America v China: a new kind of Cold War

America and China are fighting over far more than trade. If this growing rivalry is managed badly, both parties and many other countries stand to lose.

US President Donald Trump (L) and China's President Xi Jinping leave a business leaders event at the Great Hall of the People in Beijing Source: AFP

Watch the full story above.

In May this year, US President Donald Trump increased tariffs from 10 to 25 per cent on $US250 billion ($A360 billion) of imports from China. In response, Beijing imposed tariffs on $US60 billion worth of US products, escalating a trade war between the two countries.

But is the dispute between the superpowers about more than trade?

The US has accused Chinese companies of intellectual property theft through the use of patents, trademarks, and copyrights and designs without permission and criticised it for increasing its maritime presence in the South China Sea.

China has disputed the claims and says the US needs to respect its ‘sovereignty and dignity’ as its rise as an economic force continues.

The ongoing financial conflict and rising tensions have led to growing alarm the two countries are heading towards a cold war.

Like the US cold war against the Soviets that lasted from 1947 to 1991, could the US isolate China and cut it off? Economically the move is fraught with problems. As well as a number of its allies having its own arrangements with China, the US’s relationship with the country differs greatly to the one with the Soviets.

In the late 1980s, trade between the US and the Soviet Union was worth $2 billion a year. Today, it is estimated China and the US do that same amount per day. Both sides have a lot to lose.

As it stands, there are no scheduled trade talks between the two nations after the last round of tariff increases. China has hardened its rhetoric in response, vowing not to give in to the Trump administration’s demands.

With President Trump taking to Twitter to tell Americans the tariffs mean the ‘U.S. is taking in Billions!’, the tension between the two countries continues to ramp up, while resolution edges closer towards an impasse.

Copyright 2019, The Economist Newspaper Limited.  All rights reserved.