The coming trade friction and quite possibly geopolitical tensions between the US and China should be taken seriously by market players. In our opinion, this risk has increased.
As a prelude for what to expect, look no further than what is happening today between the US and Mexico, under the new Trump administration. The rhetoric and ill will generated by President Trump towards the southern neighbor of the US is pretty nasty. Thus I would expect that the rhetoric and risk of increased friction to be much greater with China.
In terms of any military standoff, the US has a much greater advantage than the Chinese. The danger here is a confrontation might happen since the Chinese do not want to loose face. Other possibilities include that the US will have closer ties with Taiwan to put pressure on China to withdraw from the man-made island in the South China Sea.
A higher probability is the chance of a trade war or tariffs. China is an easier target for Trump than Mexico. The new Trade Secretary of the US, Peter Navarro, is a hawk on China.
Investment wise, I would be very cautious at this point until this plays out.