China's 'tremendous' tech progress could see trade tensions rumble on: Bain & Co

Key Points
  • U.S. President Donald Trump on Saturday suggested he would reverse restrictions preventing American companies from selling their products to Chinese technology giant Huawei.
  • However, it's unclear that the weekend's negotiations will bring about a resolution to the superpowers' ongoing trade dispute, as it fails to address an underlying tech battle.
  • Henrik Naujoks of Bain & Company said the two countries are fighting for tech dominance.
Tech fight is an 'underlying theme' in US-China tensions: Bain & Co

President Donald Trump has suggested he would reverse restrictions preventing American companies from selling their products to Chinese technology giant Huawei — but it remains unclear if that agreement will bring about any near-term resolution to the year-long trade fight between the U.S. and China, according to management consultancy Bain & Company.

That's because Trump's apparent war against Chinese trade practices is really a war on technology — a space in which China is making "tremendous" progress, according to Henrik Naujoks, partner at the global management consultancy.

"The critical point is that, behind the trade negotiations, there is an underlying theme — which is technology — and the fight for dominance in the technology space," Naujoks told CNBC Monday at the World Economic Forum in Dalian, China.

As part of wider talks to curb an ongoing trade dispute with China, Trump agreed to remove some curbs on Huawei on Saturday, during his meeting with Chinese President Xi Jinping at the Group of 20 summit in Osaka, Japan.

The two leaders also agreed not to levy any further tariffs against each other's products as they sought to proceed with ongoing negotiations.

"I think we have to take this into account if we take a mid- to long-term view," Naujoks said. 

In that standoff, Huawei presents a "visible sign," Naujoks noted.

Washington has been locked in a high profile battle with Huawei in recent months over the alleged security risks it poses to the U.S. and its allies. Trump said Saturday that a final decision on the U.S.'s treatment of the telco giant would not come until the conclusion of negotiations. In the meantime, however, he said, the U.S. "will keep selling" to Huawei.

But Huawei is far from the only threat to the U.S.'s long-standing tech dominance, noted Naujoks.

From his base in Hong Kong, Naujoks said he has observed "tremendous progress" in Chinese technology companies over recent years, and now sees the same level of demand for China's digital operations as he does for Silicon Valley's.

"I'm personally amazed ... to see the level and pace of innovation," he said.