U.S. Presidential Candidates Clash Over China (Updated)
Even though the third U.S. presidential debate will tackle specific foreign policy issues, Mark McDonald of The International Herald Tribune writes that President Barack Obama and Republican challenger Mitt Romney still butted heads over China in their second debate on Tuesday night:
Mr. Obama mentioned three new trade agreements and a number of unfair trading cases brought by his administration — twice as many as the Bush presidency, he said. He specifically cited a move against China’s “flooding” of the U.S. market with car and truck tires, a challenge that he said “saved a thousand jobs.”
“When he talks about getting tough on China,” Mr. Obama said, “keep in mind that Governor Romney invested in companies that were pioneers of outsourcing to China and is currently investing in companies that are building surveillance equipment for China to spy on its own folks.”
Mr. Obama then spoke sharply and directly to Mr. Romney, saying, “Governor, you’re the last person who’s going to get tough on China.”
Later in the debate on Tuesday, Mr. Romney repeated his promise “on Day 1” to label China a currency manipulator, which he said would enable him to impose tariffs on Chinese goods. He said Beijing “has been cheating over the years,” stealing patents, product designs and intellectual property from American companies. China, he said, has “not played by the rules.”
In response, Mr. Obama repeated the outsourcing charge and said his administration has “exerted unprecedented trade pressure on China.”
Voice of America reports that Romney “repeatedly returned to the topic of China” during the debate, and fired back when Obama criticized him for investing in companies that had outsourced jobs to China:
Romney, apparently ready for the accusation, responded later by calling on the president to “look at your pension,” saying Obama had also invested in Chinese companies.
Romney: “Mr. President, have you looked at your pension?”
Obama: “You know, I don’t look at my pension. It’s not as big as yours so it doesn’t take as long,”
Romney: “Let me give you some advice. Look at your pension. You also have investments in Chinese companies. You also have investments outside the United States. You also have investments through a Cayman’s trust.”
The candidates used China as a “punching bag”, according to The Wall Street Journal, though they disagreed on how to address the issue of China’s currency valuation:
Mr. Romney said four times during the 90-minute debate that he would crack down on China immediately after his inauguration, standing by pointed statements he has made throughout his campaign about Beijing’s alleged intervention in markets to hold down the value of its currency, the yuan. A weak yuan makes Chinese goods cheaper on world markets.
“China has been a currency manipulator for years and years and years,” Mr. Romney said. “And the president has a regular opportunity to label them as a currency manipulator but refuses to do so. On day one, I will label China a currency manipulator, which will allow me as president to be able to put in place, if necessary, tariffs where I believe that they are taking unfair advantage of our manufacturers.”
During the debate, Mr. Obama cited the shuttle diplomacy that Treasury Secretary Timothy Geithner and others in his administration have used privately to try to persuade China to allow its currency to float more freely, suggesting this approach has been more effective than publicly slapping the country with a label.
“As far as currency manipulation, the currency’s actually gone up 11% since I’ve been president because we have pushed them hard,” Mr. Obama said, using an inflation-adjusted estimate of how much the yuan has risen against the dollar since June 2010—when China, under pressure from the U.S., other nations and the International Monetary Fund, agreed to let its currency float somewhat against the dollar.
On the subject of currency manipulation, CNN reports that some observers think that Romney has backed himself into a corner:
Many analysts worry that Romney’s plan to label China a currency manipulator could backfire, and the specificity of the promise leaves him few options but to follow through.
“He has created a huge problem for himself,” Zweig said. “He has said consistently he will do it. So how does he climb down from that?”
Economists are even more worried about the second part of Romney’s initial China plan, which is to direct the Department of Commerce to institute countervailing duties on Chinese imports if China “does not quickly move to float its currency.”
That could spark a trade war between the two countries — a circumstance likely to end unhappily for both Beijing and Washington.
Update: ABC News has edited the clips of the debate in which Romney and Obama discuss China: