China in the US Presidential Debate: The Return of Protectionism?
31 Oct, 2012 · 3744
Bhavna Singh discusses the variant trends in the US Presidential debate on China
The three rounds of US Presidential election debate witnessed a scathing critique of China by both the presidential nominees. Obama’s delineation of China as an ‘adversary and a potential partner’ in the final presidential debate and Mitt Romney’s alacrity to dub China as a ‘currency manipulator’ once he comes to power not only reflects the dilemma that an incumbent superpower faces on the ascent of another giant but also a reluctant recognition of the shift from a unipolar American century to a bipolar or possibly multipolar power-sharing arrangement. Both Obama and Mitt Romney have spewed mundane allegations and counter-allegations on each other and claimed to have a smarter strategy on China. However, this article argues that irrespective of who comes to power, the US strategy is irreversibly going to be driven by protection of its own national interests and staging a balancing act - involving a plunge in its dependence on China bilaterally, and hedging its influence internationally.
Allegations and Counter-Allegations
Obama maintains that during his time in office, there has been a reasonable appreciation of the Yuan due to trade pressures laid on China. On the other hand, Mitt Romney claims that the low appreciation of the Yuan has led to loss of jobs in the US economy. Arguments from both contenders reveal a highly un-nuanced view of the economic relationship between the two countries. The trade deficit and loss of manufacturing jobs in the US has significantly less to do with the nature of operation of the Chinese currency. Rather, it can be attributed to the high dependence that the US has on imported products from China and the structural cycle whereby it becomes a borrower of Chinese money to buy its own (Chinese) products. China’s unwillingness to comply with intellectual property rights also came up as a major cause for concern for both the leaders.
Simultaneously, a spew of economic decisions by the American President, largely driven by attempts to placate local sentiments, have been witnessed. First, Obama has blocked the acquisition of four wind-farm projects by Chinese companies citing national security as the reason. This is the first time in 22 years that a US president has blocked a foreign business deal. Second, fearing technology stealth and design copying many Chinese contracts have been questioned and cancelled. For instance, the Congressional report on Huawei and ZTE, has accused these two companies of posing national security threats to the US. Though such instances may have been triggered as Obama’s counter to Romney’s attack of ‘being too soft on China’, but at the same time, Mitt Romney himself has been found to be deeply involved in several of the Chinese firms and enterprises. By and large, the negative focus on China in the entire debate is reflective of a largely pessimistic view of Sino-US relations amongst the American leadership besides usual political-mongering.
China’s Retorts
The Chinese media, especially Xinhua and the Global Times, has been closely following the statements of both the nominees, trying to gauge major impending policy shifts. These somewhat hostile statements and gestures from the US leadership have not been seen favourably by the Chinese leadership. Hong Lei, the foreign ministry spokesperson in China stressed that “We hope the US Republican and Democratic candidates will get rid of the impact of election politics and do more things conducive to China-US mutual trust and cooperation.” He also reassured that China would pursue the reform of its currency in consonance with international norms to allay fears of the international community. Yet, at the same time, China’s commerce ministry warned that relations between the two countries would be hurt by anti-Chinese sentiments in trade, such as the congressional report that alleged that the two Chinese telecommunications firms pose intelligence-threat to the US.
Nevertheless, many Chinese scholars dismiss these statements as electoral politics and not to be taken too seriously and believe neither of the candidates would adhere to any of the promises or remarks that they are making with regards to other countries once the election gets over.
Though the bellicose rhetoric of the two contenders going to poll may not be true but the concerns are real. The US economy has shown only a marginal improvement over the previous year in its attempts to tide over the financial crisis. Most Americans are used to a highly consumerist lifestyle which accounts for the high sales and reliance on Chinese manufactured goods. The solution for reviving the US economy and creating more job opportunities lies in ground basing their own manufacturing units and increasing the purchasing power capacity of the US citizens and not in brow-beating about China.
