It's a conflict that we aren't getting any better at resolving.

试着把it's和that去掉，看看句子的语义是否完整或合理。

We aren't getting any better at resolving a conflict. 我们没能更好地解决一个矛盾。——什么矛盾？语义不完整，不是强调句。

按定语从句翻译，这是一个我们没能更好地解决的矛盾。语义完整，合理。it指 whether we want a modern city or a traditional one这种矛盾。