A few choice quotes from US presidential hopeful Mitt Romney’s recent op-ed in the Washington Post entitled “China must respect the free trade system”:
Having embraced free enterprise to some degree, the Chinese government and Chinese companies have quickly divined the benefits of ignoring the rules followed by others. China seeks advantage through systematic exploitation of other economies. It misappropriates intellectual property by coercing “technology transfers” as a condition of market access; enables theft of intellectual property, including patents, designs and know-how; hacks into foreign commercial and government computers; favors and subsidizes domestic producers over foreign competitors; and manipulates its currency to artificially reduce the price of its goods and services abroad.
China sells high-quality products to the United States at low prices. But too often the source of that high quality is American innovations stolen by Chinese companies. And the source of those low prices is too often subsidies from the Chinese government or manipulation of the Chinese currency.
But like the predatory pricing prohibited under our antitrust laws, China’s underpriced products lead to an undesirable and inefficient elimination of competing businesses, with serious long-term consequences. And in this case, the businesses killed are often our own. Meanwhile, American companies do not even get the supposed benefit of the free-trade bargain: When they try to do business in the Chinese market, they find policies designed to shut them out.
China smiles, diverts attention by criticizing the United States and merrily continues to eat our economic lunch. Who can blame the Chinese for ignoring our timid complaints when the status quo has served them so well?
Actually doing something about China’s cheating makes some people nervous. Not doing something makes me nervous. We are warned that we might precipitate a trade war. Really? China is selling us $273 billion per year more than America is selling China — why would it possibly want a trade war?
And what is the alternative to confronting China? It is allowing the Chinese to take by trade surrender what we fear to lose in trade war. Consider, too, that cheating is contagious. What China gets away with, other emerging economies may emulate. As these countries account for an ever larger share of the global economy, the consequences for the rule-following nations would grow even more intolerable. The result could be permanent damage to the international trading system.
If I am fortunate enough to be elected president, I will work to fundamentally alter our economic relationship with China. As I describe in my economic plan, I will begin on Day One by designating China as the currency manipulator it is.