Economy

STOCKHOLM (Reuters) -Swedish property group SBB on Friday ruled out state support as it sought to repair its battered finances, marred by a heavy loss and dwindling cash. The $13 billion group, which owns swathes of property across Sweden including hospitals and schools, racked up a pre-tax loss of 11.1 billion Swedish crowns ($1.09 billion) in the second quarter, while its cash reserves shrank.Long popular with investors, SBB is at the epicentre of a property crash that threatens to engulf the Nordic state’s economy.”I don’t think we need general support from the state,” CEO Leiv Synnes told Reuters. “Our situation is not alarming.” Synnes said his focus was on improving liquidity.As of June 2023, the company had around 1.9 billion Swedish crown of cash and equivalents, less than half the level in December, when cash stood at 4.85 billion Swedish crowns.SBB said speculation about its future had hurt its ability to secure new funding. Synnes said he was in talks about selling further property, but declined to be drawn on whether there was a buyer in sight for the entire group.The company said earlier this year it was looking finding a buyer of all or parts of its business. On Friday it failed to convince investors, with the company’s stock tumbling as much as 12%.In a call with analysts, Synnes declined to provide full details of property deals. One analyst who pressed for more information was cut short in the roughly 30-minute call.”When management were questioned on the book value versus disposal value of properties, Investor Relations cut off the analyst,” said Fraser Perring of Viceroy Research, a short-seller in SBB that has published research critical of the company.”This is ridiculous, as it’s a key measurement for whether SBB are in default with their bonds, or if there is any equity value left for investors.” SBB shares are subject to more short-selling – a bet that the stock price will drop – than any other Swedish company, data from the financial regulator shows. The group built up vast debts buying public property including social housing, government offices, schools and hospitals.It is now scrambling to salvage its finances after recently seeing its credit rating downgraded to junk, with some looking at the government as a potential saviour. Its shares have lost more than 90% of their value since peaking in 2021.Hit by soaring interest rates, it was forced to cancel its dividend and scrap a share issue. Last month it said its founder, former social democrat politician Ilija Batljan, was stepping down as CEO.SBB’s problems are unfolding as Sweden struggles to contain a wider property crisis, with high debts, rising interest rates and a wilting economy producing a toxic cocktail for Sweden’s commercial property companies.Problems in the industry, as well as alarming investors, have prompted the Swedish central bank to issue several warnings. Earlier this year, it cautioned that problems in heavily indebted commercial property companies could spill over and hit the economy more widely, as well as the stability of the financial system itself.It has also warned of a domino effect on banks, who have lent ever more to property companies, as well as the risk that such firms are forced to sell large numbers of buildings, sending prices into a spiral.Other Swedish property companies struck a downbeat note on Friday when they published financial results. Castellum revealed a drop in the value of properties, while Corem cut its debt but warned of falling property prices. Oscar Properties pointed to a challenging credit market.($1 = 10.2285 Swedish crowns) More

High Swedish inflation can no longer be blamed on a single lady, with price pressures remaining strong despite stripping out the rise in restaurant and hotel costs that economists pinned on Beyoncé’s Stockholm concerts. The US singer was thrust into the macroeconomic spotlight last month when economists linked the first two concerts in her Renaissance tour — which opened in the Swedish capital on May 10 — to an unexpectedly high inflation reading that month. Danske Bank blamed a record 3.3 per cent month-on-month increase in the restaurant and hotel prices in May on Beyoncé’s arrival. Inflation in that category slowed to just 0.33 per cent in June, suggesting a transitory Beyoncé effect. “This kind of ‘tourflation’ seems to not be there in June, as we suggested it was in May,” said Filip Andersson, head of Nordic macroeconomic research at the lender. “June was still a strong, seasonal month [but] the upturn in May was just extraordinary.”However, overall inflation was higher than economists’ forecasts and fell only slightly from 9.7 per cent in May to 9.3 per cent last month, as domestic factors overtook any effect related to the pop icon’s concerts in the country.

