily on concerns that an agreement that satisfies both sides is unlikely anytime soon. A prolonged trade war and rising tariffs are seen as major dampeners on global growth which, in turn, is leading to more uncertainty in the markets. Earlier this month, on the sidelines of the G20 meeting in Buenos Aires, US President Donald Trump and his Chinese counterpart Xi Jinping agreed to a temporary truce of sorts, deferring additional tariffs for 90 days starting January to let policymakers in Beijing and Washington hammer out a deal.
The real sticking point in this trade war is not the level of tariffs on American cars or steel, or even the non-tariff barrier on Hollywood movies, or Google’s ability to promote its search engine in China, but the US’ belief that Beijing is using its trade policy to advance its industrial and technological ambitions to become a dominant global tech powerhouse, elbowing it off its perch as the global tech leader. At the heart of it is Beijing’s ambitious Made in China 2025 policy, a 10-year strategic blueprint, first unveiled in May 2015, to help advance China’s march to the top of the global tech ladder.
Alongside the Belt and Road Initiative, the country’s ambitious global infrastructure outreach plan, the 2025 tech leadership roadmap is a key plank of Xi’s vision to remake China. Until recently, the consensus was China would not budge on the plan because any backing down would be seen as a huge loss of face for Xi. But Beijing’s leaders are nothing if not pragmatic. Over the past week, China has been sending strong signals that it may be ready to scale down and defer key parts of the 2025 plan in an attempt to avoid punitive tariffs that could push its economy into a recession and, indeed, even permanently derail its ambitions to be a tech leader.