Republican presidential candidate Mitt Romney’s talk of getting tough with Chinese trade practices could make China a hot button issue in the coming 2012 presidential campaign.
While revealing his plan to revive the ailing U.S. economy and boost employment, Romney also promised to label China as a currency manipulator – an official term that can prompt negotiations and possible sanctions under U.S. law – and answer to the U.S. public’s mounting concerns over China’s economic and military growth.
Romney pledged that one of his first executive orders will be to “clamp down on the cheaters” if China does not float its currency, and go after China for the theft of U.S. intellectual property.
Numerous leaders and lawmakers, including Treasury Secretary Tim Geithner, have been censuring China for keeping the value of the yuan low. They say this policy artificially lowers the price of Chinese goods, giving Chinese exporters an unfair trade advantage.
Over the last year, both the Senate and House have discussed cracking down on countries that manipulate their currencies, but their bills have not reached President Obama’s desk for approval. The Treasury Department has attempted to pressure China but has refrained from naming the country a “currency manipulator.”
Scott Paul, executive director of the Alliance for American Manufacturing, said a poll conducted by the group showed that Republicans were as strong as Democrats in supporting a more assertive U.S. trade policy against China, and welcomed Romney’s remarks. Paul also cited the example of former President Ronald Reagan’s tough stance against Japan on semi-conductors and the value of the yen.
However, the Wall Street Journal in an editorial called Romney’s plan against China “by far the most troubling proposal” and cautioned that “giving Americans the impression that a trade war will bring those jobs back to the U.S. is offering false hope.”
The Economist, while commenting that Romney’s proposal was a useful political tool, said its effectiveness has markedly deteriorated as the yuan may no longer be highly undervalued. It added that labour costs in China’s manufacturing sector have likely increased by 4% in 2010, causing the price of Chinese imports to the U.S. to rise significantly, and that some manufacturers were already moving out of China. It concluded that “America's economy will need much more than a floating yuan to get back to full employment.”
Report: Romney puts China squarely in presidential race (Reuters, 7 Sep 2011)
Report: Romney talks tough on China (CNN, 7 Sep 2011)
Analysis: The wages of China bashing (Economist, 7 Sep 2011)