The Wall Street Journal reports that, on Friday, China “lashed out” at the United States after President Trump called for global tariffs on steel and aluminum. That’s sort of true. China’s Commerce Ministry declared itself “strongly opposed” to Trump’s proposed sanctions while trade associations representing China’s steel and aluminum industries brayed for Beijing to retaliate by blocking US farm products and high-end consumer goods.

Still, from my vantage, China’s reaction to Trump’s lurch toward protectionism has been remarkably subdued. Compared to the indignation Trump’s new trade policies elicited in Europe (where officials from the European Union have vowed to retaliate against the US by boycotting products ranging from bourbon to blue jeans), China’s criticisms seem downright civilized.

Beijing’s restraint reflects the fact that Trump’s tariffs on steel imports, though they play well with his US political base, won’t have much impact on the Chinese economy. China produces roughly the half the world’s steel, but most of it never leaves China. As the Journal notes, the country’s steel exports to the US are mainly low-grade products that pose no threat to America’s high-end manufacturers. In the first ten months of last year, Chinese steel accounted for a minuscule 2.2% of total US imports of the metal. In fact, US steel imports from China fell 30% in 2017 compared to the previous year.

Trump’s tariffs on aluminum may hurt a bit more, but not much. China also produces about half the world’s aluminum, and the US is one of its major export markets. But most analysts think China will manage to reroute aluminum to other countries exempt from Trump’s tariffs.

The real trade war is yet to come and it won’t be fought over metal. Executives in Silicon Valley are bracing for the fallout if Trump, as expected, slaps China with new sanctions for the theft of US intellectual property. In August, the Trump administration launched a broad investigation into Chinese trade practices under Section 301 of the 1974 US Trade Act. Trump will likely use the results of that investigation, which could be announced any day now, as justification to impose a host of new restrictions on Chinese trade and investment. The White House is said to be considering measures that extend far beyond sanctions including banning Chinese investors from acquiring an interest in US tech companies, expanding the powers of the Committee on Foreign Investment in the United States or even prohibiting US stock exchanges from listing Chinese companies.

Trump trade advisor Peter Navarro has predicted that, if threatened with such far reaching penalties, China will surrender rather than retaliate in order to preserve access to the US market. That’s a high stakes bet. China is far less dependent on trade with the US than it was a decade ago, while its own market has become crucial to the success of a wide range of US companies. In a full-fledged trade clash, China could inflict severe pain on US firms in sectors including tech, agriculture, autos and airlines.

The current clash over metal is political theater. But a broader trade conflict with China, especially if it focuses on trade in technology, has the potential to do serious economic damage in both nations—and could get very ugly very fast.

More China news below.

Technology and Innovation

To market, to market. Foxconn, Apple's most important assembly partner, won approval this week to list in Shanghai about a month. The approval took a speedy 36 days, which analysts say marks the country's eagerness to attract new economy firms to list on its markets, as well as billionaire founder Terry Gou's vision to expand beyond assembling PCs and phones for the world’s top electronic brands. Bloomberg  

The everything store. Chinese consumer tech giant Xiaomi plans to sell its smartphones in the United States by the end of this year or early 2019. The firm has evolved beyond its "Apple imitator" reputation to build a broader connected device platform by funding small companies that build smart products on its behalf and is widely tipped to IPO this year. In the meantime, here's a look inside their "everything store".  Fast Company 

Sour apple. Apple raised public ire this week an Apple customer in China alleged that an Apple employee hacked into his iCloud account and threatened to leak his data. Apple issued an official statement in local media saying that support staff should not be able to access customer data and that the employee has been fired. But local reports revealed the employee had submitted his resignation before the incident. TechNode 

Yes and no. China does not recognize Bitcoin and other digital currencies as legitimate forms of payment, central bank governor Zhou Xiaochuan, said this week. But the country is still open to the idea of a digital currency if it does not disrupt the financial system, he added. South China Morning Post 

Good neighbours. Airbnb has temporarily removed all listings and refunded all bookings in central Beijing up until March 30, after the conclusion of the ongoing China's National People's Congress in the city's Great Hall of the People. When asked about the exact request Airbnb likely received from authorities, the company declined to reveal details but said it undertook the actions to be "good neighbors." Business Insider 

Trade and Economy

Getting even. After U.S. President Donald Trump authorized 25% import tariffs on steel and 10% for aluminum, China's metals industry is urging Beijing to retaliate by targeting coal and other sectors that are key to Trump's support base. Some Chinese officials have also identified US soybeans as prime target for retaliation. Reuters 

Cut the froth. Shareholders who own more than 5% stakes in commercial banks through financial products such as insurance and asset management schemes have been ordered by China’s banking regulator to reduce their holdings within a year. The China Banking Regulatory Commission will target small and mid-tier banks’ shareholding structures and conduct on-site checks, as part of measures to control risk and reduce froth in China's financial sector. Reuters 

Open door policy. Meanwhile, the country's securities regulator has published draft rules allowing foreign financial institutions to obtain control of Chinese securities firms. Foreign ownership in a Chinese securities firm will rise to 51% from current 49%, and the cap will be removed three years after the new rules take effect. Caixin Global 

Tesla's Twitter lobby. Tesla's Elon Musk this week called on Trump via Twitter to challenge China's auto trade rules, which limit foreign ownership of Chinese ventures and imposes a 25% import duty on cars, ten times the 2.5% levy the U.S. puts on China-built vehicles. Trump did not respond to the tweet but cited in its his announcement of the new steel and aluminium tariffs instead. Caixin Global 

No go. UBS has been suspended by Hong Kong's securities regulator from serving as a sponsor on initial public offerings in Hong Kong for 18 months, for reasons both parties did not disclose. UBS said it is appealing the decision. Wall Street Journal 

In Case You Missed It

China's Annual Parliament Has Rarely Felt Like Such a Charade TIME

China Is Not a Garden-Variety Dictatorship The Atlantic

Kim Jong Un wants to be seen as Donald Trump’s equal. A meeting would do that. Washington Post

The flimsy finances behind China's miracle Reuters

Walling Off China Won’t Erase U.S. Trade Deficits Wall Street Journal

It is up to China to save the global trading system Financial Times

How Didi Chuxing plans to beat Uber in ride-hailing race Financial Times

We need a Toutiao for podcasts TechNode

Lies and statistics: How many of China's women are actually in the tech sector? TechNode

Politics and Policy

Positive gestures. Chinese President Xi Jinping has praised Donald Trump for his "positive gesture" to resolve the North Korea nuclear crisis, after Trump agreed to meet with North Korean Kim Jong-un. The Chinese and U.S. leader spoke via telephone this week, according to state media reports. South China Morning Post 

China's new ministry. China will create a new energy ministry to manage the country's vast oil, natural gas, coal and power sectors, as part of a central government's shake-up to make policymaking more efficient. Reuters 

It's official. China's controversial move to scrap presidential term limits and allow Xi Jinping to stay in office till 2023 will be officially rubberstamped tomorrow, after 3,000 National People's Congress delegates cast their votes in Beijing. At least two-thirds of the delegates vote for it to pass, but dissent is highly unlikely, given the power Xi has amassed within the Communist Party. Financial Times  

Summaries by Debbie Yong. @debyong
debbie.yong@timeinc.com

Find past issues, and sign up for other Fortune newsletters.