Chinese media says U.S. has 'delusions', urges focus on domestic development

SHANGHAI/BEIJING (Reuters) - U.S. protectionism is self-defeating and a "symptom of paranoid delusions" that must not distract China from its path to modernisation, Chinese state media said on Friday.

China has stepped up its war of words with the United States since President Donald Trump threatened on Monday to hit $200 billion of Chinese imports with 10 percent tariffs if China retaliates against his previous targeting of $50 billion in imports.

China's commerce ministry accused the United States on Thursday of being "capricious" over bilateral trade issues and warned that the interests of U.S. workers and farmers would ultimately be hurt by Washington's penchant for brandishing "big sticks".

The official China Daily said in an editorial the United States had failed to understand that the business it does with China supported millions of American jobs and that the U.S. approach was self-defeating.

The English-language paper cited research by the Rhodium Group saying that Chinese investment in the United States declined 92 percent to $1.8 billion in the first five months of the year, its lowest level in seven years.

"The woes the administration is inflicting on Chinese companies do not simply translate into boons for U.S. enterprises and the U.S. economy," it said in an editorial headlined "Protectionism symptom of paranoid delusions".

"The fast-shrinking Chinese investment in the U.S. reflects the damage being done to China-U.S.-trade relations ... by the trade crusade of Trump and his trade hawks," it said.

The Global Times, a widely read tabloid published by the ruling Communist Party's official People's Daily, said in an editorial China needed to be realistic about how it could handle the United States and look at other strategies.

"The U.S. has the upper hand over China in technology, defence and international influence, and therefore the country will continue to have a strategic initiative over Beijing for the foreseeable future," it said.

"As long as China remains clear-minded in strategy, level-headed in its U.S. policy, and avoids a full-fledged geopolitical competition or a strategic clash against the U.S., China will be able to withstand U.S. pressure. In other words, China should focus on its domestic affairs."

China should keep promoting its own economic development and ensure its growth exceeds that of the United States in both quantity and quality, the paper said.

"As long as China can effectively utilise its successful policies and experiences accumulated since the reform and opening up, and avoid subversive mistakes, the country will see robust momentum for development," the Global Times said.

(Reporting by David Stanway and Ben Blanchard; Editing by Paul Tait)