Chinese Vice Premier Liu He

China and the United States will have in-depth negotiations on economic and trade issues during Vice Premier Liu He’s visit to Washington on January 30 and 31, China’s Ministry of Commerce (MOFCOM) said. An advance team, led by Commerce Vice Minister Wang Shouwen and Finance Vice Minister Liao Min, arrived in Washington to prepare for the talks. Eleanor Olcott, China Policy Analyst with research firm TS Lombard, said rhetoric from both Beijing and Washington had been “less belligerent and more cordial in the run-up to these talks” with officials “keenly expressing optimism for the negotiations to culminate in a deal”.

Some analysts predict that a trade deal would be reached by the March 1 deadline, but add that this is not the crux of the matter, as competition in technology between China and the U.S. is much more important that the trade imbalance. They argue that as the tariff war draws to a close, the technology war has only just begun. Some predict a new long-lasting “cold war” between the two countries, as both U.S. Republicans and Democrats agree on the need to “get tough” on China.

Two U.S. business groups have told American trade negotiators that Beijing is moving ahead with its hi-tech ambitions as outlined in the Made in China 2025 strategy. In a joint report, the American Chamber of Commerce in China and the U.S. Chamber of Commerce said they had identified more than 100 policies in 24 provinces and cities that “either set targets, create rules, or provide normative guidance” that directly institute or are related to Made in China 2025, a key initiative backed by Chinese President Xi Jinping to build up technology sectors including robotics, semiconductors, AI and aviation.

“Developing and owning indigenous innovation and intellectual property is a primary goal” and regional governments have been actively developing and promoting their own plans in line with Made in China 2025 with state support, the U.S. Chamber of Commerce said. “It suggests a deep, concerted, and continuing effort among sub-central authorities to carry out and take advantage of incentives tied to the Made in China 2025 plan. Any solution must address systemic challenges at all levels of the Chinese government.”

President Xi Jinping warned officials at a Communist Party study session in Beijing to take all the necessary precautionary steps and be vigilant about any risks that could jeopardize China’s stability and reforms. Xi told Provincial Party Secretaries, Governors, Ministers and Generals that although China’s economy was generally performing well, they must not let their guard down and they should be aware of potential turbulence and disruption ahead. He told his audience to stay alert for any “black swan”, or unforeseen events, and to take steps to prevent “grey rhinos”, the predictable but ignored threats.