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Price rises for package holidays, car rental and international flights as Swedes took summer holidays fed a 0.9 per cent monthly increase in prices.Adrian Prettejohn, Europe Economist at Capital Economics, said there was “some evidence that there may have been a Beyoncé effect” from the slowing in hotel and restaurant price increases. However, he added that the shift “doesn’t change the overall picture for Swedish inflation, which is pretty strong and stronger than expected.”June’s inflation figures maintain pressure on the Riksbank, which is expected to increase interest rates by 25 basis points to 4 per cent at its September meeting.Statistics Sweden, the country’s statistics bureau, said CPIF, the central bank’s preferred measure of price changes, fell from 6.7 per cent to 6.4 per cent. Economists polled by Bloomberg had expected a slowdown to 6 per cent. CPIF-XE, which strips out the volatile energy component, only fell from 8.2 per cent to 8.1 per cent, in a sign of sticky prices.The decline in headline inflation was driven in part by falling food inflation and lower prices for clothing. There was a further offset from decreasing electricity and fuel prices.Francesco Pesole, a foreign exchange strategist at ING Bank, said a strengthening in the krona over the past week should ease inflationary pressures by lowering import costs. “The krona’s recovery is offering some breathing room for the Riksbank, but evidence of sticky inflation — paired with those of rebounding long-term inflation expectations — all suggest a hike at the September meeting is quite likely,” he said.A weakness in the Swedish currency against the dollar lay behind the surge in hotel prices triggered by the Beyoncé concerts, as her US fans took advantage of relatively cheap tickets for the Stockholm shows. More

A senior Chinese central bank official has said the world’s second-largest economy will avoid slipping into deflation this year and urged patience as it struggles to recover from strict Covid controls last year.The comments from Liu Guoqiang, deputy governor of the People’s Bank of China, come after official data released this week showed that consumer prices were flat in June against a year earlier and exports fell sharply during the month.The consumer prices index would remain weak in July before rebounding in August and moving closer to 1 per cent by the end of the year, Liu said.China’s economy “[is] not in deflation and won’t show signs of deflation in the second half of this year”, Liu told reporters in Beijing. The official data this week showed consumer prices declining month on month, as demand remained weak following three years of strict Covid controls. Meanwhile rising interest rates in developed companies hit demand for Chinese goods, with exports in June suffering their biggest year-on-year drop since the start of Covid-19 pandemic. Analysts will be watching the release of China’s second-quarter gross domestic product figures on Monday for clues about the underlying health of the recovery and whether Beijing will need to step up stimulus measures to hit its full-year gross domestic product target of 5 per cent.Liu, however, said the economic recovery remained on track. Financial indicators, including a measure of money supply and household incomes, were signalling that the foundation was being laid for a long-term recovery, he said. “The current economic turbulence is a normal phenomenon of post-pandemic recovery,” he said. “It takes about a year for many countries to recover from the coronavirus pandemic. We’re only six months on since China transitioned from the mode of pandemic prevention and control.”

Liu said the central bank had ample policy room to deal with unexpected challenges and, if needed, could ease monetary policy using tools such as cuts in the reserve requirement ratio — the amount of cash that banks have to set aside against their deposit liabilities.China’s property sector, in particular, has been weighing on sentiment after a collapse in demand from buyers. The government this week announced it would extend support measures for real estate into next year.On China’s foreign exchange rate, which has traded near seven-month lows against the dollar this year, Liu warned against any speculation. The currency has rebounded strongly since last week on a weaker US dollar and continued to gain on Friday. “Speculative bets produce no benefits and can only hurt oneself and others,” Liu said. He said expectations on the renminbi exchange rate had now stabilised. When asked whether the PBoC has rolled out any measures so far to stem renminbi weakness, Liu said: “The central bank has an ample toolbox to deal with market deviations — we will use it when needed.”With additional reporting by Joe Leahy in Beijing More

