China and the American Election

Previously, I’ve presented both John McCain and Barack Obama’s statements on China. However, with recent vice-presidential picks and developments, there is new information to be considered.

While both Presidential candidates have at times “talked tough” on China, it’s important to remember that traditionally much inflammatory campaign rhetoric has been just that, rhetoric. The China Backpedal of talking tough in the election campaign, then pursuing a conciliatory relationship once in office, is well-documented.

Ultimately, however, since you (the reader) also possess interest in China, I think it’s also useful to hear some of your responses on which president you think would be

(1) best for continuing peaceful relations, and/or (2) best for long-term strategy (from America’s point of view).

As you read the analysis, feel free to retort with your own opinions.

It appears John McCain’s past interest in free trade implies he would encourage a positive relationship between heavy trading partners America and China whilst preserving American economic strength and military investments in the Asian region.

McCain appears to have a balanced opinion in regards to China. He counseled Bush to “avoid confrontations” on his Beijing Olympics trip to China, saying that some of China’s actions are “also regrettable, but I don’t think China is regressing the way that Russia is. We have a greater opportunity to work in a cooperative way with China.” McCain “hopes Bush will tell the Chinese leadership that “we understand, as the [DL] does, that T$3b$t is part of China but we hope Tibetans are not repressed or oppressed.” Importantly, McCain met relatively recently with the D$$ai L$$a in Colorado (Washington Post).

McCain’s main foreign policy focus will be on Iraq and Iran. Being a military man, McCain doubtless realizes there is little to be gained by forcing America to further overextend forces to posture against China over issues that present relatively minor relationships to immediate American interests. On the negative side, it is possible the McCain presidency will continue the dubious Bush policy of benign neglect of ASEAN and South-East Asian relations, which would allow China to increase its influence in that region.

Running-mate Palin’s foreign policy experience is slighly less than Obama’s (she hasn’t yet visited Iraq or Europe on state-trips), and regrettably there are few easily located documents on any statements tied to her positions on China.

Ultimately, a McCain presidency appears to offer continued peaceful relations with China.

Barack Obama would be pressured by both his party [Nancy Pelosi is a noted China-basher] and his own conscience and campaign rhetoric to “get tough on China.” Obama has made several tough statements on how America is “shipping jobs overseas.” If he carries through with campaign promises, Obama might work to roll back certain aspects of China-trade, perhaps creating more jobs in the United States. If he succeeds, that would certainly harm US-China relations and raise prices of goods that were formerly cheaply made-in-China, or assembled therein. At a minimum, Obama might seek to set up administrative hurdles to US-China trade, as Experience Not Logic implies in its analysis of Obama’s acceptance speech and the Democratic primary debate.

Obama’s running-mate, Joe Biden, is even more negative on China trade, saying; “If I were president, I’d shut down any imports from China, period, in terms of their toys — flat shut it down. Imagine if this was Morocco selling us these toys, we would have shut it down a year ago.”

Despite Obama’s anti-trade rhetoric, one Chinese journalist believes that because much of Obama’s expert team consists of Clinton-era officials, his relationship will be pragmatic. Still, that same journalist believes “an Obama administration would put more pressure on China, even to the point of being more likely than the Bush administration to use the WTO to confront China in court on related issues.”

On the positive side with Obama, he will probably talk to Hu Jintao, and not overtly pressure China beyond token expressions of dissatisfaction. At least, talks will happen if Obama isn’t forced to burnish an image of diplomatic weakness, like former US President Kennedy needed to do in order to establish credibility. If Obama is perceived as “weak” after having unsuccessful talks with Iran or Syria or Hamas, then he will need to regain his political capital somehow– and that somehow could be through bashing Russia or China- traditional bugaboos.

It is a little uncertain to say what Obama’s ultimate China policy relationship will be, but it is promising to note his advisory staff contains several people who possess deep knowledge concerning China. (See Below)

Other Views on Obama’s China Policy:

http://www.mei-zhong.com/2008/06/what-china-thinks-of-obama-part-ii/

http://www.mei-zhong.com/2008/06/what-china-thinks-of-obama-part-iii/

http://www.barackobama.com/issues/foreignpolicy/

Joe Biden’s China Stances – at China Esquire.

Other Information on McCain’s Foreign Policy

McCain’s essay in Foreign Affairs.

McCain’s China positions at OnTheIssues.

Foreign Policy and China Teams:

The Foreign Policy Research Institute analyzed what a Democratic or a Republican majority in Congress and the White House might mean for US-China relations.

(added 10/5/08) Shen Dingli of Fudan University weighed in with his views on the candidates and China.

http://www.chinalawandbusiness.com/2008/06/24/mccain-and-obamas-china-and-asia-teams/ and HERE.

