Two things seem certain in modern presidential campaigns: Candidates will spend more time attacking each other than offering constructive alternatives, and one or both will attack China.
In 1992, Bill Clinton accused President George H.W. Bush of coddling Chinese dictators. In 2004, John F. Kerry assailed “Benedict Arnold CEOs,” and by extension their allies in President George W. Bush’s administration, for shipping jobs to China. Now, Mitt Romney is challenging President Obama by pledging that if elected he will “on day one” label China a currency manipulator, crack down on Chinese “cheating” on everything from intellectual property violations to trade practices, and determine what should be cut from federal spending based on whether it merits “borrowing from China to pay for it.”
More than ever, these attacks are counterproductive, distort a robust and ever more entwined China-U.S. economic relationship, and distract from the real challenges facing U.S businesses, which have little to do with China and everything to do with the continued viability, competitiveness and innovation of the American economic system.
China is a larger and more important market for U.S. companies than ever. Even as the pace of growth in China moderates, Chinese consumers flock to U.S. brands as diverse as KFC and General Motors, Intel and Walmart, IMAX and iPhones.
If you ask, many executives will say it is easier to do business in China than it was a decade ago (though harder than it was five years ago) and is still much more straightforward than in many other parts of the world, such as India. For Americans in general, however, views of China are amplified by anxiety about the slow economic recovery in the United States. A more confident America in the mid-2000s was less troubled by hurdles to doing business in China than a more anxious America is about lower — but still formidable — hurdles today.
The best that can be said for American hostility to China is that is it bipartisan. Not to be outflanked by Romney, the Obama administration has intensified its pressure on Chinese trade and investments. It halted the purchase of wind farms in Oregon by Ralls, a Chinese-owned company, because the proximity of the farm to a naval facility could enable Ralls to “take action that threatens to impair the national security of the United States.” It was the first time in 20 years such a justification was used to halt a Chinese purchase.
Such opposition is in sync with Washington’s hard line about Chinese purchases of U.S. assets, notably the storm of criticism in Congress of the Chinese telecom giants Huawei and ZTE. Huawei is contemplating a public offering on Wall Street but has run into a gantlet of rhetoric from Democrats and Republicans that paints the company as something just slightly better than the arms manufacturer Krupp at the height of Nazi Germany.
This is hardly the first time such a storm has erupted in Congress. In 2005, Chinese energy company CNOOC was forced to withdraw its bid for California energy company Unocal after a similar uproar about dark threats to national security. CNOOC’s current $15.1 billion bid for Nexen, an oil and gas explorer, has drawn unusual scrutiny both in the U.S. and in Canada.