The pandemic accelerated a transition to cashless payments, forcing a reckoning among small-business owners. But there are benefits: One owner said the switch saved her $3,000 a month.“Making It Work” is a series about small-business owners striving to endure hard times.When Egypt Otis opened her business, Comma Bookstore and Social Hub, three years ago in Flint, Mich., the pandemic was full blown. But her neighbors welcomed the literature and art she sold in her store that celebrated people of color, as well as the community programs she hosted.Despite the warm reception, Ms. Otis quickly found that she had a sales problem: Her customers wanted to pay with their cellphones.“I realized that people were hardly keeping a wallet or a physical card, which limited my ability to sell and make money,” Ms. Otis said. So she upgraded her transactions platform to include tap-and-go purchases on mobile devices. “People are not carrying cash,” she said. “It’s becoming obsolete.”The number of Americans who say they are “cashless” has jumped in the last five years. Forty-one percent of Americans said they did not use cash for their purchases in a typical week in 2022, up from 29 percent in 2018, according to a Pew Research Center survey released last October.Small-business owners increasingly are making the switch to cashless payments for several reasons, including rising consumer demand, faster checkout, lower labor costs and increased security. Those who wait risk losing revenue, experts say.But there are drawbacks to going cash-free, including a learning curve for entrepreneurs who may not understand how to set up digital payments, a lack of accessibility to credit cards for low-income consumers, and privacy concerns.Signs at a pizza joint in New York indicating it takes multiple forms of cashless payments, a switch that accelerated in the pandemic.Karsten Moran for The New York TimesJuanny Romero was an early adopter of digital payments for her small business. Fifteen years ago, when she founded Mothership Coffee Roasters, a chain of coffee shops in Las Vegas, she began using Square, a low-cost digital payments system for small businesses.“​​I was a young businesswoman and not astute,” she said. But Square saved her $3,000 a month in merchant fees for credit card processing.As Ms. Romero expanded her businesses (to four locations in Las Vegas, with two more on the way), she added more payment options, including Apple Pay and Google Pay.But she noticed a shift during the pandemic: Her customers no longer wanted to use cash, and her employees did not want to handle it. “We didn’t know where Covid was coming from,” she said. “There were still people bringing in cash, but it was scary and dangerous.”When the coin shortage hit in 2020, she ran out of cash altogether, but Ms. Romero found it saved on labor costs. “My managers were standing in line for two hours to deposit the cash,” she said. “I can’t get an armored car service to pick up $100 in cash.”Even so, customer demand prompted her to return to cash sales, which Ms. Romero said are holding steady at about 11 percent of her overall revenue. She said she would go cashless if the share dipped below 10 percent.A digital transaction at Mothership Coffee Roasters in Las Vegas.Bridget Bennett for The New York TimesThe pressure to adapt is growing. More that 2.8 billion mobile wallets were in use at the end of 2020, and that is projected to increase nearly 74 percent to 4.8 billion — nearly 60 percent of the world’s population — by the end of 2025, according to a study released in 2021 by Boku, a fintech companyThe United States lags other countries in adopting cashless payments. Among the most cashless countries in the world is Britain, where the pound makes up only 1 percent of all transactions, according to a report from Merchant Machine, a payment research firm based in London. But in the United States, some small-business owners do not understand the complexities of digital payments.“Smaller merchants, they don’t always have the knowledge and resources to know what to do,” said Ginger Siegel, who leads the North America small-business segment at Mastercard, which offers training to business owners like Ms. Otis of Comma Bookstore.Ms. Otis said she noticed an increase in sales when she began offering mobile payments, which made the checkout process faster. “As a retailer, you want to make the experience as efficient as possible,” she said. “It is a matter of survival.”A veteran using a tap-and-go device to collect donations for the Royal British Legion in London in 2020.Guy Bell/AlamyBenefits include immediate payment, increased sales and the ability to sell to customers who might use other currencies. “You have to set it up, but it’s worth it,” said Kimberley A. Eddleston, a professor of entrepreneurship at Northeastern University.But some business owners say they are hesitant to move too quickly, worried that today’s technology could become obsolete tomorrow. And there are compatibility and cost issues to consider, said Wayne Read, the chief executive of Forged & Formed, an online jeweler with a physical store, Studio D Jewelers, in Woodstock, Ill. In his jewelry sales, where items can be pricey, he said a speedy transaction might not be suitable. “We don’t want people to feel they have rushed their decision,” he said.Despite advances in technology, many Americans still have little or no access to financial services like credit cards and mobile wallets, although that is slowly improving. An estimated 5.9 million households did not have a bank account in 2021, down from 7.1 million households in 2019, according to a survey by the Federal Reserve.Rewards points displayed on a checkout screen at Mothership. Mobile apps allow for cashless payments and can increase customer loyalty.Bridget Bennett for The New York TimesAnother obstacle to adoption is privacy concerns: Some people prefer the anonymity that cash provides. And cash is perceived as a way for consumers to remain aware of expenditures. Complicating the transition to the digital economy, the recent banking turmoil in the United States has made many depositors question the security of financial institutions.But experts agree that cash is unlikely to go away. Consumers in lower income households continue to rely on cash for payments, according to the Fed survey.And small-business owners say that despite the speed and efficiency that cashless payments offer, cash is still a viable option for their customers.“At the end of the day, I know the people I serve,” Ms. Romero said. “I would feel conflicted if I didn’t do the right thing.” More

