The document summarizes the ongoing trade and technology conflict between the US and China. It began as a trade issue in 2018 but has since escalated and expanded to other areas as both countries take measures against each other. The fundamental reason for the conflict is the rising economic and technological competition between the two powers. The US accuses China of unfair trade practices and technology theft. Both countries have imposed tariffs and other restrictions on each other's goods and companies. The conflict could continue depending on the outcome of the US presidential election, but Peru should maintain balanced relations with both countries and not take sides.

1. Trade and technology war betweenthe US and China
Carlos Aquino*
Nota daygoesby withoutnewsof anescalationin the conflictbetweenChinaandthe United
States,whichbeganwitha trade issue in2018 buthas spreadto all levels.The latestthatis
knownisthat the Negotiationsontrade issuesthatthose twocountriesshouldhave hadon
August15 were canceled,withoutanyexplanation,andwithouthavingsetanew meeting
date.
The US and China,the world'stwolargesteconomies,are lockedinaconflictwithnosignsof a
solution,whichisexacerbatedwiththe approachof the Novemberpresidentialelectionsinthe
US. What can happenfromnow on? This article aimsto answerthat.First,the reasonsforthis
conflictwill be seen,second,the measuresthatbothcountrieshave taken,third,whatthe
outcome maybe,and finallywhatPeru'spositioncouldbe.
First, the conflictbetweenthesetwogiantswasseencomingwithTrump'sspeechbefore
beingelected,inwhichhe accusedChinaof beingthe cause of manyof the illsof the United
States.Whenhe tookoffice inJanuary2017, he reaffirmedthose accusations,and in
Decemberof thatyear inthe national securitydocumentpublishedbyhisgovernment,he
catalogedChina,alongwithRussia,of beingstrategiccompetitorsof the UnitedStates,and
that theyaimto undermine itseconomicandpolitical powerinthe worldusingforbidden
means1
.
It especiallyaccuse Chinathat,despite the factthatthe UnitedStatesopeneditsmarkettoits
products,and allowedittoenterthe WorldTrade Organizationin2001, Chinadidnot change
itsstatistand authoritarianmodel and appropriatesthe technologyof USA, restrictingthe
entryof companiesandproductsinto itscountry.
It can be saidthat the fundamental reasonforthe conflictisthe economicandtechnological
competitionbetweenthesetwogreatpowers.China,whichformuchof the lasttwo thousand
yearswas the mostadvancedpowerinthe world,istakingback the place it alwayshad.The
weightthatChinahad inthe worldeconomyfell precipitouslysince itwasforced toopenin
1839-40 withthe OpiumWar thatEngland made on it.During whatthe Chinese call the next
“centuryof humiliation”until1949, Chinawas invadedbyforeignpowersandthensince 1949
withthe establishmentof the People'sRepublicof China,itplungedintoastage of near
isolationfromthe worldeconomy.ButChinasince 1979, withitsopeningupto the worldand
itseconomicreforms,isonce againgrowingandassuminganincreasinglyimportantrole,not
onlyinthe economybutin worldpolitics2
.
The conflictoriginatesbecause China economyis growingunderthe leadershipof a
CommunistPartythatis seenasauthoritarian,andwithaneconomywhere the State playsa
veryimportantrole.Inaddition,Chinaprotectsitseconomyfromforeigncompetitionandhas
helpeditscompaniestobe able tocompete withUSgiants,forexample,infields of
1 See: https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905-
2.pdf
2 See: https://www.slideshare.net/carlosalbertoaquinorodriguez/la-nueva-configuracin-
geopoltica-entre-china-y-eeuu-postpandemia

2. technology,withHuawei,TencentandAlibabaforexamplethatcompete withApple,
Facebook,or Amazon,orin computerswithcompanieslike Lenovo(whichboughtIBM's
Divisionof Personal Computers),orincars like GreatWall or BYD thatcompete withFordor
GM.
