A bipartisan spirit has momentarily returned to Washington! Before anybody gets too excited, it's not on jobs, the deficit, or the economy -- but rather China. By a 63-35 tally, the U.S. Senate voted on Tuesday, Oct. 11, to support tough legislation slapping tariffs on countries that purposely undervalue their currency (read: China). And though the bill has almost no chance of becoming law -- House Speaker John Boehner has called the legislation "dangerous" -- the fact that it was co-sponsored by a gaggle of liberal, moderate, and conservative senators suggests that this broadside against America's second-largest trading partner has support from across the political spectrum.
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In a way, it's surprising that it took this long for Congress to get around to making China a scapegoat for the continued U.S. downturn. After all, finding a foreign bogeyman at a time of domestic economic dissatisfaction is hardly unusual. In the 1930s, it helped spur passage of the Smoot-Hawley tariffs; in the 1980s and early 1990s, economic fears -- and high-profile investments by Japanese businesses, like the purchase of Rockefeller Center -- led to a round of Japan-bashing in popular culture and the media.
In Tuesday's most recent Republican debate, GOP front-runner Mitt Romney was unabashed in labeling China as a cheater and manipulator of its currency. According to Romney, "the Chinese are smiling all the way to the bank, taking our currency and taking our jobs and taking a lot of our future." In a Washington Post op-ed three days later, Romney went even further, accusing China of seeking "advantage through systematic exploitation of other economies" and stealing American innovations. His remedy: classifying Beijing as a currency manipulator and taking a host of unilateral steps against China, including punitive measures.
These sorts of attacks on China, while relatively rare in presidential politics, are not unheard of. In 1992, Bill Clinton regularly took then-President George H.W. Bush to task for his coddling of the "butchers of Beijing" (a policy that was quickly reversed once Clinton took office -- a compelling reminder that even the harshest foreign-policy campaign rhetoric should perhaps be taken with a grain of salt). China "bashing" began to emerge more prominently during the 2010 campaign with dozens of congressional contenders scapegoating China for America's economic troubles.
For example, Sen. Harry Reid accused his GOP rival Sharron Angle of being a "foreign worker's best friend" for supporting tax increases that sent American jobs to China and India. He was joined by Democratic colleagues like Barbara Boxer who went after Carly Fiorina for supporting "Shanghai" over "San Jose." Then-Rep. Zack Space of Ohio criticized his Republican opponent for backing free trade with China because it helped "their standard of living." Republicans got in some jabs as well, including Spike Maynard, whose ads attacking 34-year incumbent Rep. Nick Rahall featured traditional, plucked-string, Chinese-style music, red backgrounds, and shadowy pictures of what appears to be Chairman Mao.
And it isn't just the loss of jobs that provokes American ire -- it's also the holding of trillions of dollars in U.S. debt by the Chinese government. In reality, China owns just around 8 percent of all U.S. Treasurys -- the largest group of owners is actually individual Americans and U.S. institutions. Yet even President Barack Obama has been quick to remind audiences that continued deficit spending means "borrowing more from countries like China." The notion that China is "America's banker" has more or less become a cliché.
But for all the bipartisan panda-mugging going on, it's unclear that the American people are buying it quite yet. According to a recent poll by the Pew Research Center, when given an option of "getting tougher with China" or "building a stronger relationship," voters supported the latter by a 53-40 margin. Even though all but five members of the Senate Democratic caucus voted for this week's currency bill, only 32 percent of Democratic voters want to see a get-tough approach to China. In fact, the only group of Americans that Pew could find who were in favor of a get-tough stance with China were self-described Tea Party members.
The reality is that while the Chinese currency is likely undervalued (though steadily appreciating), it's hardly a predominant cause of America's economic malaise. As Adam Hersh, an economist at the Center for American Progress (CAP), wrote on Oct. 7, "Policymakers should not pretend ... that tackling the exchange rate issue will be a panacea for our economic growth, jobs, and competitiveness challenges."
Moreover, a blunt instrument like the legislation passed in the Senate will be unlikely to shift Chinese behavior in the near term -- (as Atlantic correspondent James Fallows explained it to me, "It is as bad in internal Chinese politics to 'knuckle under' to U.S. 'demands' as vice versa") -- and even if it did, it would take a massive appreciation in the yuan to have any real significant impact on American jobs.
If anything, such a course of action would likely lead jobs to trickle to other low-wage countries rather than back to the United States -- a phenomenon that is already taking place as labor costs in China are on the rise. Given that China is the third-largest importer of American goods ($66 billion so far this year), a potential trade war would not only affect what Americans pay for Chinese products, but it could also directly harm U.S. exporters and -- wait for it -- cost American jobs.
As CAP's Nina Hachigian points out, it's not that currency valuation is unimportant. But other challenges in the U.S.-China relationship, like improved market access for U.S. products and better intellectual-property protections, need to be addressed. That's where the focus should be -- and to some extent it has been with the Obama administration, which has not been shy in taking China to the World Trade Organization on exactly these points.
According to Devin Stewart, a senior fellow at the Carnegie Council and longtime Asia watcher, Congress is taking what he calls quite bluntly "a boneheaded approach. It is the exact opposite direction we should be going in." The right direction, he says, would be to focus on spurring innovation at home and building social infrastructure rather than making China into a global bad guy.
It reminds me of a conversation I had with one of Foreign Policy's former editors, Charles William Maynes, not longer after the 9/11 attacks. When I noted how quickly America had united against al Qaeda and the broader terrorist bogeyman, he upbraided me: "If it wasn't the jihadists, it would have been the Chinese." With Osama bin Laden somewhere at the bottom of the Arabian Sea, maybe it's China's turn.
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