Good morning. Rishi Sunak has offered to increase public sector pay by five to seven per cent in a bid to end the rolling industrial disputes, and it will be funded by cuts to departmental budgets. The chances of the former happening are very high. The chances of the latter happening are vanishingly small. Some thoughts on all that below. School strikes are (probably) out Yesterday Rishi Sunak accepted in full the recommendations of independent pay review bodies, in the hope that this will be enough to end the wave of strikes in England.In good news for the prime minister, the announcement comes alongside one from the teaching unions that they will recommend their members vote to accept the offer. The better news is, even should some trade unions opt not to accept the deal, I think it is highly likely that a large enough minority will back them to make future strikes impossible. We’ve already seen that dynamic play itself out with the nurses’ strike: Unison voted to accept a similar pay rise, while the Royal College of Nursing rejected the offer. But the RCN then failed to hit the turnout threshold requirement for further strikes.My sense is that is where most of these industrial disputes will land: some unions will accept the deal in theory and in practice, while some will end up accepting it in practice but not in theory. Here’s another prediction: Rishi Sunak’s plan to fund these pay rises through existing departmental budgets will fail. The Treasury said a further £1.4bn would be raised over two years by increasing visa fees for migrant workers and putting up their annual NHS “surcharge” by 66 per cent to £1,035.To deliver these pay rises without increasing taxes or borrowing will mean further cuts elsewhere. This is as good an opportunity as any to bring back my favourite chart: The UK has already had a prolonged period of spending cuts, and by 2016 we had reached the point where further reductions became politically impossible. Everything that has happened in British politics since then was in some ways driven by that: it is part of why Jeremy Corbyn made gains in the 2017 election, it’s why Boris Johnson’s 2019 campaign promised more money for schools, hospitals and the police, it’s why Sajid Javid resigned from Johnson’s government in 2020 and Rishi Sunak became chancellor, it’s why Sunak raised taxes in 2021, it’s why Sunak resigned from Boris Johnson’s government, it’s why Liz Truss became Conservative leader, it’s why Truss delivered tax cuts but no spending reductions, it’s why Jeremy Hunt became chancellor, it’s why Truss resigned as prime minister, it’s why Sunak is prime minister now. There are not going to be £2bn in savings from existing departmental budgets this year or £3bn in subsequent years. It ain’t gonna happen! The only question is whether the inevitable tax rises are delivered by Jeremy Hunt or Rachel Reeves. Now try thisGeorgina and I went to Rambutan recently, in large part thanks to Tim Hayward’s excellent review of its Sri Lankan diaspora cooking. (Reading one of his reviews really is one of life’s great pleasures: I’ve had meals I found less appetising than some of them.) We are fast coming up on the summer parliamentary recess, when this email will either a) be taken up by some kind of political crisis that we don’t expect or more likely b) take on a more discursive flavour, considering political books, trends and hypotheticals. If you have any thoughts on what you’d like us to tackle in the column, let me know by emailing us at [email protected] you spend it, have a wonderful weekend! Top stories todayHold the phone | The contents of Boris Johnson’s old mobile phone may about to be handed over to the Covid-19 public inquiry, amid signs the mystery over the former premier’s pin number has been resolved.UK ‘vulnerable’ over public debt | UK public finances are in a “very risky” position, with government debt on course to hit 310 per cent of gross domestic product in 50 years, the Office for Budget Responsibility has warned. The OBR also noted the UK had the highest proportion of inflation-linked debt of any major advanced economy, which has pushed up debt servicing costs.West country dispatch | Ed Davey hopes that next week the Liberal Democrats will overturn a 19,213 Tory majority in the Somerset seat of Somerton and Frome. Bookmakers give the Lib Dems a 96 per cent probability of victory. Anna Gross reports on the party’s strategy and residents’ concerns in the region that voted strongly for Brexit. China crisis | The government’s response to China’s “increasingly sophisticated” spying operation targeting the UK and its interests has been “completely inadequate”, according to a scathing parliamentary report.Northern Ireland NHS facing ‘severe challenges’ | Stormont’s Department of Health has said there is no money for health service staff in Northern Ireland to get pay rises, the BBC reports. The comments were made in a submission to an independent pay review body, which said that as a result pay in Northern Ireland may fall behind other parts of the UK. More