Second,in2018 the US begantakingmeasurestorestrictthe access of Chinese productstoits
marketby placingtariffsonthose products,ina trade escalation warthat continues
throughout2018 and2019, withChinarespondinginthe same way.Thingsreachedasituation
where mostof the goods tradedbetweenthe two countries were already undertariffs,andin
the face of Trump's threatto impose tariffsonall Chinese productsinDecember2019, an
agreementwasreachedinJanuaryof 2020.
Throughthat agreement,calledthe firstphase of atrade agreement,Chinacommitted,among
otherthings,tobuy in2020 and 2021 an additional 200 billiondollarstothe amountit
normallybuysfromthe UnitedStates,basedon2017 levels.Momentarypeace seemedto
come,but the conflictworsenedwiththe arrival of the COVID-19pandemicpreciselyin
January2020.
But also,in2018, the conflictinthe technological fieldbetweenthese twocountries began
whenthe US beganto restrictthe sale of vital partsand components,suchassome chips,to
the Chinese companiesZTEand Huawei,whichare amongthe mostadvancedinthe worldin
5G telecommunicationstechnology.Thistechnologywill be the engineof the fourthindustrial
revolutionanditsdominance will allow the countrytohave an advantage inthatrevolution.
Thistechnologymakespossible forexampleautonomouscars,communicationbetween
robots,artificial intelligence,andisnotonlyusedinthe industrial fieldbutalsointhe military,
as indrones,forexample3
.
The conflictsituationbetweenthe USandChinaworsenedwiththe COVID-19pandemic.The
US accused ChinainFebruaryof thisyear that ithidand delayedinwarningof the onsetof the
pandemicandthe real magnitude of it.These accusationshave become more stridentasthe
pandemiccausesmore deathsandinfectionsinthe UnitedStatesandthe impactonits
economyisgreater.ButTrump's accusationsagainstChina alsohide the incompetence of his
governmentinfacingthispandemic,havingatfirstdeniedhow seriousitwas,evensayingthat
it wasa simple coldthat would disappearinthe summer.
Thus, Chinabecomesthe scapegoatforthe inefficiencyof the Trumpadministration,andwith
electionsloominginNovemberthisyear,itbecomesafavorite targetof attacks.But thingsget
complicatedwhen,addedtothe economicandtechnological conflict,the USaccusesChinaof
beinganincreasinglyauthoritarianregime,of repressingitsownpeople, of especially
repressingthe MuslimUighurpopulationinXinjiangprovince,of applyingthe law of national
securityinHong Kong,suppressingcriticismof the Chinese regime there,andeffectively
endingthe "one countrytwosystems"regime,andsoon.
Thishas beenaccompaniedbysanctionsagainstChinese companiesandleadersonwhatis
happeninginXinjiangandHongKong,the closure of the Chinese ConsulateinHouston,the
threatof closingthe operationsinthe USof TiktokandWeChat,two Chinese applications,and
3 Regarding the several aspects of the trade and technological disputeof China with US see the special
section of the South China MorningPost: https://www.scmp.com/topics/us-china-trade-war

3. the impositionof greaterrestrictionsonthe sale of US chips,parts,and technologythat
companieslike Huaweiuse toproduce theirdevices.
The implicationsof China'sconfrontationwiththe UnitedStatesinthe worldare enormous,
not onlybecause these twocountriesconstitute38% of the worldeconomy,theyare the two
largestcommercial powers,the twolargestinvestors,but because theirconflictcouldforce
the rest of the countriestotake sidesforone of them.The US campaignto preventother
countriesfrom source Huawei'stechnologyforthe installationof 5G infrastructure isthatcase.
Huawei iswithoutadoubtthe mostadvancedcompanyinthe worldin thisfieldtodayandthe
one that offersthe lowestcostforinstallation.But the US accusesit thatthe data itmay
collectwill endupinthe handsof the Chinese government,puttingthe securityof the
countriesatrisk,and pressuresthemnottoadopt the technologyof thatChinese company.
