Trump said Xi Jinping abandoned a signature economic initiative because he told him it was insulting

trump chinaU.S. President Donald Trump, right, walks with Chinese President Xi Jinping during a welcome ceremony at the Great Hall of the people in Beijing, Thursday, Nov. 9, 2017.Associated Press/Andy Wong

  • President Donald Trump claimed victory in a key battle in his trade war with China, saying Chinese President Xi Jinping backed off a plan to dominate global tech after Trump called it 'insulting.'
  • China has stopped referring to the plan by name, which is significant, because Xi personally put his name behind the policy.
  • US companies and experts assess that China is using unfair business practices and stealing technology to displace the US as the world's tech superpower.
  • But it's unlikely China has actually abandoned its economic and military goal of having better tech than the US.
  • Visit Business Insider's homepage for more stories.

President Donald Trump claimed victory in a key battle in his trade war with China, saying that Chinese President Xi Jinping has backed down from a key economic push because Trump checked him on it.

In a wild, wide-ranging phone call to CNBC's "Squawk Box," Trump unloaded on China, Mexico, and his political opponents. In doing so, he may have humiliated Xi while discussing the death of one of his signature policies.

China in 2015 launched a plan to become the world's lone technological superpower by 2025 by subsidizing its businesses and acquiring cutting-edge intellectual properties. Xi Jinping personally put his name on this policy, called "Made in China 2025," reflecting how core it is to China's future plans.

But Trump took offense to the idea of China as the world's leader in tech.

"I want China to do well," Trump told "Squawk Box," but "I don't want them to do as well as us, I have to be honest with you."

"When you see 'China 25,' you don't see that anymore," he continued, referring to Made in China 2025.

"What they mean is that in 25, they're going to be dominant in 25," he said.

"I told President Xi, 'Listen, that's very insulting to me' and they took it off. They don't use 'China 2025' anymore because he understood exactly what I meant," Trump concluded.

China has indeed scrapped references to the ambitions plan starting around December 2018, during heated trade talks between Washington and Beijing.

Read more: China's Xi takes humiliating loss to US on trade and Huawei - but Trump could be getting played

In 2019 Chinese Premier Li Keqiang did not mention the plan at all in a speech to open the National People's Congress.

Made in China or stolen from America?

F-35 vs J-31Public Domain

US businesses in China have long accused the country of unfair practices, pointing to government subsidies and allegedly widespread theft of intellectual property from US and international firms.

"Most US companies are careful about what intellectual property they bring to China. Some simply do not bring their best intellectual property to China," Ken Jarrett, the former president of the American Chamber of Commerce in Shanghai, told Business Insider in December. "Others take steps to try to protect whatever intellectual property they bring here, though this is difficult in a country where intellectual property protection lags far behind the West."

"American companies have shared their intellectual property, but in many instances either as the price for market entry or under duress from joint venture partners," he continued.

According to Jarrett, this sentiment spiked in the aviation industry, where China seeks to displace the US as the world's dominant air power with a new generation of stealthy fighter jets, which experts say use stolen US technology.

The tech Cold War that could go hot

uss decaturUS Navy photo showing a confrontation between the USS Decatur (left) and PRC Warship 170 (right) in the South China Sea on Sunday, September 30, 2018.US Navy Photo

A recent report co-authored by former deputy defense secretary Robert Work reaches a similar conclusion: China has eroded the US's military edge with a mix of spying and government initatives.

"The Chinese People's Liberation Army has been patiently stalking the U.S. military for two decades," according to the report. "It has studied the preferred American way of war and devised a strategy to exploit its weaknesses and offset its strengths - particularly its military-technological strengths."

However it's extremely unlikely that Xi would have abandoned such a central economic and military ambition to avoid insulting Trump.

China has long downplayed the significance of Made in China 2025, and may now simply have backed off using that phrase that irritates Trump, rather than actually allowing the US to continue leading in technology.

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