Mitt Romney and President Obama debate Monday in Boca Raton, Fla., with moderator Bob Schieffer. (Win McNamee/Getty Images)
At this point many of us who have been following the US Elections could probably write the candidates’ responses to any question about China ourselves. Nevertheless, let’s examine whether anything of substance on the US-China relationship managed to squeeze through the desperation of both Barack Obama and Mitt Romney not to screw up the final debate.
China’s both an adversary but also a potential partner in the international community if it’s following the rules. So my attitude coming into office was that we are going to insist that China plays by the same rules as everybody else.
And I know Americans had — had seen jobs being shipped overseas, businesses and workers not getting a level playing field when it came to trade. And that’s the reason why I set up a trade task force to go after cheaters when it came to international trade. That’s the reason why we have brought more cases against China for violating trade rules than the other — the previous administration had done in two terms. And we’ve won just about every case that we’ve filed, that — that has been decided. In fact, just recently, steelworkers in Ohio and throughout the Midwest, Pennsylvania, are in a position now to sell steel to China because we won that case.
It is worth noting that the cases the Obama administration has brought against China at the World Trade Organisation (WTO) were mostly initiated during this election cycle. The President seemed less concerned about alleged Chinese trade violations when the Republicans weren’t attacking him for being soft on China.
Obama’s stance here is little changed to what he has said previously throughout the campaign (if not, say, the first two years of his presidency).
China has an interest that’s very much like ours in one respect, and that is they want a stable world. They don’t want war. They don’t want to see protectionism. They don’t want to see the — the world break out into — into various forms of chaos, because they have to — they have to manufacture goods and put people to work. And they have about 20,000 — 20 million, rather, people coming out of the farms every year, coming into the cities, needing jobs. So they want the economy to work and the world to be free and open.
And so we can be a partner with China. We don’t have to be an adversary in any way, shape or form. We can work with them. We can collaborate with them if they’re willing to be responsible.
They look at the fact that we owe them a trillion dollars and owe other people 16 trillion (dollars) in total, including them. They — they look at our — our decision to — to cut back on our military capabilities — a trillion dollars.
The “borrowing from China” complaint is a common one on the right, but is also something of a misrepresentation. “Borrowing” implies (to those who don’t already have a decent understanding of securities) that the US government goes cap-in-hand to beg for money in order to pay for various programs. In reality, China (as well as numerous other countries) buys US Treasury Bonds because they are an extraordinarily safe investment. Indeed, attempts by China to “diversify from Treasuries into more risk-oriented assets have not fared well”.
Additionally, hardly any new US debt (such as that generated by the Obama administrations stimulus package) is “borrowed from China”; in fact, China has reduced its holdings of U.S. bonds from $1.314 trillion in mid-2011 to $1.169 trillion in mid-2012.
[On] day one I will label them a currency manipulator which allows us to apply tariffs where they’re taking jobs. They’re stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods. They have to understand, we want to trade with them, we want a world that’s stable, we like free enterprise, but you got to play by the rules.
Despite numerous reiterations of his pledge to label China a currency manipulator, many commentators still believe that Romney will backtrack on this if he does become President.
If President Romney were to follow through on Candidate Romney’s threats, economic commentators on both the left and the right have predicted disastrous results. Richard C. Bush III of the Brookings Institution recently stated that such a move “would result in a mutually damaging trade war that slowed economic growth and increased unemployment in both countries and caused inflation and higher interest rates in the United States”.
Romney was dismissive about the possibility of a trade war however:
Well, they sell us about this much stuff every year. And we sell them about this much stuff every year. So it’s pretty clear who doesn’t want a trade war. And there’s one going on right now that we don’t know about. It’s a silent one and they’re winning. We have an enormous trade imbalance with China. And it’s worse this year than last year. And it was worse last year than the year before.
Governor Romney’s right. You are familiar with jobs being shipped overseas, because you invested in companies that were shipping jobs overseas. And, you know, that’s your right. I mean, that’s how our free market works.
But I’ve made a different bet on American workers. You know, if we had taken your advice, Governor Romney, about our auto industry, we’d be buying cars from China instead of selling cars to China. If we take your advice with respect to how we change our tax codes so that companies that are in profits overseas don’t pay U.S. taxes compared to companies here that are paying taxes, now, that’s estimated to create 800,000 jobs. The problem is they won’t be here; they’ll be in places like China. And if we’re not making investments in education and basic research, which is not something that the private sector is doing at a sufficient pace right now and has never done, then we will lose the lead in things like clean energy technology.
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