In 1792, Lord Macartney was sent by King George III to establish trade relations with the Chinese Emperor, Qianlong. But after a lengthy journey and the presentation of lavish gifts, he was dismissed with a message that China had no need for foreign manufactures, reflecting the Emperor’s preference for tribute rather than partnership.

Macartney refused to kow-tow and was sent packing, but China’s smug isolationism signalled the beginning of the end for the Qing Dynasty. Britain — on the other side of the world — took advantage, began to traffic opioids into the Chinese market, and joined in a Western carve-up. So began China’s century of humiliation.

Are we now seeing history repeat itself, but with a new American emperor making the same mistakes? In the last 24 hours, Donald Trump has announced a 90-day pause on tariffs of up to 10%, but has immediately hiked tariffs on China to 125%. As Treasury Secretary Scott Bessent warned yesterday: “I’m not calling it a trade war, but I’m saying that China has escalated,” adding that Beijing was the “biggest source” of trade issues for the United States and the rest of the world.

The US is running a $295 billion trade deficit with China, so it’s no wonder that Trump wants to rebalance the equation. However, it’s worth noting that the situation is not solely Beijing’s fault. The US has steadily reduced its industrial base over several decades, relying more on cheap imports while accumulating significant national debt. The US is the world’s largest debtor nation, with much of its debt held by foreign entities, including financial institutions in major trading countries such as Japan, China and the UK. While China also carries substantial foreign debt, it plays a significant role as a global creditor, particularly through investments in developing nations such as Belarus, Cambodia, Bangladesh, and Ethiopia.

Though China’s economic miracle is often symbolised by the skyscrapers of Shanghai and Shenzhen, its growth was built on low-wage, low-skill manufacturing. Rapid modernisation has created a shortage of highly-educated workers to support the transition to a high-tech economy. Meanwhile, the housing-market collapse has reduced disposable income, hindering domestic consumption. In contrast, US household spending in 2023 reached $19 trillion — three times that of China, with only a third of its population.

The tensions in the current tariff strategy are exemplified by Tesla, which has half of its production in China. Despite a £200 million battery plant in Shanghai and a $2 billion Gigafactory, Tesla’s sales in China are down 11%, while Chinese-made BYD vehicles are outselling it four-to-one. If US tariffs increase, BYD and other Chinese car manufacturers may push into Europe, retailing at half the cost of a Tesla. Similarly, Apple, despite shifting some production to India, remains heavily tied to China, where its Foxconn factory employs 300,000 people.

As China announces tit-for-tat increases on tariffs on American goods, it could easily target agricultural produce, simultaneously attacking Trump’s base. As part of its post-Covid self-sufficiency initiative, it has already cut pork imports by a third from the West (shifting to Russian supplies), and is restricting beef import licenses from the US, so there might be less room for further restrictions. Rare earths, on the other hand, are a straightforward advantage for China. Over the years, the country has built up its processing capacity and now deals with 70-80% of the world’s mined rare earth deposits, which are fundamental to its advanced technology industries and high-tech consumer products.

The current trade brinksmanship threatens to expose the shallow foundations of both powerbrokers, so the question is: who blinks first? If the past tells us anything, it is that the Western domination of China in the 19th century resulted in the annexation of Hong Kong by the British Empire. Who knows, it might be a similar, small-island outpost like Taiwan — a relative bystander in the geopolitical balancing act — which will determine the direction of history.

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Austin Williams is the author of “China’s Urban Revolution” and director of the Future Cities Project. He is course leader at Kingston School of Art.

Future_Cities

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