At the beginning of 2019 when people thought—meh, this trade war between China and the US craze will stop in a few months. One can’t win a trade war! President Trump will make that out and come to his senses.

Wrong.

Perhaps one can’t win a trade war. There will be hurt from decoupling. However, decoupling is occurring. Just take a gander at what the Pentagon and the Department of Defense thinks about China in the current year’s Worldwide Threat Assessment and you already know where this is going. Maybe even Joe Biden can’t set aside China now.

Observe: A Big Mistake China’s Elites Make In Fighting The Trade War – Forbes

To a few, the trade war is a “lose-lose” state of affairs. It has by now spoiled relations between the two countries. “The feud not only has precipitated an economic decoupling of the United States and China, but also has pushed the overall bilateral relationship to its lowest point in half century,” writes Professor Xiangfeng Yang in an academic article reviewed last week by Forbes contributor Panos Mourdoukoutas.

It’s that decoupling of the world’s No. 1 and No. 2 economies that actually makes the Chinese worried and distrustful about future relations between Washington and Beijing, although a trade deal is reached. “Any deal will be just a temporary cease-fire in a long-lasting economic war,” Yang adds.

That’s the response in the markets too.

“Cease-fires will definitely be temporary,” says Daniel Ahn, a former State Department official under President Obama and now a chief economist for BNP Paribas in New York.

According to his forecasts, sub-6 percent growth will occur in China this year and next. That’s the psychological growth number put by Beijing. Anything lesser than six means the central planners are attaining things wrong.

Ahn has China developing at 5.9 percent this year and 5.6 percent next year. Other banks, such as Nomura and Barclays, have China developing somewhere between 5 percent and 5.5 percent in 2020.

“We’re telling our clients that regardless of Trump’s reelection, the underlying tensions between the U.S. and China are not going away. You may get a shift in rhetoric, or tactics might change, but decoupling is already underway. This is a ‘deep state’ phenomenon,” he said, half-chuckling.

BNP has the Chinese yuan declining to 7.35. It is now trading at 7.11.

Prior to this week, famous currency short-seller George Soros praised Trump in an op-ed in the WSJ for his trade war with China. Obviously. Soros has been shorting the yuan ineffectively for a year. At present that it is over 7, he is getting profit. If BNP’s approach on the yuan is right, Soros will get even more.

Rumors on the Street of China dumping its Treasury bond holdings is part of its retaliatory measures in the trade war are greatly exaggerated. China has over $3 trillion in its central bank reserves. Most of that is in Treasurys. There is no other asset left in the market that has Treasury-sized liquidity and yield. Not in Europe. Not in Japan. Australia and Canada are too small. “They need to diversify out of Treasurys and they are, but weaponizing their holdings, I think, is far-fetched,” says Ahn.

The latest variable in the trade war is Hong Kong political unrest. China’s One Country, Two Systems policy is in jeopardy as tens of thousands of protesters call for a more independent Hong Kong.

A Trump-less White House could be moved to act against China should protests continue into 2021. Wheels are already in motion, with at least two bills written up by Senator Marco Rubio, and others by both parties, ready to strip Hong Kong of its special trading status with the U.S.

On the tech front, Washington seems committed to making life more difficult for Chinese investors, especially firms investing in new technologies, be it in the life sciences, financial services, or defense related tech.

So far, U.S. companies have told the U.S. China Business Council that they do not want to leave China. Only 3 percent of survey respondents this year said they were considering relocating to the U.S. and under 10 percent said they were sourcing supply elsewhere due to tariffs.

Either companies are not aligned with the market’s thinking of a prolonged trade war, with permanent tariffs or the mark-up for China goods is so great, that companies can afford the reduced profit margin.

That could all change after the new tariffs that went into effect on September 1, after the survey was conducted. A new dose of tariffs will hit consumer goods on December 15.

In the meantime, Washington’s goal seems to be to make investing in China as risky a proposition as investing in Mexico or India. When that happens, China will be just another market; an important one and perhaps even a highly desirable one. But for many manufactured goods, it will no longer be the only one.