Radhika Sivadi

2 min read ·


The issue:

The U.S. accuses China of flouting trade rules and undervaluing its currency to helps its exporters, hurting American competitors and jobs. But imposing tariffs could set off a trade war and drive up prices for American consumers. Tensions have spread to the automotive sector: The U.S. is seeking international rulings against Chinese subsidies for its auto and auto-parts exports and against Chinese duties on U.S. autos.


Where they stand:

Mitt Romney says he'll get tougher on China's trade violations and intellectual property theft, and designate it a currency manipulator on his first day in office. President Barack Obama, who also wants to increase U.S. exports to China's growing market, has opted, like George W. Bush before him, to wait while economic forces encourage Beijing to allow its currency to gain in value gradually.


Why it matters:

Cheap imports of goods from China have benefited American consumers and helped keep inflation down. But those imports have hurt American manufacturers, and many U.S.-based companies outsource production to China to cut costs, which also has caused U.S. job losses. One study estimated that between 2001 and 2010, 2.8 million U.S. jobs were lost or displaced to China, the world's second-largest economy.

The trade imbalance is a constant source of friction. China exports far more than it imports from the U.S., which depends on foreign lenders, most prominently China, to finance its federal deficit. The U.S. wants China to rely less on exports to drive its economy and more on demand among its 1.3 billion people, and to open up its markets more.

Romney says Obama has been too soft on China, although the administration has increased complaints against China at the World Trade Organization in the past year. Romney says fears of a trade war should not deter the U.S. from action on China's currency.

However, many U.S. business leaders, who want to see Romney elected, oppose punitive duties on China. They think it is impractical and would hurt the chances of getting China to open up to more American products. U.S. exports to China have grown fivefold in the past decade, helping to create American jobs.

While jobs and trade are the burning U.S. election issues, dealing with China goes beyond economics. It's about how the U.S. manages the rise of an Asian superpower.

China's military budget is surpassed only by America's. China is rapidly modernizing its armed forces and asserting its claims to disputed islands in the South and East China Seas. That has unnerved neighbors and challenges the stature of the U.S. as the predominant military power in the Asia-Pacific since World War II.

Obama and Romney both want to divert more U.S. forces to Asia and strengthen allies there. China views this as an attempt to contain it and has responded lukewarmly to U.S. attempts at forging U.S.-China military ties to help prevent a confrontation.

The U.S. struggles to win China's diplomatic help on pressing international issues like Syria, Iran and North Korea, and China itself remains a closed shop politically. The ruling party has carried out market-style reforms but still monopolizes power and persecutes human rights and pro-democracy activists, as well as religious minorities in places such as Tibet.

Obama has kept up U.S. criticism of Beijing's human rights record but hasn't let it get in the way of deepening relations. Romney argues that a nation that represses its own people cannot be a trusted partner in an international system based on economic and political freedom.

EDITOR'S NOTE _ One in a weekday series examining issues at stake in the election and their impact on people

Radhika Sivadi