Obama certainly has the big names on his team, from Brooking’s Jeffery Bader to Richard Bush of Brookings; Ken Lieberthal, former NSC; Mike Lampton, SAIS; Evan Medeiros, RAND; Bob Kapp, former president of the US-China Business Council; Kevin Nealer, The Scowcroft Group; and Bob Suettinger, former NSC and CIA now consultant. Elizabeth Economy is also involved in Environmental issues.

McCain has former Deputy Secretary of State Rich Armitage, former Bush Administration defense, NSC and foreign policy officials Peter Rodman, Rick Williamson, Mike Green, the former NSC Senior Director for Asia, now at CSIS, and Dan Blumenthal, former DOD, now at AEI.

Obama’s China Policy

Barack Obama recently achieved status as the presumptive Democratic Party Presidential nominee, so it seems worthwhile to address what his future China policy might be like, should he be elected.

CHINESE CURRENCY REEVALUATION

Obama wants faster Chinese currency reevaluation, and threatens to levy duties against the Chinese if they do not move to strengthen the RMB against the dollar. 

The bill Obama promotes, S. 796, Sen. Bunning (R), and Stabenow (D)’s Fair Currency Act of 2007, appears similar to the failed Baucus’ 2006 bill S. 295 which attempted to designate China a currency mainpulator but which eventually did not pass because of fears that it was non-WTO compliant. 

Likewise, the Fair Currency Act appears similar to the unadopted 2007 S. 1607 Baucus/Grassley bill which sought to replace the current Treasury reporting structure which merely analyzes if foreign countries “manipulate the rate of exchange between their currency and the United States dollar for the purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade” (1) with a requirement that Treasury identify “fundamentally misaligned” currencies and designate them for priority action in semi-annual reports to Congress, whether or not the currency manipulation is maliciously intended.

Such a bill would introduce countervaling duties against Chinese exports to the United States, arguably helping domestic American manufacturers. Prices of goods will rise to some degree, but more manufacturing jobs will (theoretically) remain in the United States. (Read the bill HERE.) [A further analysis on the Bill and currency evaluation/manipulation will follow in a later article.] 

Former ambassador to the UN Economic and Social Council Terry Miller gives some insight into the effects of such a bill, arguing that “changing the exchange rate will, however, affect U.S. producers who use intermediate goods imported from China in their U.S. production processes. Renminbi appreciation will increase their costs of production. U.S. consumers of basic commodities like oil will also be hurt, as renminbi appreciation will make dollar-denominated commodities like oil cheaper for the Chinese. Chinese demand, already rising rapidly, will drive up the dollar price of such commodities worldwide, forcing American consumers to pay even more at the pump.” All Roads Lead to China had another interesting analysis on the wisdom of encouraging a currency reevaluation. I’m not certain I agree with either statements, but they make intriguing arguments. The economy is never quite as simple as it initially appears.

Ultimately, the Chinese RMB has appreciated 18% since 2005 when it removed its peg from the dollar and began to float against a market basket of currencies; but the bill argues China’s currency is still undervalued by as much as 40%.

PELOSI AND ANTI-CHINA SENTIMENTS

Barack Obama, if elected, will lead a Democratic Party alongside a powerful anti-China House Majority Leader, Nancy Pelosi. Pelosi is famous (in China) for unveiling a pro-democracy banner in Tian@nmen Square in 1991 while on a Congressional docket- hardly a subdued gesture by a future national leader. She is often confrontational against China, very pro-T*b*t, and has pushed for changes in China’s population control policies. A commentary in Xinhua, the AP of China, has many derisive things to say about her.

Depending on how much influence Pelosi and the rest of the Democrats’ anti-China lobby might have on Barack Obama, Sino-American relations could degrade under an Obama presidency.

OBAMA AND TAIWAN

Obama supports the “One China Principle” and congratulates Taiwan for its developing democracy, but beyond that has had few constructive statements or declarations of policy on the situation.

CONCLUSION

Although Obama has yet to construct a fully cohesive China policy, a vote for Obama appears to be a vote against coddling China economically. It remains to be seen whether he is a military anti-China hawk, like the recently ousted air force generals who promoted purchases of 381 new F-22 jets in opposition to the Bush Administration’s suggested number of 183, partially because they saw America’s future as confronting conventional armed forces rather than insurgencies.

 The Council on Foreign Relations discusses more of Obama and the other candidates’ China policies at length HERE.

[A future article  on this site will examine McCain’s China Policy]

–(1) Exchange Rates and International Economic Policy Coordination Act of 1988. A part of the: Omnibus
Trade and Competitiveness Act of 1988. Cornell University Law School. 1988. http://www.law.cornell.edu/uscode/html/uscode22/usc_sec_22_00005301—-000-.html