Presidential Debate Tonight: Mitt Romney is All Wrong in His Approach to China
While engaging in debate with the leader of the free world, Mitt Romney has little choice but offer to Americans how he would act given the opportunity to lead the country. Governor Romney, like his running mate Paul Ryan, has little foreign policy record of which to speak. Nevertheless, as a prominent political figure it is expected Mitt Romney voice his opinions on current affairs. For example, part of Mitt Romney's 5 Point Plan is to "curtail unfair trade practices with countries like China." And to Romney's credit, China is infamous for artificially de-valuing their currency; a practice that makes goods from China appear cheaper than American-made goods.
Indeed, one of the primary factors of China's astounding growth over the past 30 years is their strategic currency manipulation. The Chinese yuan has continually been worth much less than the U.S. dollar, and in turn, Chinese exports arrive in U.S. markets looking cheaper than an American product. Consequently, consumers purchase more Chinese-made goods, resulting in less American-made goods being bought. It follows, of course, that there are less U.S. manufacturing jobs due to China's currency manipulation. Meanwhile, China's incredible rise in economic power can largely be attributed to America's demand for their labor and goods.
In the second debate, Romney told the American people he would call China on his first day as president and demand that they stop this unfair practice. Romney also stated he would cut down on China's pirating of U.S. technology. In a perfect world, it would be phenomenal for China to start playing by the rules. Mitt Romney has laid out that as president, he will crack down on China.
If Mitt Romney walked into the Oval Office on day one and called China demanding they stop de-valuing the yuan, he would effectively spark a trade war between the two biggest economies in the world. China is making too much money off of their current practices to have any incentive to change. Furthermore, the Chinese government owns a lot of U.S. debt they can easily dangle over our heads. Any type of enforcement by Mitt Romney (as president) to follow through on his promise would shock a fragile U.S. economy. Under no circumstance can either China or the U.S. afford to stop trading with each other — our economies are inextricably linked.
As a man that stands by free markets, Mitt Romney should know that China's comparative advantage in providing labor is far too valuable to disrupt. Americans, too, are benefiting from our current economic relationship with China; Miami Heat star Dwayne Wade recently dropped his deal with Micheal Jordan's brand to become the face of Li-Ning, a Chinese apparel company. Mitt Romney's talk of China is all rhetoric; a snap of the fingers will not force China to stop de-valuing their currency. It can be hard during a time of endless rhetoric, but when possible we must seek out how practical the candidates' policies are. Keep this in mind while tuning into the debate tonight.