Australia’s government has rejected Philip Lowe for a renewed term as central bank governor, deciding instead to promote deputy Michele Bullock to implement a swath of reforms and bring inflation under control.Bullock, who will be the Reserve Bank of Australia’s first female governor, was the leading internal candidate to replace Lowe, who has run the institution since 2016. It is the first time that Australia has not extended the term of a RBA governor in almost three decades. Lowe has suffered a strong public backlash since the RBA started an interest rate tightening cycle last year, belying his previous guidance that rates were set to stay low. The bank’s main policy rate has been raised a dozen times, from 0.1 per cent to 4.1 per cent, over the past 15 months and the bank has indicated more increases might be needed.The decision by the Australian Treasury to switch the head of the central bank during a rate-tightening cycle is set to attract wider scrutiny around the world, as governments launch inquests into whether central bankers were too slow to react to the threat of inflation.Shane Oliver, chief economist with financial services group AMP, said public anger over rising interest rates in a cost of living crisis was not confined to Australia. “There is a public backlash due to higher interest rates and an annoyance with central banks,” he said. “That annoyance has got through to politicians.”

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Bullock is expected to implement the recommendations of a review of the bank, which has detailed more than 50 recommendations to strengthen its governance and communication with the public. Jim Chalmers, Australia’s treasurer, who had previously described the decision on the RBA governor as one of the biggest for his government, said on Friday that Bullock’s appointment “combines experience and expertise with a fresh leadership perspective”. Bullock said that it was a “challenging time” to be coming into the role. “I am committed to ensuring that the Reserve Bank delivers on its policy and operational objectives for the benefit of the Australian people,” she said. The RBA will carry out press conferences after rate decisions from next year to address concerns over its communication policies that were raised in the review. A plan to split the rate-setting board from the main RBA board is also set to be part of the reforms. “As times change, we need to change too,” Lowe said this week. Josh Williamson, chief economist at Citi, said Bullock was the “most suitable candidate” to take over from Lowe after an appointment process that had become “drawn out and abnormally politicised”.The deputy governor, a London School of Economics and University of New England graduate, has spent more than three decades at the RBA. Her two main rivals for the role were outsiders from the Treasury and Finance departments, who might have had a clearer mandate to make sweeping reforms to the operation and the culture of the bank. Bullock is widely seen as a good communicator compared to Lowe, who has been forced to defend the bank’s actions as necessary to bring the threat of rampant inflation to heel. He also warned of the impact of a sharp rise in wages without productivity gains. Lowe in particular paid the price for policies adopted during the pandemic aimed at stimulating economic activity. He indicated in 2021 that interest rates would be unlikely to rise until 2024 but that forecast proved erroneous. Lowe was forced into an apology as result. “I’m sorry that people listened to what we’ve said and acted on that,” he told a senate hearing last year.AMP’s Oliver said it was “grossly unfair” that Lowe had been made a scapegoat for forecasts made during the abnormal circumstances of the pandemic. “Unfortunately that has come back to bite him,” he said. One former RBA official said the government had to make sure that the decision to replace Lowe was not seen as making “change for change’s sake” and was not a reaction to a “lack of perspective” around Australia’s relative economic success.Australia is enjoying its lowest unemployment levels in almost 50 years while the rise in interest rates to 4.1 per cent over the past year is still below most comparable markets.Mark Barnaba, whose six-year term on the RBA board ends in August, said the central bank had raised interest rates less than its counterparts in the US, Canada, the UK and New Zealand. “Australia holds the enviable position of having the longest run in modern history without having had a recession — which occurred over the last 30-odd years. So, if that is the report card for the RBA and Australia, we should receive it with some pride,” he told the Financial Times. More

