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Chinese police in front of the Canadian embassy in Beijing. Photo: Greg Baker/AFP/Getty Images

Just as signs emerged that China was softening on trade this week, Beijing seemed to ramp up its retaliation over the arrest of a top Chinese tech executive in Canada.

Between the lines: This confusing week in U.S.-China relations has seen signs of a major climbdown from China, over trade, in parallel with a major escalation. "The Chinese really are trying to keep Huawei and trade separate," says Axios contributor Bill Bishop.

On the one hand ...

  • Last night we learned that China has detained a second Canadian citizen, apparently in retaliation for Canada's arrest of Meng Wanzhou, CFO of Chinese telecom giant Huawei.
  • Meng was released on bail on Tuesday, but still faces extradition to the U.S. over fraud charges tied to U.S. sanctions on Iran. Her arrest infuriated Beijing, which has targeted its ire primarily at Canada, rather than the U.S.

On the other hand ...

  • The Wall Street Journal reports that China is "preparing to replace" its "Made in China 2025" initiative to dominate key high-tech sectors "with a new program promising greater access for foreign companies."
  • That follows news that China has begun to buy U.S. soybeans againand is reversing tariff hikes for U.S. autos. Trump is preparing to declare victory, telling Fox News today, "They're going to open the whole country. They want to please President Trump."

Bishop says he's hearing that the Chinese are indeed planning to make big concessions, because they understand Robert Lighthizer, the U.S. trade representative, won't "accept warmed-over promises."

"So as long as Trump keeps his resolve there may actually be a chance for some significant concessions on trade, moves that Xi can spin domestically as not due to U.S. pressure but as part of the deepening of reform."

Go deeper

Tracking the pandemic's unequal impact

Expand chart
Data: Morning Consult/Axios; Chart: Will Chase/Axios

The pandemic was bound to hit the most economically vulnerable among us the hardest. New polling data from Morning Consult, out this morning, shows the degree to which those difficulties were more concentrated among people of color.

Catch up quick: The Morning Consult/Axios Inequality Index has tracked the economic experience of adults in three wage groups since May 2020. We began publishing the findings in May of this year, and six months in, we’re slicing the data a little differently — and looking at inequality between ethnicities.

1 hour ago - Health

WHO says Omicron poses "very high" risk

World Health Organization Director-General Tedros Adhanom Ghebreyesus speaking in Geneva in October. Photo: Fabrice Coffrini/AFP via Getty Images

The World Health Organization said Monday in a new risk assessment that it believes the COVID-19 Omicron variant poses a "very high" risk to the globe because it may be more transmissible than other strains of the virus.

Why it matters: Though the WHO acknowledged there are still many uncertainties associated with the variant, the agency said it believes the likelihood of potential further spread of Omicron around the world is "high."

Battle for the soul of a new web

Illustration: Aïda Amer/Axios

A well-funded and intensely motivated chunk of tech's hive mind is finding common cause in a vast new project: rebuilding the web on a foundation of cryptocurrency and blockchain tech. They call it "Web3."

The big picture: Developers, investors and early adopters imagine a future in which the technologies that enable Bitcoin and Ethereum will break up the concentrated power today's tech giants wield and usher in a golden age of individual empowerment and entrepreneurial freedom.