This is the main game for Trump. Beyond the narrative of returning jobs to the blue-collar heartland through 10 to 25 per cent tariffs on products imported from China, he believes the strategy of ratcheting up tariffs will force China to heel over what he sees as the rampant theft of US innovation. The alleged theft occurs in two ways, through industrial espionage - a $US200 billion plan for an F-35 strike fighter jet was stolen in 2009 and a similar model later turned up in Beijing - or by poaching talent and ideas through mandatory joint Chinese-foreign ownership of companies operating in China. Lee Branstetter, senior fellow at the Peterson Institute for International Economics and professor of economics and public policy at Carnegie Mellon University, says China has operated with impunity for years. "But the broad-based tariffs the Trump administration has imposed are a very poor way of dealing with the problem, tariffs hurt US consumers who buy Chinese products or businesses using Chinese inputs [and] punish Chinese firms that have never engaged in these inappropriate behaviours," he says. "It's a cure that's worse than the disease it is trying to remedy."

That sentiment is echoed in Australia, where modelling has found a best-case scenario from the trade fallout will cost Australia $36 billion and raise costs for consumers - particularly for tech products such as smartphones - over the next five years. PwC chief economist Jeremy Thorpe is one of many aghast at Trump's justification for the tariffs, the threat it poses to the dominant world order and his disregard for any flow-on effects. "Tariffs do not directly address IP issues and so it is a bit disingenuous for the US administration to clothe its tariff increases in the righteous cloak of protecting intellectual property," he says. Trade Minister Simon Birmingham in his Parliament House office. Credit:Alex Ellinghausen Birmingham, who flew into the middle of the conflict two weeks ago at the G20 in Argentina, has urged both countries to avoid "digging an ever-deeper hole".

"Neither major player comes to this dispute with purity, with arguments over intellectual property, distorting subsidies, unilateral tariffs action and World Trade Organisation disruption all having degrees of validity," he says. "There’s absolutely scope to improve World Trade Organisation rules and how those processes work through more transparency and better dispute resolution, but I’d encourage everyone to keep engaged with the system." His Coalition colleague Trevor Evans, an economist and member of the parliamentary economics committee, is more hawkish. He warns Trump's current tariffs are likely to be a precursor to a much wider dispute. “It’s preparing the ground for the mainstream Americans to acquaint themselves with trade," he says. "Intellectual property and copyright are hard to get your head around.” With China, tensions over the theft of ideas are not just about market power, he says, because of the threat that the Chinese state could take over a company and therefore commercial intelligence.

"If the US-China trade dispute leads to a reckoning about how we put limits on sovereignty, then that is in the long-term interests of Australia," Evans says. Peter Jennings, a former defence official who now heads the Australian Strategic Policy Institute in Canberra, says China has been as active in Australia as it has been in the US in attempting to steal intellectual property. One example was the cyber hacking of the Australian Bureau of Meteorology in 2015. "People often say 'what is the economic value of that?'," he says. "It is easily understandable if you think of the value to China of being able to manage its food crops more effectively, then good quality meteorology is a major part of that." China said it was "opposed to all forms of cyber attacks" and denied the allegation, but was also accused two years later of targeting the Australian National University - a claim it has yet to respond to publicly.

"This was not just a bunch of Chinese kids in a garage somewhere," says Jennings. "They are interested in wholesale intellectual property theft against any area of hard science research that is occurring inside the ANU. "This is stuff that China can mine for its own economic purposes. A billboard showing Chinese President Xi Jinping on a street in Beijing. Credit:AP "It tends to happen beneath a veil. I just think that Western governments are now sick to death of having this theft go on at the same time as we are attempting to have cordial relations with China."

The US Commission on the Theft of American Intellectual Property labelled China “the world's principal intellectual property infringer". "The theft of American IP is not just the 'greatest transfer of wealth in human history', as General Keith Alexander once put it; IP theft undercuts the primary competitive advantage of American business - the capacity for innovation," it said. Loading That assessment was ramped up this year by US trade representative Robert Lighthizer's investigation, which warned China's regime forced US companies to either cede substantial control over their valuable technologies or be closed out of one of the world’s largest and fastest-growing economies. Foreign car companies seeking to assemble cars in China have had to do so through a 50 per cent joint venture with an existing Chinese firm, leaving them commercially exposed, while airlines are also prime targets - an environment where "technology can easily leak out the back door", according to Branstetter.

Here business executives are not only motivated by maximising profits but also keeping the government happy, so there are incentives to share stolen intellectual property. "Very few US or foreign firms have been willing to come forward with explicit allegations of being pressured into transferring their intellectual property," says Branstetter. "China is a big market and if you publicly criticise the government or state-owned entities you are probably going to be blacklisted." It's an area of particular sensitivity for the Chinese, says Branstetter - because it reminds the world that they are not like other capitalist economies. That looks set to change under the "Made in China 2025" plan, where President Xi Jinping has laid out a path to transform China from a low-wage manufacturing hub to a technological superpower - with a focus on robotics, autonomous cars, aviation and biotech.

"It's almost an attack priority list for Chinese intelligence," says Jennings. Monash University business law lecturer Alice De Jonge says foreign investors have long taken advantage of cheap labour costs in China and that it was now balancing the books as it caught up to the developed world. "From the Chinese perspective that seems fair enough," she says. "From the US perspective they want to retain the rights in American hands so they get the royalties going back to America. A visitor takes a photo of a display of robotic military technology at an exhibition highlighting China's achievements under five years of leadership by Chinese President Xi Jinping. Credit:AP "China is simply providing support for its own research and development and for its own companies, which are increasingly of world standard," she says.

"Occasionally those companies might play fast and loose with those rules and you might blame the Chinese government for turning a blind eye - but when foreigners have launched legal action, they have been successful."