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China-bashing hits ’12 race
A stark warning to China in Mitt Romney’s jobs plan is an early sign of the China-bashing that is likely to characterize the 2012 fight for the White House.
A struggling economy, high unemployment and growing debt, much of it held by China, make the rising power a convenient target.
The former Massachusetts governor has positioned himself as the pro-business candidate in the GOP race and touted his background at Bain Capital while arguing that career politicians are not the ones best equipped to guide the country through difficult economic times.
He’s not the candidate the business community and K Street expected to see side with unions and smaller manufacturers, which for years have argued that the United States needs to get tougher with China over its currency manipulation.
“It’s a bit of a surprise,” said Bill Reinsch, president of the National Foreign Trade Council, which represents some of the largest U.S. companies on trade issues. “I think it suggests we may see a lot of China-bashing in the upcoming election.”
Romney announced Tuesday that one of the five executive orders he’d sign on his first day in the Oval Office would be an order sanctioning China for unfair trade practices. He said he would direct the Treasury Department to list China as a currency manipulator in a biannual report and direct the Department of Commerce to assess anti-subsidy duties on Chinese imports if the country did not move quickly to float its currency.
The move puts Romney to the left of both the Bush and Obama administrations, which have resisted such designations.
Romney’s China stance was slammed Wednesday by The Wall Street Journal’s editorial board, which labeled it his most “troubling” proposal and said he had done Obama “one worse.” Starting a trade war was “a rare policy mistake that Mr. Obama hasn’t made,” the conservative editorial board wrote.
Romney’s position might help him politically by balancing criticism — sure to come from Obama and other rivals for the GOP nomination — that he sent U.S. jobs overseas at Bain Capital.
Democrats in Congress have argued for years that China should be labeled a currency manipulator, and legislation that could have led to higher duties on Chinese imports was approved by the House last year with Republican support. But the bill never moved through the Senate, and it is unclear whether President Obama would have signed it.
Republican leaders in the House and Senate have generally been lukewarm at best about the legislation, which the business community has opposed.
Larger corporations with operations or business in China have argued against labeling China a currency manipulator. They contend that currency values account for a small part of the U.S. trade imbalance with China, and say the currency designation could spark a trade fight with devastating consequences.
In testimony to the House Ways and Means Committee last year, U.S.-China Business Council President John Frisbie said legislation imposing tariffs on Chinese goods because of currency manipulation could also violate World Trade Organization rules.
Romney’s campaign emphasizes that currency is only one prong in a multipart policy toward China that would also tackle other trade tensions, including pervasive theft of U.S. intellectual property. Yet it is the currency provision, a longstanding irritant to U.S. manufacturers and workers, that was emphasized with an executive-order designation.
The Romney campaign said the former governor is not interested in a trade war, but also does not think the United States should “maintain its posture of trade surrender.”
He argues that the time has come “to lay out the consequences” for China if it does not take steps to become a responsible member of the global economy. Designating China a currency manipulator, he argues, would convince the country’s leaders to change their ways.
One problem for the United States, of course, is that China does not lack leverage. The United States depends on China’s purchases of U.S. treasuries to finance its debt. China is also a country with 100-year plans, which raises questions over just how much the United States can influence its decisions.
Reinsch noted that recent presidential candidates have tended to criticize their predecessors in both parties as being soft on China.
“Yet when they get in, it’s a different story,” he said. “Since [President Richard] Nixon, U.S. policy toward China has been consistent within a narrow band.”
Economic officials in Republican and Democratic administrations alike have warned against hitting China over currency.
If Romney wins the presidency, it will be tough for him to back away from the promise he issued Tuesday. But there will likely be people in his Treasury Department telling him to do so, Reinsch said.
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