The stability that was expected from the signing of the Phase One trade deal is now a distant reality in the wake of COVID-19. The U.S. and China are entangled in blame games and trade disputes, setting the stage for further, more devastating escalation.

With China-U.S. relations already on a downward trajectory, things are likely to get worse. The world is entering a period of heightened risk in the next six months.

A misguided analysis of history raises the potential for a repeat of a negative outcome. The world is not the same as it was, and the policy approach that was used against the USSR will not work for China.

In recent years, fears of a new cold war between the United States and China have been proliferating. But the tensions between the two powers would be better described as a “cool war,” characterized not by old-fashioned spheres of interest, proxy wars, and the threat of “mutually assured destruction,” but by an unprecedented combination of wide-ranging competition and deep interconnection.

First of all, it’s not clear that such a confrontation even exists. Science and engineering cooperation between China and the U.S. has been growing rapidly over the last two decades.

The Trump administration's attempts to decouple China-U.S. economic ties equates to dangerous market distortion – driving unnecessary dislocation, inefficiencies and global trade disruption. Such measures will harm both Chinese and U.S. economies in the near- and longer-term and contribute to a less open and more divided world.

Over the next decade, new perspectives on sovereignty, human rights, and intellectual property will revise current legal norms. We are not in a ‘Cold War,’ but Beijing is courting US allies away from liberal democracy with investment, as globalization and its growing pains prove unpopular and spread populist politics across the globe.

5G technology has the potential to spark a new technological revolution, while recharging Europe’s ailing tech companies. But if the EU joins the US in waging “Tech Cold War” on China and Chinese companies like Huawei, Europe risks losing out on the advantages of this new generation of technology.

The new cold war against China will be won not through ideology or even weaponry, but through the deployment of economic incentives to wage a geopolitical struggle.

A technological cold-war seems to have arisen alongside the China-US trade war, but this may not be a sustainable long-term strategy. If this continues, wagers of the tech cold war can expect to face consequences.