US tech focus suggests risk of broader confrontation

Last week's US trade and investment measures targeting China focused on technology. China will respond, but we expect it to remain relatively restrained, and - barring major escalation - the macroeconomic damage in 2018-19 should remain manageable.

However, the technology focus of the US measures suggests the risk of a broader economic and technological confrontation.

Planned US tariffs and investment restrictions are meant to hit China in response to what the United States sees as unfair technology and intellectual property practices. The US aims to impose tariffs on $50 billion worth of Chinese exports to the US, with a focus on the advanced sectors that China has previously identified as ones in which it wants to become a global leader.