Bashed by Obama and Romney at debate, China shows its patience is wearing thin
BEIJING — In the aftermath of a U.S. presidential debate that included blistering accusations about unfair Chinese economic practices, a commentary carried by China’s state Xinhua newswire on Wednesday warned that targeting its country’s products or currency would risk a trade war.
While the analysis was far from a statement of intent by senior Chinese leadership, and stopped well short of past media tirades sparked by foreign policy issues, it signaled fraying patience in Beijing with a U.S. presidential campaign that’s featured criticism of China by both President Barack Obama and Republican challenger Mitt Romney.
“If ‘President Romney’ was determined to keep his words by throwing punitive tariffs against Chinese products exported to the U.S. market on Day One, then China perhaps would be forced to fight back, and then his administration would be very likely to be on its way to a global trade war,” said the item, which was attributed to a writer named Liu Chang and posted on the news service’s English-language website. “Such a scenario would ultimately bury his other promises, not least the one to jumpstart the sluggish U.S. economic growth.”
Chinese news organizations have published several pieces lately complaining about U.S. “China-bashing” this election season.
During Tuesday night’s debate, the word “China” came up 21 times, according to a transcript, as Obama and Romney alternated between pledging to confront the nation and criticizing each other for having failed to do so.
The specific quote to which Xinhua was referring was one by Romney in which he said, “China has been a currency manipulator for years and years and years. 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.”
Although the United States has a massive trade deficit with China in goods and services — $282 billion last year — the value of the Chinese currency, the yuan, against the dollar has been increasing, undercutting the argument that Beijing should be sanctioned for keeping its value artificially low to make its products cheaper.
Financial news agencies reported last week that the yuan had hit a 19-year high. In May, the Peterson Institute for International Economics, a non-partisan research center in Washington, revised its estimate of how much the yuan needed to strengthen to reach “equilibrium” with the U.S. dollar, from 28.5 percent last year to 7.7 percent.
Xinhua ran a separate report on Tuesday quoting Vice Foreign Minister Cui Tiankai in Brussels saying that his nation wants to avoid trade wars.
“We believe that an open trading system serves the interest of everybody, especially in the difficult time of the global economy,” Cui said. “If there is any trade war between the major trading states in the world, nobody will be better off.”
The atmosphere surrounding business between China and the United States has been particularly rocky recently. Last month, Obama ordered a Chinese company to divest its interests in wind farm projects near a Navy testing facility in Oregon, citing national security risks. And then earlier this month, the U.S. House Intelligence Committee released a report naming two leading Chinese telecommunications firms as threats to American national security and recommended they be blocked from mergers or acquisitions in the United States.
Still, given the delicate balance of interests and conflicts between the United States and China, which are the largest and second-largest economies in the world and last year had bilateral trade worth some $539 billion, many observers think it unlikely that either Romney or Obama would introduce a radically different approach to China in 2013.
That didn’t stop the two from swapping China-related barbs at New York’s Hofstra University on Tuesday.
Obama needled Romney, who co-founded the private equity firm Bain Capital, for his business dealings here.
“When he talks about getting tough on China, 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 … Governor, you’re the last person who’s going to get tough on China,” Obama said.
Romney later retorted, “Let me give you some advice. Look at your pension. You also have investments in Chinese companies.”
Nicholas Lardy, a Peterson analyst who’s written extensively on the Chinese economy, recently cautioned against expecting a vast shift in America policy.
“I tend to think that the change might be significantly less than you would imagine based on some of the rhetoric,” Lardy said in remarks posted to the institute’s website last month.
Of Chinese officials watching the presidential campaign, Lardy remarked that, “I think they’ve learned over the years that the rhetoric escalates in campaigns, but there frequently isn’t a follow through. I think they’re very much of the school, we are going to watch and see what you actually do.”