AmericanEconomicAlert.org | Fighting for American Companies, Fighting for American Jobs
Few Differences Exist on China Policy between Obama and McCain
By William R. Hawkins
Monday, September 29, 2008
DESPITE PROBLEMS, OBAMA AND MCCAIN SEEK CHINA ACCORD
Democratic presidential candidate Barack Obama and Republican candidate John McCain laid out their views on Beijing's rising diplomatic and economic power in position papers published by the American Chamber of Commerce in China on September 15.
Neither candidate has a China section on his campaign website, so these papers represent a rare look at their thinking on a matter of great strategic importance. The direct audience is not the American people, but those business executives and their Chinese counterparts who have hitched their wagons to Beijing’s advancement.
The China Chamber’s own 2008 White Paper claimed, “The relationship stands on solid footing, with trade growing steadily to an all-time high and an unprecedented level of dialogue between the US and Chinese governments. But if we are to continue this positive momentum, growing protectionist tendencies in both countries must be resisted and openness reinforced.”
The Chamber’s then set out its goals: “The US Government priorities for China should include more resources supporting US companies looking to capitalize on opportunities in the Chinese market; more resources to meet the projected increase in Chinese demand for business and tourist visas; and the facilitation of commercial trade through the ongoing review of export controls and license requirements to reflect market realities.” This last point has long been a demand by the Beijing regime so that Chinese firms could get their hands on American technology, especially “dual use” technology that can be incorporated into China’s defense industrial base.
The U.S. trade deficit with China hit an all-time high last year of $256.3 billion, making it America’s largest bilateral imbalance and accounting for 58 percent of America’s manufacturing deficit. Yet neither candidate mentioned these facts. The closest hint was Sen. Obama’s call for a “rebalancing of our economic relationship with China.” The context was Beijing’s use of currency manipulation. “Because it pegs its currency at an artificially low rate, China is running massive current account surpluses. This is not good for American firms and workers, not good for the world, and ultimately likely to produce inflation problems in China itself,” wrote the Democrat.
Sen. Obama has backed legislation that would define currency manipulation as an illegal subsidy so that the United States could levy duties on Chinese goods. He is a co-sponsor of S. 796, The Fair Currency Act of 2007. This bill would also prohibit the Department of Defense from procuring defense articles from China if such articles are in competition with production form the U.S. defense industrial base. Obama is currently running a television ad in Pennsylvania attacking McCain for voting in 2005 on a procedural motion to prevent floor consideration of a proposal by Democratic Senator Charles Schumer that would have imposed a 27.5 percent tariff on Chinese imports unless China revalued its currency upward. (McCain’s position lost on the vote of 33-67.)
Playing to the Chamber audience, Sen. McCain attacked Obama, claiming “in what has become an all-too-predictable pattern, some American politicians—including the Democratic candidate for president—are preying on the fears stoked by Asia’s dynamism; rather than encouraging American innovation and entrepreneurship, they instead propose throwing up protectionist walls that will leave us all worse off.” Yet, the only action Obama advocated was on currency, an issue on which McCain has also recently expressed concern.
McCain wrote, “China has obligations as well. Its commitment to open markets must include enforcement of international trade rules, protecting intellectual property, lowering manufacturing tariffs and fulfillment of its commitment to move to a market-determined currency. The next administration should be clear about where China needs to make progress, hold it to its commitments through enforcement at the World Trade Organization and enforce US trade and product safety laws.”
The Republican’s statement is not much different from that of his Democratic rival. Obama wrote, “As President, I will use all the diplomatic avenues available to seek a change in China’s currency practices. I will also undertake more sustained and serious efforts to combat intellectual property piracy in China, and to address regulations that discriminate against foreign investments in major sectors and other unfair trading practices.” Obama, added, “I will take a vigorous, pragmatic approach to addressing these issues, utilizing our domestic trade remedy laws as well as the WTO’s dispute settlement mechanism wherever appropriate.”
How seriously should the reader take these statements? Sen. McCain has a long record as a dedicated “free trader” -- one who has worked more often to weaken rather than strengthen U.S. trade laws. Sen. Obama has not been in office long enough to establish a solid record on these issues, despite some encouraging words about “fresh thinking and a change from the US policy approach of the past eight years.” Both papers have the overall tone of Bush Administration statements, where problems are considered merely bumps on an otherwise high road to mutual prosperity, with continued dialogue being a sufficient aid to navigation.
Yet there is little in the record to support the notion that diplomacy alone will solve the many outstanding Sino-American conflicts. Both candidates express too rosy a view of common interests between the United States and China. Consider “climate change,” which both McCain and Obama take seriously. McCain considers this problem to be a “basis of a strong partnership on issues of global concern” with China. Obama thinks, “As the world’s richest developed economy and largest and most dynamic developing country, our cooperation to reduce the threat of climate change can produce models, practices and technologies that will provide impetus to global efforts.”
The aftermath of the recent G-8 summit in Tokyo tells a different story. The major industrial nations agreed to cut in half their greenhouse gas emissions by 2050, if the developing nations were also part of any new international climate control effort. China, India, Brazil, Mexico, and South Africa, known as the Group of 5, rejected any mandate to meet the G-8 target. Chinese President Hu Jintao went a step further in separate remarks, saying, “China's central task now is to develop the economy and make life better for the people.” China signed the Kyoto Protocol, but only because it contained no mandates on developing states, which is the precise reason the United States has refused to ratify Kyoto.
Economic relations with China cannot be pursued outside a larger geopolitical framework, even though the Chamber’s members would like to ignore the consequences of China’s rise to the global balance of power. Sen. McCain hopes, “China and the United States are not destined to be adversaries,” but notes, “China could bolster its claim that it is ‘peacefully rising’ by being more transparent about its significant military buildup and by working with the world to isolate pariah states. In addition, how a nation treats its citizens is a legitimate subject of international concern in today’s world.”
Sen. Obama goes further, identifying one of the pariah states Beijing supports as Iran. “I look to China to work with us to prevent Iran from developing nuclear weapons,” writes the Democratic candidate in what can only be described as wishful thinking at this point. Obama also calls on Beijing, “To halt the genocide in Darfur and to help reverse the slide into anarchy in Zimbabwe,” even though he must know that China is arming the brutal regimes in question in exchange for access to oil and minerals needed by Chinese industry.
Neither candidate indicates any understanding that China’s economic growth, fueled by foreign investment and easy access to the American market, is the source of its expanding global ambitions and improved military capabilities. Of course, to state such a link would be to condemn the Chamber audience, which includes many of the largest American corporations, for committing acts harmful to the security of the United States by helping China’s rise.
Are both politicians too eager to hit these business interests up for campaign contributions to hold them accountable? If so, then neither can claim to represent change from the policies of past politicians in Washington. Those for whose consumption the Obama and McCain papers have been provided will likely conclude that neither they nor Beijing has much to worry about from the next American administration.
William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.
(c)Copyright 2001-2010 AmericanEconomicAlert.org, USBIC