The new Cold war is different than the one that went before. The previous one, political and military, lasting nearly four decades through the 1950s to the 1980s, was one where while no fighting actually took place between the two major protagonists, the Soviet Union and the United states, though the threat of a nuclear Armageddon hung over-head like the sword of Damocles (There were, however, proxy wars fought in many parts of the world, in which the sides were supported by one or the other superpower , but the principals themselves did not engage in direct conflict).This new version of the Cold War, also has two major protagonists, the US which is a repeat, and the new rising superpower, China. But it is not political and military, though both aspects are associated, but mainly commercial and fiscal. While nuclear ordnances are tucked away in their silos and armouries, trade and currency are the weapons that are being openly used. One hopes that things will never come to such pass that the bombs and missiles are summoned up to be deployed and eventually activated.

Almost from the start of his tenure President Donald Trump had four broad complaints about Chinese trade practices. First, he thought China hugely benefitted from filching American intellectual property accomplishments; secondly, Chinese laws forced technology transfer upon American firms investing in China; third, China treated American companies unequally; and finally, China accorded its own commercial entities competitive advantage, by a combination of large state subsidies and currency manipulation (more about the last point later).In reality , of course , the matter is more complex. Some of Mr trump's complaints have basis. It is also true that on many issues President Xi Jinping cannot take any corrective measures without significantly weakening himself and the Chinese Communist Party. China's benefits also accrue from US fiscal policy, interest rates, and the habits and predilections that drive the American consumer. At the same time he developed an instinctive liking for the muscular leadership qualities of China's Mr Xi. The latter's support was also key for the relations with North Korea, a cornerstone of Mr Trump's foreign policy. The capacity to intellectually delineate a coherent policy from these diverse, and at times contradictory elements, might have been too challenging for Mr Trump. The upshot is a somewhat bizarre China policy.

All wars, both trade and military, have unintended consequences. Incensed that, as he saw it, China had built up huge trade surpluses by, besides other factors, allegedly taking advantage of the naivite of his predecessors, Mr Trump has been imposing a series of tariffs on Chinese goods. The Chinese who do not buy as much from the US as the US does from China-which is why the problem has occurred in the first place, were unable to response in kind. Therefore, as in an asymmetric battle, it chose its own manner of response. When Mr Trump threatened a further 10 per cent increase on the balance of US $300 billion worth of imports from China, Beijing struck back by weaponizing its currency. It let the renminbi fall below the symbolic level of seven to the dollar. This was used as a stick to beat Mr Trump with as it would boost Chinese trade even more at the margin.

But even for China, it was cutting its nose to spite its face. For while a lift to exports was desirable, right now a modicum of stability was far more important to the Chinese. Their current focus is more on containing capital flight, which a weak renminbi would encourage, avoiding a domestic debt crisis and pursuing a rebalancing of the economy from export to consumption. So, it was clearly a political decision, a sprinkling of salt on Mr Trump's wounds. Already Mr Trump had been accusing China of currency manipulation. But the truth is in fact the depreciation has largely been market-driven, Beijing had even endeavoured to prop up the renminbi artificially high, and even the International Monetary Fund had assessed that China's exchange rate was in line with economic fundamentals. So ironically, Mr Trump was making a self- fulfilling prophecy.

Because White House decisions are often inexplicably erratic, and the President himself has been known to blow hot and cold, we do not know if the Chinese decision reined him in somewhat. For immediately, thereafter, Mr Trump delayed imposing some of the tariffs supposed to kick in on 1 September to 15 December. It is also possible that Mr Trump's decision might have been induced by the fact that US consumers are beginning to bear the crunch of the war in a way that it might have negative electoral ramifications for him. Also, with Christmas around the corner, Mr Trump was chary of inconveniencing his religious constituency with having to pay higher price for the traditional gifts. Indeed, a US report stated that if the US imposed the full 25 per cent of tariff as threatened earlier on the balance $ 300 worth of Chinese merchandise, then the US consumers would pay $ 4.4 billion more each year for clothing, $2.5 billion more from footwear and $ 3.7 billion more for toys. Also, there was impact on the stock market in mid-August. The Dow Jones fell 3 per cent and the market registered an 'inverted yield curve', a rare phenomenon when investors favour shorter bond yields to higher term bonds which are seen as fraught with uncertainties.

On the other hand, China, despite the overall slow-down of the economy, seemed not to suffer too much, as yet, from the trade war. Its export and import figures beat expectations, despite a definite and sharp decline in US-China trade. Over the last year, July to July, China's import of US goods fell by 19 per cent, and exports to the US fell 6.5 per cent, actually resulting in a trade surplus of $ 27 billion. Its rising trade to non-US market is also acting as a cushion. In fact, it is estimated that China's trade with Asia will increase 6 per cent, over the next year, mainly due to growing commerce with the ASEAN countries.

Nonetheless, other prosperous countries are feeling the pinch of the trade war. It is part of the reason Singapore, for instance, may be faced with a technical recession. Its economy shrank to 3.3 per cent this quarter compared to 3.8 percent in the first quarter of this year. Some countries, like Vietnam, benefitted by the relocation of industries from China, and made a whopping US $40 billion surplus in trade with the US. But it could not evade Mr Trump's hawk-eye, and he was trenchantly critical of the allegedly unfair advantage that he thought Vietnam had taken. To be kind to the weak is not one of the virtues he likes to be attributed to him.

But what may be lying at the heart of the trade war is perhaps not really trade. It is the 'constraining' of China by the US, which is something between 'containing' and 'restraining'. The late Andre Gunder Frank had warned just over a decade ago that what is to be really feared about the rise of China was actually America's response to it. Right now, when Mr Trump wants to make America 'great again', he assumes that the achievement of that goal would be woefully eroded if China were to become 'greater'.

For instance, for him, the fact that China, which built its first fast supercomputer with American microprocessors, now boasts of owning 206 of the world's fastest 500 supercomputers, while American number is 124 (a superiority allegedly owed to China's reverse engineering technology pertaining to US component parts) must be a bitter pill to swallow. China may be poised to overtake the US at some point in time in the foreseeable future in a way that the Soviet Union of the past never was. Mr Trump's 'America first' policy will lose considerable shine if the US were to come 'second' to China in the pecking order of the world's successful States, even if seemingly. He is unlikely to take such a prospect lightly.