The US has alreadylobbiedthe UK,Australia,Japannotto adoptHuawei'stechnology.And
alreadythe US SecretaryMike PompeowasinApril 2019 in4 LatinAmericancountries,
includingPerusayingthe same thing4
.There isadangerthat countrieswill be forcedtochoose
betweenthe position of Chinaorthatof the UnitedStates,andif theydo so theywouldbe
affectedbysanctionsfromthe other(asboth countrieshave implied)5
.
Third, whatcouldbe the outcome of thisconflict?The conflictbetweenthe USand China
wouldcontinue asthe competitionbetweenthese twocountriesforeconomicand
technological dominance isreal,althoughTrumphasimposedapersonal nuance onitwiththe
virulence of hisattacksonChina.On the otherhand,it shouldbe notedthatChina,compared
to a fewyearsago, isnot afraidof conflict.
Chinaisanothercountry because itfeelsthatithasa superioreconomicandpolitical system,
whichhas allowedit,amongotherthings,tocontrol the pandemictoa large extent,ata lower
cost to itssocietyandits economy.Inaddition,ithasa leader,Xi Jinping,whohasa goal of
achievingthe "Chinese dream"of regainingthe place thatChinahasalwayshad,as a leading
and advancedcountrylike nootherinthe world.Inaddition,Chinaknowsthatitisincreasingly
influencingthe world.
Chinaisthe largestmarketforthe productsof more than half of countriesinthe world6
,itis
the largestinvestorandlenderinmanycountriesinAsia,Africa,andalsoinseveral countries
inLatin America.Andthistrendwill continue,since onlyChinaisina positiontoofferits
marketfor raw materials,which,forexample,iswhatdevelopingcountriesexportthe most,
and ithas financingforinvestmentsthatdevelopingcountriesalsoneed.
If Joe Bidenwinsthe elections, itislikelythatthe rhetoricof the confrontationbetweenChina
and the UnitedStateswill dropandtheywill begintonegotiate.Inaddition,inthe US there
manylarge companiesthatdo businessinChinaandthat thinkthat an escalationinthe
conflictdoesnotsuitthem.Chinaisimportanttothem, not justas a worldfactory,but
increasingly,asthe world'slargestconsumermarket.
4 See: https://www.france24.com/es/20190423-chile-guerra-comercial-eeuu-china-huawei
5 See: https://www.slideshare.net/carlosalbertoaquinorodriguez/relaciones-de-latinoamerica-
y-peru-con-china-postpandemia
6 See: https://asiapacifico-carlosaquino.blogspot.com/2020/05/china-es-el-mayor-socio-
comercial-de.html

4. Fourth, whatshouldbe the positionof Peru?ForPeru,Chinaandthe US are the twomain
tradingpartnersand twoof the largestinvestorsinthe country.Historical tieswiththese two
countries are alsoold,and since theyare the two largestworldpowers,there isaneedto
maintaingoodrelationswiththem.
That said, Perushouldnottake sidesforany of them.The decisions thatmustbe takingshould
have intoaccount the interestsof the countryandmaintainingfriendlyrelationswiththem.
Whenthe time comes,the costs andbenefitsof adopting5Gtechnologyhastobe weighed,
for example,looking alsoatthe issue of national security.Fortunately forPeru,perhaps
because isa country mediumorsmall insize,andgeographicallyfarfromthose powers,in
termsof security,thisissue shouldnotbe soimportantforany of them.
Furthermore,Peru'sneedintermsof, forexample,financing,issogreatthat it isopento the
participationof all countries.Thisisalsovital inthe sense thatPerushouldnotdependonany
particularcountry,seekingtomaintainabalancedrelationshipwithall.
Finally,we shouldalso considerseeingthe possibilityof havingajointpositionwithother
countriesinthe region,suchas those of the PacificAlliance.Amongsmall countriesitisbestto
try to have a commonpositiononissuesof international relevance.
August16, 2020
* CarlosAquinoisCoordinatorof the CenterforAsianStudies, SanMarcosNational University.
Is specialistin AsianEconomicsandPolitics.