Protectionist sentiments are intensifying in the US where the rhetoric of the incoming administration blames China for America’s large trade deficits and job losses. In contrast, most policymakers in Europe have advocated a more considered position to placate populist feelings.

That both the US and to a lesser extent the EU have such deficits provides some credibility for the concerns but the logic is flawed. Aside from their bilateral deficits, there are differences between the two because the EU is now generating large overall trade surpluses while America’s persistent overall deficits have triggered bouts of insecurity in which China has become an easy target. The EU story is also more complicated because some members have significant bilateral deficits with China but others — such as Germany — are running large surpluses. This explains why anti-China sentiment in the EU is more diffuse.

There is no direct link between the emergence of America’s overall trade deficits and China’s surpluses. Neither is it true, as some claim, that China’s accession to the World Trade Organisation in 2001 gave it an unfair advantage.