As China's Next PM Prepares for America Visit, Mitt Romney's Threats of Trade War Strain U.S.-China Relationship
Xi Jinping, the man that will likely be China’s prime minister later this year, will visit the U.S. next week on a trip that will take him to California and Iowa, in addition to Washington. The visit will allow China’s future leader to develop relationships with American officials and affirm the “strategic partnership” between the U.S. and China nearly 40 years after Nixon’s historic visit. But while both sides are publicly stressing the importance of the visit and the importance of U.S.-China cooperation, there are a host of specific issues on the table that have no easy resolution in sight. The timing of the visit is especially delicate as the election heats up, with candidates frequently bashing China and its trade policies.
There is a kind of tacit understanding that election year criticism of China is unavoidable and will not harm the long-term relationship of the U.S. and China. But the uptick in overtly racist campaign ads and Romney’s jingoistic rhetoric threatening a trade war against China have reached a higher level of vitriol than in previous elections. The most aggressive critics of China want to press charges against China in the WTO, somehow persuade the country to raise the value of the Yuan, and impose direct tariffs on Chinese imports.
Aside from resentment of China’s trade policies vis a vis the U.S., there is also anger at China’s recent veto of a UN resolution condemning Syria, as well as its continued hesitancy to embrace sanctions on Iran.
First of all, it’s important for Americans to take a realistic approach to China despite the perception of China as a menacing rising power, emitter of greenhouse gas, and patron of evil regimes the world over. There may be some truth to these perceptions but there’s also the need to understand what the Chinese would say to American criticisms.
Lets start with realism in international relations: The recent sanctions on Iran have only allowed the Chinese to get discounts on Iranian oil while still using the convenient intellectual cover of “not interfering in sovereign nations internal affairs”. In fact, “non-interference” has become China’s version of the Monroe Doctrine, the 19th century policy in which the U.S. opposed European intervention in Latin America in favor of an “open door”. China is in a similar position today: a rising power that has adeptly inserted its state companies into areas of the world like Africa that have long been hostile to the U.S. and “the West." What strategic reasons does China have to back sanctions when they can continue to receive the benefits of importing Iranian (and other nations’) oil and resources without any of the risks associated with supporting sanctions?
With regard to U.S.-China trade, China has no incentive to rapidly let the Yuan rise, as America desires. With already high unemployment (despite its booming GDP), China is worried of a global recession that could put more factory workers out of work. Why would China risk more unemployment in export-oriented factories at a time of uncertain global demand? The reality is that the Yuan will probably rise gradually in the foreseeable future. Also important is the way criticism of China’s trade practices by a wealthy nation is perceived in China, a country that despite its rapid growth still has about 128 million people living on a dollar a day or less.
China’s rise is here and we should get used to it. We should also get realistic about what we can expect the Chinese to do. Big pronouncements of displeasure are likely to be ineffective. We can get serious by looking at incentives and agreements on specific trade issues that could benefit the U.S., and more importantly, prioritize long-term economic growth through investment in education and infrastructure. We should also realize the hypocrisy of people in the business community like Mitt Romney, who profit from corporate outsourcing to China and elsewhere and then turn around to pretend that they are suddenly concerned about jobs at home.
Photo Credit: An Honorable German