The failure of China bashing

Fan Gang, Project Syndicate

With China's rapid growth increasingly affecting a wide range of issues worldwide, it has become expedient for U.S. presidential candidates to blame China for some of America's domestic problems. But in this year's U.S. presidential election campaign, China bashing has been virtually non-existent. There are good reasons for this welcome change.

Recent U.S. elections rarely spared China, which found itself a frequent target of populist demagoguery. Its exchange-rate regime, which pegs the Renminbi to the U.S. dollar, was blamed for the mounting U.S. trade deficit. Never mind that America's bilateral trade deficit with China, even including Hong Kong, accounts for less than one-fifth of the total U.S. deficit: growing imports from China and more direct investment by U.S. companies supposedly fueled U.S. unemployment.

Similarly, the unfinished reforms in China's banking sector and state-owned enterprises have been used as evidence of state subsidies for dumping activities. Although the majority of China's exports now come from private companies that receive virtually no loans from state banks, American candidates in previous elections routinely sought to curry favor with working class voters by vowing to protect U.S. jobs against China's supposedly unfair business practices. The jobs issue could be exploited further by citing poor working conditions, low wages, child labor, and other problems commonly found in developing countries.

Attacking a communist country has always seemed to offer American politicians a convenient way to appeal to the average voter. After all, most U.S. voters can be trusted not to learn how other countries, let alone countries in the Far East, really work.

But this time, George W. Bush and John Kerry both know that it would be unwise to bash China too hard. American companies and the entire U.S. economy have a huge stake in China now, so both candidates have no interest in rocking the boat. A candidate may promise more anti-dumping actions against Chinese goods, vow to press harder on China to change its exchange rate regime, or sharpen criticism of China's weak enforcement of intellectual property rights; but over-protectionism may make a candidate look irresponsible in 2004.

Indeed, protectionism can do nothing to reduce America's trade deficit and stanch domestic unemployment. No matter how much politicians blame others, growing U.S. imports mean greater reliance on international markets, and some China factor in America's investment portfolio is needed to compete against European and Japanese firms.

There is no hiding these facts from American voters anymore. George W. Bush failed to honor his anti-Chinese protectionist campaign promises of 2000, as did Bill Clinton throughout his presidency. Any China-bashing and protectionist pleas this time around will most likely ring just as hollow.

Moreover, China's geopolitical importance to the U.S. has grown immensely since the terrorist attacks on New York and Washington D.C. of Sept. 11, 2001. At least for now, engaging China in the global fight against terrorism is in America's interest. China does have some common interests in fighting Islamic extremist terrorism, and it did not try to block America's path to the Iraqi war in the UN Security Council. China has also been cooperating constructively with the U.S. and its allies in dealing with North Korea's nuclear capabilities.

Of course, America still wants to contain China and prevent it from becoming a major regional and world power. But that remains a long-term strategic goal, not the stuff of presidential campaigns, especially when China seems too weak to pose any immediate threat to the U.S. on any front in the foreseeable future.

China has never been a positive factor in American politics; so, from its perspective, the less it is mentioned in this U.S. election season, the better. The relative silence about China in the U.S. these days may be due merely to the news dominance of the Iraq War. Yet it may also indicate that America's political elites are in the process of facing up to new realities and adjusting their view of China accordingly.

The writer is Professor of Economics at Beijing University and the Chinese Academy of Social Sciences, and Director of the National Economic Research Institute, China Reform Foundation.