A Message for China

China and President Obama have a lot to think about after the House voted, overwhelmingly, on Wednesday to give the Obama administration expanded authority to impose tariffs on nearly all Chinese imports



Protectionist impulses run far too strong on Capitol Hill, especially in an election year. But China’s aggressive undervaluation of its currency is providing a hugely unfair boost to its exports — hurting some American exports, but doing a lot more damage to others and hindering the recovery around the world.

If the House vote grabs Beijing’s attention, that would be a good thing. We are skeptical that punitive tariffs are the answer. They wouldn’t provide all that much redress to American companies because at this point, except for steel and a few other products, most of the things Americans buy from China: TVs, refrigerators, toys — are no longer made here.

As for whether tariffs would change Beijing’s thinking, we fear there is at least an equal chance that China will lash back. A trade war would be disastrous for bilateral relations, complicating efforts to contain nuclear programs in Iran and North Korea, and disastrous for the world economy.

A more effective strategy would be to muster the support of the many other countries whose manufacturing industries have been mauled. China needs to hear and see that its currency policy is a global problem that is undermining the global influence it so clearly desires.

So far, Beijing has used its clout as a major foreign investor and the world’s biggest importer of raw materials to mollify or intimidate its potential critics. The Obama administration needs to be at least as determined in its efforts to persuade others to finally speak up.

A lot of that can and should be done with behind-the-scenes diplomacy. There is also an important public part to be played. One of the best venues to get the message across — to Beijing and other world capitals — is at the World Trade Organization. China, which relies so heavily on exports, keeps an especially close watch there.

Last month, Washington filed two W.T.O. cases against China for duties it slapped on American steel and its discrimination against American suppliers of electronic payment services. It would be unlikely to win a case on China’s currency manipulation (which the World Trade Organization does not define as illegal). A broad challenge against China’s illegal trade practices, including providing subsidized energy and cheap credit to its exporters, could help embolden others to put forth their own complaints.

This strategy also carries the risk of retaliation. But the United States can’t be paralyzed, and moving with others should lessen that threat. A few other countries are already speaking out. Japan has begun criticizing China’s currency policies. Brazil’s finance minister complained earlier this week about the “international currency war” set off by the manipulation of China’s currency, the renminbi.

As the vote in the House loomed, Beijing defiantly slapped steep tariffs on poultry from the United States. On the day of the vote, Foreign Ministry officials warned of potentially dire consequences to bilateral trade relations, and China’s central bank let the renminbi fall a little. Still, over the last three weeks, the bank allowed the currency to rise about 1.5 percent against the dollar, roughly three times as much as it appreciated in the previous three months.

Hours before the House vote, China’s central bank issued a statement pledging to “increase currency flexibility,” and “gradually improve the exchange rate setting mechanism.” Beijing has made these promises before. Which is why the United States and other countries need to push harder, together. Editorial New York Times