The EU is urgently calling on aluminium and zinc companies to investigate producing key semiconductor metals after China announced plans to curb exports of gallium and germanium.Beijing’s decision to enforce export restrictions on the two critical minerals from August has prompted a scramble across Brussels, Washington and Tokyo to find sources of materials outside of Asia’s largest economy. The EU has approached Mytilineos Energy & Metals, a Greek aluminium producer, and asked it to explore producing gallium as a byproduct at its refinery that turns bauxite into alumina, a starting material for aluminium, in Agios Nikolaos in mainland Greece.“The EU has reached out to us with regards to evaluating how alumina refineries can contribute to a way out of this crisis,” said Nick Keramidas, executive director of EU affairs at the company. The EU sources 71 per cent of its gallium and 45 per cent of germanium from China, according to the EU, but there are only a handful of companies outside of China capable of producing the high-purity metals used in chipmaking, solar photovoltaic cells and optic fibres.However, the dire state of Europe’s metals sector makes it a difficult proposition for companies to invest tens of millions of euros to produce gallium without state support to help them deal with the region’s high energy costs and rising inflation. These have already forced many smelters to come offline.“We realise China can twist our arm. Europe said ‘oh let’s ramp up production, alumina refineries can look at that’ but last time I looked, half of them were down,” said Keramidas.“When you can’t competitively produce your main commodity because the conditions are so absurdly problematic, it might be idiotic to invest in a side-product that is gallium.”It is not the first time that Brussels has panicked about supplies of minerals under pressure from China. The EU made similar efforts to boost domestic production of magnesium after China cut production in 2021 because of energy shortages.Eurometaux, the bloc’s trade body for non-ferrous metals, confirmed that several companies were looking into improving the region’s resilience for germanium and gallium but warned that “this is a wider industrial policy discussion”.“Last year it was magnesium, and we don’t know what metals will be next in the geopolitical spotlight,” it said.Europe is in a tougher situation when it comes to developing its own germanium output. Only zinc smelters using a specific process can recover it, but very few outside of China use that method and none in Europe do.Trafigura-owned Nyrstar is among those assessing building a $150mn germanium and gallium recovery and processing facility at its zinc smelter in Tennessee, which could cover 80 per cent of US demand but would take at least two years to construct. Umicore, a Belgian advanced materials group that recycles germanium, said it is developing technologies based on “thin film” germanium to reduce use of the material.Gallium prices have surged 28 per cent since China’s announcement, according to Fastmarkets, a price reporting agency.But several executives highlighted the need for EU officials to develop policies for dealing with the opposite problem: how to remain competitive when China floods the market.The two metals are among those listed as strategic in a regulation currently under discussion, which is designed to boost the bloc’s supplies of materials critical to the green transition. Beijing’s export restrictions came after the Netherlands followed Japan and the US in limiting the sale of high-end chipmaking equipment abroad.The European Commission said it was working on a “detailed analysis” of the Chinese export controls and whether they were compatible with World Trade Organization rules.“The Commission is concerned that these export restrictions are unrelated to the need to protect essential security interests. We call on China to take an approach whereby export controls are based on relevant security considerations,” a spokesperson said.Greek environment minister Theodoros Skylakakis said he hoped Greece could become a hub for the production of critical minerals in Europe, partly thanks to Mytilineos’s potential to produce gallium from bauxite. If the EU’s “open, competitive model” was undermined by “specific geopolitical situations”, the bloc should “take measures to make sure we are protected”, he added.This article has been amended to correct the location of Mytilineos Energy & Metals’ refinery, which is in Agios Nikolaos in mainland Greece, not Crete. More

It takes courage to go against the prevailing economic or political dogma. For the past 20 years or so, questioning the notion that free trade was always and everywhere an unadulterated good was verboten in the US. That changed in 2018, when Robert Lighthizer, the US trade representative under President Donald Trump, levied tariffs on China, a move that triggered a broader debate about decoupling, the relationship between trade and diplomacy, and what the post-neoliberal world should look like.In his new book, No Trade Is Free, Lighthizer lays out the dynamics behind America’s new trade stance, arguing that the last two decades of what he would call a “radical free trade agenda” is a historical anomaly for the country, which like “all the great economies” was “built behind a wall of protection and often with government money”. This is an interesting observation for a Republican to make, but it reflects the fact that conservatism in the US didn’t always equate to a laissez-faire view on trade.

