President Donald Trump claimed victory in a key battle in his trade war with China, saying Chinese President Xi Jinping backed off a plan to dominate global tech after Trump called it "insulting."

China has stopped referring to the plan by name, which is significant because Xi personally put his name behind the policy.

US companies and experts have assessed that China is using unfair business practices and stealing technology to displace the US as the world's tech superpower.

But it's unlikely China has actually abandoned its economic and military goal of having better tech than the US.

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President Donald Trump claimed victory in a key battle in his trade war with China, saying that Chinese President Xi Jinping has backed down from a key economic push because Trump checked him on it.

In a wild phone call to CNBC's "Squawk Box" that covered many topics, Trump unloaded on China, Mexico, and his political opponents. In doing so, he may have humiliated Xi while discussing the death of one of his signature policies.

China in 2015 launched a plan to become the world's lone technological superpower by 2025 by subsidizing its businesses and acquiring cutting-edge intellectual properties. Xi personally put his name on this policy, called "Made in China 2025," reflecting how core it is to China's future plans.

But Trump took offense to the idea of China as the world's leader in tech.

"I want China to do well," Trump told "Squawk Box," but "I don't want them to do as well as us; I have to be honest with you."

"When you see 'China '25,' you don't see that anymore," he added, referring to Made in China 2025.

"What they mean is that in '25, they're going to be dominant in '25," he said.

"I told President Xi, 'Listen, that's very insulting to me,' and they took it off. They don't use 'China 2025' anymore because he understood exactly what I meant," Trump said.

China in December 2018 started scrapping references to the ambitious plan during heated trade talks between Washington and Beijing.

Read more: China's Xi takes humiliating loss to US on trade and Huawei — but Trump could be getting played

In 2019, Chinese Premier Li Keqiang did not mention the plan at all in a speech to open the National People's Congress.

Made in China or stolen from America?

China may have stolen US technology from the F-35 fighter-jet program to build its own similar-looking J-31. Public Domain

US businesses in China have long accused the country of unfair practices, pointing to government subsidies and allegations of widespread theft of intellectual property from US and international firms.

"Most US companies are careful about what intellectual property they bring to China. Some simply do not bring their best intellectual property to China," Ken Jarrett, the former president of the American Chamber of Commerce in Shanghai, told Business Insider in December. "Others take steps to try to protect whatever intellectual property they bring here, though this is difficult in a country where intellectual-property protection lags far behind the West."



"American companies have shared their intellectual property, but in many instances either as the price for market entry or under duress from joint venture partners," he added.

According to Jarrett, this sentiment spiked in the aviation industry, where China seeks to displace the US as the world's dominant air power with a new generation of stealthy fighter jets, which experts say use stolen US technology.

The tech Cold War that could go hot

A confrontation between the USS Decatur, left, and PRC Warship 170 in the South China Sea on September 30, 2018. US Navy Photo

A recent report coauthored by former Deputy Defense Secretary Robert Work reached a similar conclusion: China has eroded the US's military edge with a mix of spying and government initiatives.

"The Chinese People's Liberation Army has been patiently stalking the U.S. military for two decades," the report said. "It has studied the preferred American way of war and devised a strategy to exploit its weaknesses and offset its strengths — particularly its military-technological strengths."

However, it's extremely unlikely that Xi would have abandoned such a central economic and military ambition to avoid insulting Trump.

China has long downplayed the significance of Made in China 2025 and may now have simply backed off using the phrase that irritates Trump, rather than actually allowing the US to continue being the leader in technology.