This 17 October analytical story from Associated Press criticizes both US presidential candidates for presenting a one-dimensional view of China in their campaign rhetoric. Nuance does not work well in presidential politics.
POLI6007 – International Relations in the Asia-Pacific
A course taught in the Department of Politics and Public Administration of the University of Hong Kong
POLI6007 - International Relations in the Asia-Pacific 
I could not agree more with this. I have watched the 3 debates so far (2 presidential, 1 vice-presidential), and I am really critical of a few points, and especially this “China Bashing” Mitt Romney has been doing throughout his campaign. We are in a time when, since the growth rate in China is slowing down, and the State wants to promote internal consumption, the central power within China is going to let the RMB appreciate itself, and it already has.
So basically, you can either just wait for the RMB to continue appreciate, or start a commercial conflict, potentially very destructive economically, by calling China a “currency manipulator”.
Moreover, no one can deny that the US is using the central place of the US$ in world trade to print unlimited amounts of US$ and live on credit, this credit precisely being financed by China ! Surprisingly, this aspect was not mentioned by the candidates…
On an unrelated matter, I found anachronistic to ask for oil prices to go down, to promote the use of coal. The US seriously needs to understand that they cannot keep consuming so much fossil resources.
I am just thinking whether the appreciation of RMB could really settle all problems? Like in HK, the RMB appreciates against HKD (with HKD peg with USD) and it significantly increases the purchasing power of the Mainland visitors. You can see how Causeway Bay or Tsim Sha Tsui have been transformed into areas where you can find cosmetic chain stores, high-end, luxurious stores everywhere. Price is being pushed up and things become unaffordable for locals. Of course, there are other factors that Mainlanders choose to buy in HK instead of China. However, is that what the US want?
It is not surprising that China comes out as a subject in the presidential election. The losing of jobs to China, the RMB, China’s disregard of intellectual property right etc all have strong populous appeal. Yet the article rightly pointed out that “if low-cost manufacturing jobs don’t go to China, they’ll go somewhere else. Think Mexico”.
In yesterday’s class we discussed why China’s “peaceful rise” is met with so much skepticism. Notwithstanding that the opening up of China has brought tremendous benefits for many countries, including the US, China is always portrayed to be the villain. Its one-party rule, the lack of rule of law and the lack of transparency make it an easy target on human issue, unfair trade practices, military hegemonic etc. The increasing number of trade disputes could be a sign of the end of economic honey-moon but there are some lessons learned for Chinese investors from the Huawei incident and the recent lawsuit brought by Ralls Corp against President Obama for barring the company from taking over four windmills in the US state of Oregon due to national security concerns. Though a long way to go, China needs to learn the rules of the Western game and play them well.
I wish the term “currency manipulator” can be better explained. Countries do intervene its currencies at some level through fiscal and monetary policies. But there is little evidence the central bank of China is intervening on a large scale to suppress the value of the RMB. It is interesting to note that Chinese businesses and households have been moving more money out of the country to diversify their investments and hedge against the possibility of political change at home and result a downward pressure on the currency. The government might even be acting to prevent it from going lower to avoid a political reaction in the United States.
The recent case of Chinese telecommunications companies were blocked from investing in the U.S. market for the reason of allegedly posing national security risks is regarded as protectionism behavior by Chinese trade officials. A Chinese Foreign Ministry spokesman urged the United States to create a fair and stable environment for Chinese companies investing and operating in the country. “Such moves will hurt bilateral trade ties. In fact, the growth of China’s investment to the U.S. grew the slowest among all of China’s trade partners in the first nine months,” said Ministry of Commerce (MOC) spokesman Shen Danyang. The ministry hopes the U.S. side will refrain from politicizing trade issues and return to the right track as soon as possible.
So is the US-China business relationship beyond economics?