Lighthizer began his own trade negotiation career as a deputy US trade representative under President Ronald Reagan, who believed in free trade, but only to the extent that it didn’t undermine US domestic economic interests. As Reagan set out in a speech in 1985, “free trade is, by definition, fair trade. When domestic markets are closed to the exports of others, it is no longer free trade. When governments subsidise their manufacturers and farmers so that they can dump goods in other markets, it is no longer free trade. When governments permit counterfeiting or copying of American products . . . it is no longer free trade.”These are some of the arguments that Lighthizer made against China during his tenure, and indeed in the decades leading up to it. From the 1990s, he argued and editorialised against China joining the World Trade Organization, and in 2010 he gave 35 pages of single-spaced Congressional testimony on “what a disaster the 2000 decision to grant China ‘Most Favored Nation’ status had been for America — and particularly for our workers”.While many will disagree with the economics of his arguments about the need to rebalance the US trade deficit with China (particularly when considered within a global context — one country’s deficit is always another country’s surplus), his arguments about the need for a large diversified economy like the US to produce as well as consume in order to remain strong resonate in an era in which the risks of financialisation and fragile global supply chains have become all too clear.Lighthizer writes simply and clearly, delivering a message that resonates in America’s heartland (he hails from Ohio), if not in world capitals. “For some, trade is mostly a way to engage on the world stage. One hears about the need for America to use its economic prowess to gain friends and to influence events. We need to trade more — read: import more — so that other countries will like us instead of, say, China. For others, trade is really about obtaining the cheapest products for our consumers. For these people, if the result is the loss of manufacturing and related jobs, that is a fair exchange. Cheap televisions trump American factories.”There are, of course, many reasons for the decline of the rustbelt over the past few decades. The “China shock” to US labour markets (as documented by academics such as David Autor and Gordon Hanson) is one, but the demise of vocational training, a contentious labour relations paradigm and a decline in both public and private investment in the industrial commons are others.Lighthizer, like an increasing number of Americans on both the right and left, is inclined to blame China. While he comes off as xenophobic at times (China “intensely dislikes the United States and our way of life. It teaches its children to dislike us”), it’s tough to quibble with the fact that allowing China into the WTO did not, in fact, change the political economy of the country. China didn’t get freer as it got richer.It did, however, become a tougher trade partner and negotiator. One of the most interesting sections of No Trade Is Free outlines the tick-tock of the multiyear trade negotiations and tariff disputes between China and the US during the Trump years. It was, at its very best, a maddening process during which Lighthizer’s negotiation binders had “more lines and written notes in multicolor than print on the pages. They looked a little bit like a Jackson Pollock painting.”The upshot was, for better or worse, an end to the wilful blindness that had characterised the US-China trade relationship. This, perhaps more than anything, is Lighthizer’s legacy.No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers by Robert Lighthizer, Broadside £25/HarperCollins $32, 384 pagesRana Foroohar is the FT’s global business columnistJoin our online book group on Facebook at FT Books Café More