The president of an association of chief executives of major U.S. companies said he doubts Republican presidential candidate Mitt Romney will follow through on his threat to brand China a currency manipulator on his first day in the White House.
John Engler, president of the Business Roundtable and a former Republican governor of Michigan, commented today at a breakfast discussion of international trade at the Republican National Convention co-sponsored by Bloomberg and the Tampa Bay Host Committee.
Asked whether he supported Romney’s pledge of an immediate designation, Engler responded, “I don’t think that he will,” though the business association leader added, “I think he will take a look at it.”
Romney, a former Massachusetts governor and private-equity executive, has made a forceful stance on trade competition with China a centerpiece of his appeal to working-class voters in battleground states such as Ohio and regularly criticizes President Barack Obama for failing to sanction China.
Engler called designation of China as a currency manipulator “very politically delicate,” given the sensitivities of the Chinese government leadership. Still, he added, “a lot of economists” have concluded that China’s currency is undervalued.
The U.S. ran a $27.4 billion trade deficit with China in June, up from $26.7 billion for the month a year earlier, according to the U.S. Census Bureau, which doesn’t seasonally adjust the figure. The deficit with China in goods totaled $295 billion last year, the largest the U.S. has had with any country.
At the same time, China is the third-largest U.S. export market behind Canada and Mexico, and many of the largest U.S. companies prefer a less confrontational approach than Romney’s.
The U.S.-China Business Council, a trade association including Exxon Mobil Corp., General Electric Co. and Google Inc., plays down the importance of the currency issue and says any approach to “global economic imbalances” should be multilateral.
Romney’s campaign website site says that one of five executive orders the Republican would issue on his first day in the White House would be one that directs the Treasury Department to list China as a currency manipulator and instructs the Commerce Department “to assess countervailing duties on Chinese imports if China does not quickly move to float its currency.”
Romney would confront procedural hurdles in making that designation on his first day, Engler said.
Engler added that he hoped the Chinese government would “react” to Romney’s trade stance if the Republican is elected by allowing the country’s currency to rise during the transition period before the Jan. 20 change in administration.
Pressing the Chinese government to take more effective action to protect intellectual property is “for many more important,” Engler said.
Improved intellectual property protection in China would have increased U.S. companies’ sales by $107 billion in 2009, and U.S. employment by 2.1 million jobs, according to the U.S. International Trade Commission.