Being at the helm of international affairs, it would be beneficial for the US to ensure that China plays by the rules of international arrangements, like the WTO. Putting up tariffs against Chinese goods, which Romney wishes to do, would not be the right strategy since it will only increase the value of these products for the American consumers. In this sense, Obama’s strategy seems more pragmatic as he is trying to contain China through multilateral arrangements as compared to Romney, who wants to go for unilateral action against the country. Also, adopting protectionist policies would be counterproductive in the long-term and in an increasingly interdependent economic world.
Allegations and Counter-Allegations
Obama maintains that during his time in office, there has been a reasonable appreciation of the Yuan due to trade pressures laid on China. On the other hand, Mitt Romney claims that the low appreciation of the Yuan has led to loss of jobs in the US economy. Arguments from both contenders reveal a highly un-nuanced view of the economic relationship between the two countries. The trade deficit and loss of manufacturing jobs in the US has significantly less to do with the nature of operation of the Chinese currency. Rather, it can be attributed to the high dependence that the US has on imported products from China and the structural cycle whereby it becomes a borrower of Chinese money to buy its own (Chinese) products. China’s unwillingness to comply with intellectual property rights also came up as a major cause for concern for both the leaders.
Simultaneously, a spew of economic decisions by the American President, largely driven by attempts to placate local sentiments, have been witnessed. First, Obama has blocked the acquisition of four wind-farm projects by Chinese companies citing national security as the reason. This is the first time in 22 years that a US president has blocked a foreign business deal. Second, fearing technology stealth and design copying many Chinese contracts have been questioned and cancelled. For instance, the Congressional report on Huawei and ZTE, has accused these two companies of posing national security threats to the US. Though such instances may have been triggered as Obama’s counter to Romney’s attack of ‘being too soft on China’, but at the same time, Mitt Romney himself has been found to be deeply involved in several of the Chinese firms and enterprises. By and large, the negative focus on China in the entire debate is reflective of a largely pessimistic view of Sino-US relations amongst the American leadership besides usual political-mongering.
China’s Retorts
The Chinese media, especially Xinhua and the Global Times, has been closely following the statements of both the nominees, trying to gauge major impending policy shifts. These somewhat hostile statements and gestures from the US leadership have not been seen favourably by the Chinese leadership. Hong Lei, the foreign ministry spokesperson in China stressed that “We hope the US Republican and Democratic candidates will get rid of the impact of election politics and do more things conducive to China-US mutual trust and cooperation.” He also reassured that China would pursue the reform of its currency in consonance with international norms to allay fears of the international community. Yet, at the same time, China’s commerce ministry warned that relations between the two countries would be hurt by anti-Chinese sentiments in trade, such as the congressional report that alleged that the two Chinese telecommunications firms pose intelligence-threat to the US.
Nevertheless, many Chinese scholars dismiss these statements as electoral politics and not to be taken too seriously and believe neither of the candidates would adhere to any of the promises or remarks that they are making with regards to other countries once the election gets over.
Though the bellicose rhetoric of the two contenders going to poll may not be true but the concerns are real. The US economy has shown only a marginal improvement over the previous year in its attempts to tide over the financial crisis. Most Americans are used to a highly consumerist lifestyle which accounts for the high sales and reliance on Chinese manufactured goods. The solution for reviving the US economy and creating more job opportunities lies in ground basing their own manufacturing units and increasing the purchasing power capacity of the US citizens and not in brow-beating about China.
Being at the helm of international affairs, it would be beneficial for the US to ensure that China plays by the rules of international arrangements, like the WTO. Putting up tariffs against Chinese goods, which Romney wishes to do, would not be the right strategy since it will only increase the value of these products for the American consumers. In this sense, Obama’s strategy seems more pragmatic as he is trying to contain China through multilateral arrangements as compared to Romney, who wants to go for unilateral action against the country. Also, adopting protectionist policies would be counterproductive in the long-term and in an increasingly interdependent economic world.