Wednesday, March 14, 2012

China bashing par for the course in heat of US elections

Business Times - 15 Mar 2012


China bashing par for the course in heat of US elections

By LEON HADAR
WASHINGTON CORRESPONDENT

IT may not have been surprising that on the same day the Republican presidential candidates were taking part in major primary races in Alabama and Mississippi and public opinion polls pointed to more Americans being dissatisfied with the job that the current Democratic White House occupant was doing, US President Barack Obama decided to demonstrate he was getting tough with China.

In a sign that Washington was escalating its trade offensive against Beijing, Mr Obama told reporters that his administration was filing a trade ruling case against China as part of an effort to protect American companies against Chinese restrictions on exporting the rare-earth minerals that are used to build high-tech products such as hybrid car batteries and flat-screen television sets. 'We want our companies building those products right here in America. But to do that, American manufacturers need to have access to rare earth materials, which China supplies.'

He made it clear that he saw the issue as integral to his election-campaign narrative of rebuilding the American manufacturing base and strengthening US global economic competitiveness vis-a-vis China and other leading economic powers.

The perception that unfair trade practices by the Chinese were responsible for their success in getting American manufacturers to move their operations to China and in having the upper hand in trade competition with the US is shared by many Americans and has been exploited by the leading Republican presidential contenders.

Hence, former Massachusetts governor Mitt Romney has engaged in China-bashing during the election campaign, accusing Mr Obama of failing to stand up to China in the global economic arena and pledging that, if elected as president, he would retaliate against Chinese trade practices by imposing economic sanctions against Beijing.

At the same time, both Republican and Democratic lawmakers have urged the White House to take punitive action against China in response to Beijing's continuing effort to undervalue the yuan to improve the ability of Chinese exporters to out-compete American manufacturers.

In fact, the notion that China was posing a threat to US economic interests is also very popular among members of the trade unions, a powerful political force in the Democratic Party as well as among blue-collar workers. The unemployment rate remains very high among blue-collar workers, who tend to be concentrated in critical electoral 'swing' states such as Ohio and Pennsylvania.

The recent New York Times/CBS News opinion poll suggests that the support for Mr Obama among these voters has slipped to an all-time low, and could continue to fall as oil prices continue to rise. The results of the same poll also point to rising dissatisfaction among all voters with his management of the economy.

During his State of the Union Address in January, he announced the formation of a new trade task force that would investigate China's trade practices while calling on the Chinese to remove market restrictions to American exporters and respect international business standards. He reiterated these positions during his meetings with Chinese Vice-President Xi Jinping last month.

Demonstrating that he would continue to protect the interests of American business and workers by standing firm vis-a-vis China makes a lot of political sense for Mr Obama. So does Chinese politicians' resistance to this American pressure in a year when the Chinese Communist Party chooses its new leadership.

'We've got a constructive economic relationship with China, and whenever possible we are committed to working with them to addressing our concerns. But when it is necessary, I will take action if our workers and our businesses are being subjected to unfair practices,' he stressed, touting the new case brought before the World Trade Organization. 'We will keep working every single day to give American workers and American businesses a fair shot in the global economy.'

Strengthening the US hand in the new trade dispute was the fact that the European Union and Japan have joined Washington in filing the complaint with the WTO that China was restricting its export of 17 rare earth minerals. Beijing gave environmental concerns as the main reason for cutting export quotas of these minerals.

But US Trade Representative Ron Kirk claims that the Chinese have restricted the export of these minerals in recent years to provide their companies with an unfair advantage in the production of high-technology products.

No one expects a WTO ruling on this issue soon. But Mr Obama would be able to point to his assertive posture in this new trade dispute with China during the coming presidential debates with his Republican rival who can be expected to accuse him of appeasing the Chinese.

So far, it's all going on a very predictable trajectory.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

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