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Illustration: Sarah Grillo/Axios

The escalation of the U.S.-China trade war into tit-for-tat arrests suggests a new stage of hostility in their rivalry for technological and economic dominance in the coming decades.

Why it matters: Everyone is a potential target in this brinkmanship as nerves fray, the global order erodes, and the old rules of international engagement are thrown out.

The backstory: In recent days, China has detained two Canadian citizens — Michael Kovrig and Michael Spavor — for "engaging in activities that endanger China’s national security," a Chinese foreign ministry spokesman said.

In interviews with Axios, U.S. experts interpreted the detentions as direct retaliation for an arguably provocative new American approach toward China.

  • In October, Belgian police arrested Yanjun Xu, a Chinese intelligence officer accused of economic espionage in the U.S., on the request of American authorities. He has already been extradited to the U.S.
  • On Dec. 1, Canadian authorities arrested Meng Wanzhou, CFO of Chinese phone giant Huawei, and daughter of the company's founder. Meng allegedly violated U.S. banking fraud laws and sanctions against Iran. The U.S. is seeking her extradition.

"By making a prominent example of Canada, Beijing is sending a message globally," Dennis Wilder, the National Security Council's senior director for East Asia under George W. Bush, tells Axios.

"Foreign businesses and other entities operating in China need to recognize that there are no more 'grey areas' in the Xi Jinping era when it comes to conforming to the letter of Chinese law. You might get away with it in the near term, but then you will be a convenient target when tensions with your home country escalate."
— Chris Johnson, Center for International and Strategic Studies

It's rare for the U.S. to seek and achieve the arrest of a senior official — commercial, military or political — from any other major country. While it's not surprising for a country to nominally file charges against the elite of a rival nation, it's highly unusual for detention and extradition to actually happen, largely because — as has occurred in this situation — it is hard to know where tit-for-tat would stop.

  • "It is a clear escalation of the economic competition between China and the United States and its allies. Tariffs are one thing, putting each other’s citizens in jail is another," says Michael Beckley, a professor at Tufts University.

The big picture: As we've reported before, the U.S. and China are racing to "reborder" the world for a new Cold War — in effect redividing the world into spheres of influence. The new brinkmanship could accelerate that dynamic.

Meanwhile, firms and governments on both sides are on high alert.

  • Cisco urged some employees to postpone all nonessential travel to China for fear that they may be targets of a counterstrike, NYT reports.
  • The government of British Columbia in Canada is rescheduling a trade trip to China for the same reason.
  • Zhang Ruimin, CEO of the Chinese appliance maker Haier, told Bloomberg Meng's arrest "has created a shadow in everyone’s hearts."

The risks are high on both sides, and there is also potential for spillover.

  • For the U.S., there is the threat to billions of dollars in U.S. business in China.
  • For China, "there was already an emerging Western coalition committed to getting tough with China economically," Beckley says. "The detentions will solidify this coalition and put whatever remaining support China had in Western business communities in jeopardy."
  • "This is tit-for-tat but it is also 'kill the chicken to scare the monkeys' — the monkeys meaning other smaller powers who the U.S. might ask to get involved in similar legal extraditions," says Wilder, the former NSC official.

Go deeper

Bill Clinton released from hospital following treatment for non-COVID infection

Photo: Tasos Katopodis/Getty Images/Bloomberg via Getty Images

Former President Bill Clinton was discharged from the University of California, Irvine Medical Center on Sunday, nearly a week after he was admitted for a non-COVID-related infection, according to his spokesperson Angel Ureña.

What they're saying: "His fever and white blood cell count are normalized and he will return home to New York to finish his course of antibiotics," wrote Dr. Alpesh Amin, who has been overseeing the team of doctors treating Clinton. "On behalf of everyone at UC Irvine Medical Center, we were honored to have treated him and will continue to monitor his progress."

Worth noting: Clinton had a urinary tract infection that spread to his bloodstream, per CNN.

  • The California-based medical team had been administering IV antibiotics and fluids, and was in constant communication with Clinton's New York team, including his cardiologist, according to the former president's physicians.
  • President Biden spoke by phone with Clinton on Friday to see how he was doing, and the catch-up included a discussion of recent politics.
5 hours ago - Technology

TikTok drives new nostalgia economy

Illustration: Shoshana Gordon/Axios

Older brands, trends and technologies are making a comeback as younger consumers desperately chase slower, less chaotic times.

The big picture: TikTok's algorithm makes it easy for flashback items to resurface and quickly go viral both on its platform and eventually on other social networks.

Updated 8 hours ago - World

Reports: Up to 17 U.S. missionaries kidnapped in Haiti

Haitian soldiers guard the public prosecutor's office in Port-au-Prince earlier this month. Photo: Richard Pierrin/AFP via Getty Images

Children were among up to 17 American Christian missionaries and their relatives kidnapped by a gang in Haiti on Saturday, the New York Times first reported.

Details: The missionaries had just left an orphanage and were traveling by bus to the airport to "drop off some members" and were due to travel to another destination when the gang struck in Port-au-Prince, Haitian security officials said, per the NYT.