The next phase, including the world’s most valuable products, is harder

China can’t make chips as small and fast as the United States can.

Its cars are sold mostly at home.

Its manufacturing prowess is built on the back of engineering and expertise from the West.

Both Apple iPhone and Huawei Mate 10 are assembled in Chinese factories. Both rely on pieces from outside Chine.

The most intricate and expensive technology in the Huawei phone, the motherboard, is composed chips from American, SouthKorean and Taiwanese companies.

Many of these companies are so advanced that they don’t even manufacture the chips. Instead they send their complex designs to foundries in Asia to manufacture. But even in this step of the production, most companies in China are shut out.

Unless China can catch up, it will remain vulnerable.

China knows it has a problem.

It’s investing heavily in electric cars, semiconductors and mobile technology, part of a major industrial policy.

And the trade war also has hardened China’s resolve.

“The initial result of the trade was has made China appear to be weaker,” said Liu Rui, and economics professor at Renmin University in Beijing. “But it is precisely this weaker position that has awakened China, forcing us to change our approach.”