China and the United States are in a cold war on a variety of fronts. Trade, of course, but also Taiwan, the South China Sea, "economic colonialism" and rising militarization are other major concerns.
The level of conflict could see significant escalation shortly into 2019. That's because U.S. President Donald Trump is considering an executive order declaring a national state of emergency over the risk of spying by China.
Trump could issue the order as early as January, according to Reuters. He has been mulling the move since May, but is now ratcheting up the pressure, and his administration is working on the exact wording, the news agency says, citing several sources.
The order would be aimed most directly at the Chinese telecom companies Huawei Technologies and ZTE, although almost certainly it wouldn't single them out. It wouldn't likely name China, either, but you wouldn't have to have a literature degree to read between the lines.
Instead, the executive order would tell the U.S. Commerce Department to block U.S. companies from buying equipment from foreign telecom companies that present a national security risk. One source said Commerce officials would interpret that as referring to the two Chinese telecoms.
Huawei and ZTE are both already personae non gratae with the U.S. state. Trump signed a bill back in August that bars the U.S. government from using equipment made by either company.
Such an order might be warranted. Although private companies, Huawei and ZTE both have very close ties to the Chinese military. Beijing would almost certainly require full cooperation, whenever it wanted and on whatever it wanted, in return for granting government contracts.
Both Huawei and ZTE have denied that their products are used as spyware. But it's a Catch-22 in the truest sense. They may be innocent. But if they were making spyware, it wouldn't be very good spyware if they advertised it as such!
Either way, Chinese officials aren't going to enjoy being labelled as spymasters. It would deposit fresh frost on the thawing in the trade war generated by the 90-day truce currently in effect.
The executive order would involve invoking the International Emergency Economic Powers Act, which allows the president to regulate commerce in response to an emergency threatening U.S. national security.
It seems the development of the 5G network is the greatest concern. Though the White House hasn't confirmed anything about the national-security order, it has stated that it's working "across government and with our allies and like-minded partners" to mitigate the risk in deploying 5G infrastructure and other telecom hardware.
A U.S. official said that when talk of the national-emergency law first emerged in May, Huawei and ZTE "in particular are of concern because of the kind of equipment they produce and their overall market penetration."
To be fair, China has its own list of industries that are off-limits. On December 25, Beijing published a national "negative list" of the sectors and industries that are shut or restricted to all investment -- foreign or domestic.
That came in addition to a "negative list" published in June by the commerce ministry that specified the sectors where foreigners in particular can and cannot invest. There are 48 areas where foreign investment is either restricted or prohibited.
The prohibited list contains value-added telecommunications services, as well as some obvious national-security risks, such as air-traffic control. But it also outlaws investment in stem-cell research, fishing, news agencies, tobacco retail and the operation of religious schools.
Trump would probably question any Chinese investment into evangelical colleges, given his voter base. But it seems to be hardly a national security risk. We'll see in the new year how else that might be construed to apply to Chinese trade.