The common characterisation of US-China relations as a new Cold War is wrong. Instead, the most recent spike in tensions between the two countries – the second time this has happened since US President Donald Trump took office in 2016 – is primarily motivated by political considerations ahead of the November US presidential election. Therefore tensions may well escalate leading up to November, but there will then be mileage in striking a deal and defusing those tensions after the next Administration takes office. China and the US are so closely linked in economic terms that a serious worsening of ties would be costly for both countries, at a time when neither can afford further negative economic shocks. Hence, a proxy conflict looks more likely with Hong Kong clearly in the sights. If the US pulls the rug from under Hong Kong, we would expect China to step in with massive support and thereby deepen ties with Hong Kong at the expense of Hong Kong’s ties with the US. We believe that the US obsession with China is partly attributable to fear, given that China’s economy is on track to be nearly three times that of the US by 2050. China is moving inexorably in the direction of replacing the US as the global economic and financial hegemon. The best play for the US is not to try to prevent China’s rise, but to focus on America’s own problems and how to overcome them. This is what China is doing as reflected in the government’s clearly defined dual policy focus on structural economic reforms and attaining technological independence from the US. China biggest challenge is to overcome eye watering mistrust in Western economies. To address this problem, which is not entirely under Chinese control, China can be relied upon to continue to act in a responsible manner in global relations. On balance, this means that China should continue to be a positive factor for EM, regardless of what happens with US-China relations.