Both parties are cranking up their rhetoric against
the world’s second-largest economy
IT IS a truth universally
acknowledged that a man in possession of a major American political party’s
presidential nomination must be in want of a more assertive policy on China.
Bill Clinton upbraided George Bush senior for “coddling dictators”; Mr Bush’s
son went on to accuse Mr Clinton, when president, of much the same thing.
Barack Obama, during his first presidential campaign, called the younger Mr
Bush “a patsy” in his dealings with China. Now it is Mitt Romney’s turn: in
February he described Mr Obama as a “near supplicant to Beijing”.
Mr Romney, as befits the author of a
book called “No Apology: The Case for American Greatness”, says that if elected
he would not hesitate to put China in its place. On his first day in office, no
less, he has pledged to declare it a currency manipulator, a step that could
lead to across-the-board tariff increases on Chinese imports. More broadly, he
says he will force China to play by the rules of international trade and
investment: no more theft of intellectual property, no more unfair subsidies
for state-owned firms, no more predatory pricing. And economics is not his only
concern: he promises to chastise China more loudly for its human-rights abuses
and to bolster America’s armed forces to counteract China’s growing military
clout.
As in most things, Mr Romney’s
China-bashing seems studied and methodical. He would like rich countries to
impose “intellectual-property sanctions” on China, to prevent it from acquiring
the advanced technology behind such things as passenger jets until it stops pilfering
foreign know-how. Under the heading “Confront China Directly”, his website
pledges to end government procurement from China until China provides
reciprocal access to American firms. Taiwan, he says, should be allowed to buy
whatever weapons it wants. Meanwhile America’s navy, he calculates, needs to
build an extra six ships a year to handle all the challenges it faces,
including an uppity China.
Mr Romney mocks the suggestion that
he is gunning for a trade war (let alone a conventional one). An undeclared
conflict is already under way, he suggests, and China is winning. Moreover, if
America imposed punitive tariffs on Chinese goods, he argues, China would not
dare to retaliate in kind because it has more to lose from an escalation in
hostilities. China is selling America, he notes, $273 billion more per year
than America is selling to China. “If you’re not willing to stand up to China,
you’ll get run over by China,” he insists.
The obvious response to all this is
to shrug. Candidates may rage about China on the campaign trail, but when in
office they become more temperate. Four years ago Mr Obama promised to do just
as Mr Romney now demands, and label China a currency manipulator. Twice a year
since then he has passed up the opportunity to do so. In part, that is because
China’s currency has been appreciating in recent years, and its global trade
surplus shrinking. But mainly it is because picking a fight with an
all-important trading partner, and the biggest foreign holder of American
public debt, does not seem a bright idea when you are the one who will be
blamed for the economic consequences.
If even a former community organiser
shies away from a showdown with China, the assumption runs, then a pin-striped
man of finance certainly will. There are plenty of ways out of the hole Mr
Romney has dug for himself. He could say that as a result of the pressure he
has brought to bear, China has made such great strides that the penalties he
envisaged are no longer warranted. Or he could keep his pledge, and brand it a
manipulator, while making sure that the bureaucratic procedure that would then
follow did not lead to any actual retribution. So far, there does not seem to
be much sense of alarm emanating from Beijing. Even as Mr Romney was cranking
up his rhetoric earlier this year, the man who is expected to become China’s
next president, Xi Jinping, visited Washington and described ties between his
country and America as “an unstoppable river that keeps surging ahead”.
Words have consequences, too
In fact, the risks could be a lot
greater than that. China, like America is in the middle of a transition of
leadership; and being branded as a manipulator could easily risk a nasty
response. For another thing, Mr Romney’s words set up a dynamic whereby
candidates try to outdo one another with their China-bashing. Earlier this
month, when the administration unveiled a complaint about Chinese car tariffs
before the WTO, the president’s campaign proudly noted that he had initiated
such proceedings twice as often as his predecessor. The Republican Party
immediately retorted that Mr Obama was nonetheless a late convert to the cause,
and should have been challenging China more often.
Indeed, fewer and fewer Republicans
are letting their supposed belief in free trade interfere with an easy shot at
the president. Mr Romney is actually among the milder ones. Donald Trump, while
flirting with a run for the Republican nomination last year, said, “China is
raping this country.” Newt Gingrich, who did run, argued at a debate among candidates
that it was important “to dramatically raise the pain level for the Chinese
cheating”. Michele Bachmann, another candidate, quipped that China’s purchases
of American Treasury bills brought a whole new meaning to the phrase “Hu’s your
daddy?”
The trouble with such talk is that
it reinforces the feeling among China’s leaders that America is out to thwart
their country’s “peaceful rise”. The fact that both parties are happy to
portray China as the bogeyman of globalisation creates an impression of uniform
hostility. That, in turn, undermines America’s message that China is unduly
paranoid and defensive. It also disenfranchises those American voters who would
like to express a more optimistic view of the consequences of commerce.
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