Obama Campaigns in Ohio by Way of Beijing

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By Deborah Solomon

Nothing says campaign season like a little China-bashing, and President Barack Obama delivered in Ohio today, announcing his administration's latest trade complaint against the world's second-largest economy.

Less than two months after slapping Chinese-made solar panels with hefty tariffs, Obama accused China of charging unfair tariffs on U.S. autos. China, the world's biggest car market, is charging duties on more than 80 percent of U.S. auto shipments, putting the U.S. at a disadvantage by making its cars more expensive.

Obama, on a two-day campaign bus tour in Ohio, said he was following through on a promise to ensure that U.S. manufacturers are "competing on a fair playing field."

Not to be outdone, a spokeswoman for Republican presidential nominee Mitt Romney said Obama "hasn't delivered" on his "tough talk" on China. Romney has said he'll brand China a currency manipulator on his first day in office.

This is a strange way to conduct international relations with a country that is crucial to the U.S. economy. Forget that the U.S. government is literally indebted to China for its purchase of trillions in U.S. treasuries -- that alone is not reason enough to engage with the Chinese. The more important fact is that China is a crucial market for U.S. exports.

In addition to all those cars the Chinese want to buy, they're also purchasing corn, soybean and wheat, tractors and other heavy equipment, aircraft and computers. Exports of U.S. goods to China totaled $103.9 billion in 2011, up 13 percent from 2010 and a whopping 539 percent from 2000, according to the U.S. Trade Representative office. Last year, U.S. exports to China accounted for 7 percent of total U.S. exports.

There are certainly reasons to be angry with China. The country has kept its currency, the yuan, artificially low for far too long, giving it a leg up in global trade by making its furniture, TVs and toys less expensive. It has been an attractive place for U.S. businesses to outsource because of its cheap labor costs. And it has also slapped U.S. products with tariffs, making American stuff more expensive to buy.

These are the types of issues we elect presidents to deal with. The primary path for solving these problems should be through diplomatic discussions -- not knee-jerk, feel-good tariffs and counter-tariffs. It's not as if diplomatic channels don't exist: Several years ago Washington initiated what's now known as the Strategic & Economic Dialogue with Beijing to hash out these exact economic issues. Those talks continue, with Treasury Secretary Tim Geithner and Secretary of State Hillary Clinton leading U.S. discussions.

Obama and Romney continue to talk about the importance of U.S. manufacturing to job creation and economic recovery. Yet it's hard to see how the U.S. can make that a reality without China as a serious trading partner. What voters should demand from both candidates is a pledge to hold China accountable for any violations of World Trade Organization standards and to work on improving diplomatic and commercial relations.  Like it or not, China holds one of the keys to U.S. economic success.

(Deborah Solomon is a member of the Bloomberg View editorial board. Follow her on Twitter.)

Read more breaking commentary from Josh Barro and other Bloomberg View columnists and editors at the Ticker.


-0- Jul/05/2012 20:50 GMT