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Is the U.S. heading towards a trade war with China?

Nicole Goodkind
Nicole Goodkind
Daily Ticker

China is allegedly pushing its banks to drop their IBM servers and use Chinese brands only. This new allegation comes after the United States accused five Chinese military officials of cyber-espionage.

Bloomberg reported this morning that Chinese governmental agencies are investigating whether Chinese bank’s reliance on IBM servers puts their country’s financial security at risk and that the results of this investigation will go to Chinese President Xi Jinping. IBM, however, denies the allegations, “IBM is not aware of any Chinese government policy recommending against the use of IBM servers within the country's banking industry," spokesperson Ian Colley told Reuters. “IBM is a trusted partner in China and has been for more than 30 years."

Related: China may have hacked your company, too

On Monday China accused the United States of internet-surveillance and conducting large-scale cyber attacks against the Chinese government.

So what does this all mean for the fragile economic relationship between The United States and China?

“I fear that we’re starting to get into a bit of a tit-for-tat and we’re probably going to come back with something against the Chinese, maybe some sanctions, maybe it’s going to amount to a bit of a trade war with China which is not going to be good for anybody,” says Yahoo Finance editor-in-chief Aaron Task.

It’s not just IBM. Earlier this month China excluded Windows 8 from a purchase of energy-efficient computers claiming it was, “a move to ensure computer security.”

Related: China's GDP slows: Time to panic?

“This is how geopolitics gets played out in economics and the Chinese very much feel like they no longer need to bow down to the United States of America,” says Task. “They’re going to stand up tall and strong for their own rights and if we push on them they’re going to push back. Hopefully this is the end of it and it doesn’t go any further but I fear that it may go further.”

These geopolitical issues are factoring into U.S. performance. Just in IT China represents a $300 billion market over the next five years, according to Gardner. If relationships between the countries cool it will certainly hurt companies’ bottom lines.

Edward Snowden is set to appear in his first American TV interview on Wednesday, possible stoking the flames of the fire.

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