Obama responded with a boast of his own: “We’ve put unprecedented trade pressure on China” and he repeatedly cited Romney’s investments in China through the private equity firm he founded, Bain Capital.
The rhetoric has obvious appeal to voters uneasy with the general state of the economy and resonates particularly in battleground industrial states like Ohio, Wisconsin and Michigan, where residents still feel a visceral impact from the decline of manufacturing jobs. But Obama and Romney know considerably more about the complex realities of dealing with China than they let on — and neither candidate approached fundamental questions raised for the U.S. by the rise of China as an economic power.
Arguably, Romney has the most sophisticated understanding of the global economy of any recent presidential candidate. He founded Bain Capital by drawing international investors to a partnership that produced extraordinary profits anticipating global market trends, including the outsourcing of jobs once done in-house by American manufacturers.
Anticipating attacks on this business record, Romney appears reticent to publicly discuss his considerable international investment experience. In part, that’s because he understands how the word “China” can be used to motivate worried voters.
Bill Clinton deployed the China card in 1992, complaining that his Republican predecessor had coddled the “butchers of Beijing.” Eight years later, George W. Bush criticized Clinton for being too easy on China. And Romney saw Obama use China during the 2008 debate, with his own vow to crack down on currency and trade manipulation, citing President Bush’s failure to take action.
During Tuesday’s debate Romney pledged repeatedly that he would move swiftly against China’s alleged scheme to artificially hold down the price of its currency, the yuan. A low value for the yuan makes Chinese exports cheaper around the world.
“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,” Romney said.
Obama made similar promises as a candidate in 2008, but now cites the advantage of informal jawboning with the Chinese. “The currency has actually gone up 11 percent since I’ve been president because we have pushed them hard,” he said during the debate.
Despite the attention it received, the pricing of the yuan is a sideshow to the fundamental questions about America’s relationship with China, which now owns a large portion of U.S. debt and is inextricably tied to the overall economy.