Is China A Cheater?

Oct 18 2012 @ 2:43pm

In the debate this week, Romney said that China's currency manipulation and intellectual property theft has allowed it to become the largest manufacturer in the world, causing the loss of 500,000 American manufacturing jobs in the last four years. Anthony Tao defends China: 

Even now, when China’s per [capita] GDP is still nearly six times less than the US’s, China is just artificially keeping its currency down cause it really wants to stick it to Americans, right? Because there are just so many Americans who dream about working in an iPhone-assembling factory.

Dan Ikenson, meanwhile, explains why Romney's position on currency manipulation is unusually silly:

[T]here is no (none, zero, zilch) evidence in the public domain that an appreciating Chinese yuan will lead to economic growth and job creation in the United States. The supposition … has been that a rising yuan would lead to a reduction in the bilateral deficit and that reduction would lead to job creation in the United States. But there is no discernible inverse relationship between the value of the Chinese currency and the size of the bilateral deficit or between the size of the bilateral deficit and the number of jobs in the U.S. economy. …

In fact, this analysis and this post and the links within it demonstrate that a rising yuan is more closely associated with a larger bilateral U.S. trade deficit, which is associated with more jobs – not fewer – in the United States.

Others fear that Romney's pledge to name China a currency manipulator could spark a trade war. Jonathan Alter pushes back on those who think Romney is bluffing:

This view that [Romney] will back off immediately after taking the oath is simultaneously cynical and politically ignorant. Romney's promise is so specific — and so lacking in escape hatches — that it's a sure bet he would feel obliged to keep it. Otherwise, within 24 hours of his swearing in he would be pilloried by the press for breaking a major promise. If he immediately confirmed all of the Democrats' attacks about his lack of constancy, his honeymoon would be over before it even started.

Obama's slate is hardly clean, however. Sharon LaFraniere calls attention to the president's 2009 duty on Chinese tires:

A study by the Peterson Institute for International Economics found that the tariff protected at most 1,200 American jobs. But last year alone, the institute found, it cost American consumers $1.1 billion in higher-priced tires. Moreover, China responded by imposing tariffs on imports of American chicken parts that cost American poultry producers an estimated $1 billion. Last month, the Obama administration quietly let the tire tariff expire. Critics say it recognized that the economic costs of the sanction were too great.

Ted Galen thinks that both candidates' anti-China rhetoric is worse than normal:

There are indications … that the current campaign hostility toward China may be more than the usual political posturing. Romney’s advisers include several prominent anti-China hawks – including former U.N. Ambassador John Bolton and Princeton professor Aaron Friedberg. And the Obama administration has already taken a number of actions that suggest a change in the substance as well as the tone of U.S. policy. The imposition of tariffs and the WTO suits are examples in the economic realm, but shifts in Washington’s security policies are even more evident.

The Chinese are so far taking this mostly in stride, notes Evan Osnos, but the state press cranks out persistent coverage of both candidates' "China-bashing":

Neither candidate is much loved in China these days. When Obama entered office, he was especially popular among young Chinese, though he was a mystery to Chinese foreign-policy analysts, because he defied everything they thought they knew about American politics. (In their calculations, an African-American with little experience could never defeat a rich war hero with extensive political connections, much less the wife of a former President.) Over the past two years, a period when the Administration has tacked toward a more confrontational position, Obama’s favorability in China has declined significantly; a new Pew poll says that the number of Chinese who see their country’s relationship with the U.S. as coöperative has sunk from sixty-eight per cent to thirty-nine per cent.

And yet, over-all, the Chinese seem to prefer, if only slightly, the panda slugger they know to the one they don’t.

Edward Alden, meanwhile, tallies up the real Sino-US problem areas:

 Of the top ten problems for business in dealing with China, there is no mention of tariffs, or quotas, or even of China’s undervalued currency, which has featured so prominently in the presidential election campaign. Instead, the problems are things like licensing approvals, intellectual property theft, foreign investment restrictions, competition with state-owned enterprises, and unfair regulatory standards.

And, despite all the heated rhetoric, business between the two countries is booming:

34 U.S. states were engaged in some kind of business relationship with China last year. The number of Chinese deals with U.S. companies is growing annually at a rate of 130 percent.