CNBC, 23 October 2015
Scott Paul, president of the Alliance for American Manufacturing.
When the Republican presidential field gathers for its third debate, the guiding topic will ostensibly be economic policy. That means the candidates should be talking about China.
Yes, the “foreign policy” debate (Sept. 17 on CNN) has come and gone, but this subject is just as pertinent to voters now as it should have been then, when China was barely mentioned.
According to a recent Pew poll the public sees a number of problems with the U.S.-China relationship, from regular cyber hacking allegations, to Beijing’s belligerent military activity in the world’s busiest shipping lanes, to our own increasingly tenuous bilateral economic relationship.
It would be hard to call these concerns unjustified.
Americans are worried about the level of U.S. debt held by the Chinese government. It’s roughly $1.2 trillion.
They’re worried about job loss. The country has lost more than a million manufacturing jobs to Chinese imports since 2001.
And they’re worried about the incredibly lopsided balance of our trade. U.S.-China trade in goods was a record $590 billion in 2014, and very weighted; the trade deficit with China was $343 billion, a record of its own.
It’s no wonder the public is interested in how the next president plans to address China. Voters want to know:
- What will be done about China’s inability to maintain its trade commitments? Despite its entry to the world Trade Organization, China still forces technology transfer on firms as a condition of market access, its state-owned enterprises have grown massive, and it maintains artificial barriers to market access.
- Do any of the candidates believe China is a market economy, or deserves to be treated like one? There will be a decision made soon at the WTO about whether to graduate China to market economy status, which will have ramifications on the types of tariffs unfairly traded Chinese imports can face.
- What about Beijing’s past behavior on trade agreements gives faith that it will live up to its recent promise to refrain from government-sponsored cyber theft of industrial secrets? Independent reports suggest that cyber-intrusions have continued even after an agreement was reached.
- How would a Republican administration respond to the threats posed to our own economy by a Chinese that’s in full slowdown, just as its authoritarian government clumsily attempts a turn toward market orientation? Did the latter cause the former?
- What would the next president say about China’s inability to keeps its hands off the market value of the yuan? China has manipulated its currency to gain a trade advantage for decades, but no administration – Republican or Democratic – has taken firm steps to curb it. Will any of them commit to being any different?
- And what will the candidates have to say about an increasingly globalized military supply chain? Many of the essential inputs for U.S. defense systems are sourced in places like China, which has a history of anti-competitive behavior in industries with national security repercussions.Do the candidates think we can credibly deter China while our fleet in the Pacific depends in no small part on Chinese-made material.
By my count there are still 15 candidates left in the race for the GOP nomination, and while their positions on China vary, none offer the kind of assurance that they’ll handle a complex question correctly.
Ben Carson promises pure belligerence toward China, and not much else. Marco Rubio thinks America’s best response is to sign the Trans-Pacific Partnership, which would enshrine the weaker rules of origin on traded goods and nonbinding currency language that China wants to see in precedent-setting international agreements.
Jeb Bush is happy with the status quo and his head in the sand. And Donald Trump, who has talked, loudly, about the China question more than anyone in the field, hasn’t offered any specifics. Referring endlessly to your business negotiating background isn’t a policy plan.
Luckily, there’s nothing like the bright lights and big stage of a nationally televised debate with your political rivals to bring policy plans into sharp focus. What will the GOP say about our uneasy economic relationship with China? America wants to know.
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