The rust belt is being sold a lie – China has funded US spending

US fruit products at a supermarket in Beijing, China.

First it was Europe, Canada and Mexico. Now Donald Trump’s focus has switched to the real target for his trade war: China. Wilbur Ross, the US commerce secretary, is in Beijing for talks aimed at reducing America’s $30bn-a month-deficit. Exports of Chinese high-tech manufactured goods are top of Ross’s list.

Make no mistake: Trump’s strategy is a sign of weakness not strength. Countries that resort to protectionism normally do so for one of two reasons: to assist the development process when they are on the way up and to slow the pace of decline when they are in relative decline.

In America’s case, it is certainly the latter. Hefty tariffs of 40% on imported manufactured goods helped the US to build up its industrial power in the second half of the 19th century. By 1945, the US was by far the most powerful economy in the world, and supported trade liberalisation because it needed to find overseas markets for its goods.

Protectionist tendencies never really went away. They resurfaced in the 1980s, when there was a panic about the threat posed by Japan. And behind the Trumpian bombast is a deep-seated fear that America’s hegemony is threatened by China’s rapid economic transformation over the past 40 years.

If the struggle between the US and China merely leads to a trade war, the world can consider itself lucky. Historically, when a rising power challenges the existing top dog it has more often than not led to bloodshed.

That’s not remotely in prospect currently. In terms of the measures that count – technological sophistication, military clout and income per head of population – the US remains streets ahead. But China has been catching up fast. The first phase of its development, moving people out of the fields and into low-cost manufacturing, is over. A second phase, in which investment in higher education allows the economy to compete in sectors hitherto the preserve of the developed west, is well under way. China is not remotely interested in an international division of labour where the west does the clever stuff and it is left with the cheap end of the market.

Trump’s action sums up what Rebecca and Jack Harding are talking about in…

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