With days remaining until the midterm election, candidates are turning up the heat ... on China. It's a bipartisan bogeyman, a pinata easily smacked from the left or right.
There are two ways to attack China -- in particularly, Chinese currency
manipulation (good explainer HERE) -- on the campaign trail. Get 'em for outsourcing or get
'em for buying our debt with ulterior motives. Democrats are focusing
on the first, while Republicans are focusing on the second. Dave Weigel
makes an astute point:
In 2008, Democrats owned both arguments -- bashing the Bush administration for spending big and selling our future to China was just icing on the anti-outsourcing cupcake. But now it's a fight.
And it's a cheap fight. Is China manipulating its currency? Sure. So are Singapore, Taiwan, Switzerland, and other countries in southeast Asia. If we got them all to raise their currencies, that would make their consumers' wallets fatter, which would give them more buying power in the global marketplace along with making our own products relatively cheaper in that marketplace.
But currency appreciation won't
bring back legions of U.S. jobs -- not when China's currency is
undervalued maybe 25 percent and some U.S. manufacturing wages are a whopping
20 times higher than Chinese factory workers'. As for the motives behind China's massive hoard of U.S. Treasuries, I'll direct you to Jim Fallows' wonderful article from The Atlantic in 2008. Far from a conspiracy, cheap Chinese goods and easy Chinese money subsidize both consumers and government. As Jim elegantly puts it:
This is the real meaning of the vast trade surplus--$1.4 trillion and counting, going up by about $1 billion per day--that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People's Republic of China.
Say what you want about the Chinese, they have a strategy: produce a lot of cheap goods, sell them for dollars, and put away the dollars to keep your currency cheap, which keeps your goods cheap, which keeps the cycle turning. What's the United States' global strategy? More to the point, what are the midterm candidates' global export strategies?
One percent of the United States' 30 million companies export. Only 0.4 percent export to more than one market. The president announced the National Export Initiative to double US exports in five years to bring fresh money into the stalled economy. Let's embrace that goal. Are "repeal ObamaCare" or "raise taxes on multinational companies" really the best ideas candidates can add?