With Mitt Romney and Barack Obama trading jabs over who will be tougher on China, somehow the bigger picture has been lost: Which U.S. presidential candidate would be better for U.S.-China relations?
It's an important question for Beijing. In 2011, the United States was China's largest trading partner. With millions of its own jobs at stake, Beijing is not only mindful of the U.S. presidential candidates' strong views on China's currency, but on the bigger issue of how each would direct economic policy over the next four years. And this attention comes at a particularly delicate time, as Beijing is watching the U.S. "return to Asia" and "rebalancing" in the Asia-Pacific and thinking about how this will evolve as China rises. These U.S. policies -- along with issues including labor, environment, market access, and intellectual property rights -- will directly affect China's development and prosperity. That in turn will influence China's domestic stability and perhaps even its government's legitimacy, especially as its new leadership emerges from the November Communist Party Congress, just days after the U.S. election.
Despite his aggressive rhetoric, a President Romney might actually be better for China.
Traditionally, Republicans have favored free trade, free enterprise, and less regulation -- qualities more or less compatible with China's present state economic philosophy of development, investment, trade, entrepreneurship, and efficiency -- not to mention a shared concern over the economic risk of curbing climate change. Since the two countries established an official relationship in 1979, their overall relations have been better when Republicans have been in power. The logic is simple: no delusion from the outset, fewer human rights distractions, frank talk, and concrete cooperation whenever possible. This plain dealing tends to stabilize China-U.S. bilateral relations, as it avoids speculation and gaming.
Candidate Romney's repeated promise that he would label China a currency manipulator on his first day in office is well known. But could he really afford to do so? China imported $120 billion of U.S. commodities in 2011, and roughly 1 million Chinese visitors toured the United States that year, each spending an average of around $7,000. Despite China's slowing economy, these numbers will increase in 2012. Would a President Romney really honor his threat, at the cost of hundreds of thousands of U.S. jobs? Two days before the 2008 presidential election, Obama issued a similar threat to protect the U.S. textile business from Chinese competition. After winning the election, his administration spent roughly four months investigating whether China was, in fact, artificially suppressing its currency. The conclusion? China was not manipulating the renminbi.
If Romney does win, he will likely follow in Obama's footsteps; after all, he'd have to think not only of the U.S. economy, but of his second term. As president, Romney should understand that China can be less a competitor than an opportunity for the United States. The current U.S. economic and financial stress is primarily an outcome of globalization and U.S. overspending, especially due to the wars in Iraq and Afghanistan. Washington could blame Beijing for exacerbating the U.S. financial crisis, or it could engage with China -- working together for a collectively beneficial solution.
As America's decade-long war in Central Asia draws to an end, China and the United States will have far less need to cooperate on the anti-terrorism front. And this redistribution of resources could cause problems. With China's fast growth and the U.S. frustration with what it sees as Beijing's growing assertiveness, the Obama administration has shifted to a "pivot" strategy to balance China in East Asia and beyond. A growing amount of friction between the two countries, brought on by concerns such as Washington's suspicion of China's intentions in the South China Sea, have deepened their strategic distrust. If Obama succeeds, he will surely continue in this direction.