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Tue October 23, 2012
Is China An Economic Partner, Adversary Or Both?
Originally published on Wed October 24, 2012 6:39 pm
AUDIE CORNISH, HOST:
It's ALL THINGS CONSIDERED from NPR News. I'm Audie Cornish.
MELISSA BLOCK, HOST:
And I'm Melissa Block.
Is China an economic partner, an adversary, or both? In last night's debate we heard slightly different answers from President Obama and Mitt Romney.
(SOUNDBITE OF DEBATE)
MITT ROMNEY: We can be a partner with China. We don't have to be an adversary in any way, shape or form. We can work with them. We can collaborate with them, if they're willing to be responsible.
PRESIDENT BARACK OBAMA: China's both an adversary, but also a potential partner in the international community, if it's following the rules.
BLOCK: President Obama and Mitt Romney there talking about our economic relationship with China. And we're going to begin this hour by putting that in context. Adam Davidson of NPR's Planet Money team joins us to explore what the U.S.-China economic relationship is, what it could be and how the next president may deal with it. Hey, Adam.
ADAM DAVIDSON, BYLINE: Hey, Melissa.
CORNISH: And, first of all, would you say at this point that China is both a trade partner and an economic adversary?
DAVIDSON: Well, we're definitely trade partners. We trade a huge amount with them, billions and billions and billions of dollars every week. But we are not, in any real way, an adversary. Mitt Romney seemed to define adversary as any country we have a trade deficit with, that we export less than we import from. That would mean most countries in the world.
President Obama seemed to define it as a country we have disputes with at the World Trade Organization, but that also would involve lots and lots of countries, like much of Europe, Argentina, Brazil, India, Vietnam, places that we don't think of adversaries. So no, we are in no serious way adversaries.
CORNISH: One clear difference between the two candidates came down to whether or not it makes sense to call China a currency manipulator. And Mitt Romney talked last night about what happens when China artificially holds down the value of its currency.
(SOUNDBITE OF DEBATE)
ROMNEY: It holds down the prices of their goods. It means our goods aren't as competitive, and we lose jobs. That's got to end. They're making some progress. They need to make more. That's why on day one I will label them a currency manipulator.
BLOCK: Adam, there's a lot of dispute about that, about whether that would be wise policy or whether it might backfire.
DAVIDSON: Yeah. So what there is no dispute about is whether or not China is a currency manipulator. They are a currency manipulator. They actively intervene every single day to keep the value of their currency less than it would be against the dollar than if it floated freely. We think. Even China barely disputes that.
But that being said, is it a wise policy of our government to tell China that, to embarrass them? The fact is, presidential candidates say this. President Obama said it when he was a candidate. Before him John Kerry said it. George W. Bush said it. It's just something presidential candidates say to make themselves seem tougher on China, especially for swing voters in Ohio and Pennsylvania, places that really care about this issue.
And then when they become president, either they learn or they've already figured out that we don't control China's monetary policy, and taking this kind of tack doesn't seem to be advisable. I will say, this feels like a very old issue. China's currency has indeed appreciated, but it is some red meat for certain swing state voters.
BLOCK: Well, President Obama last night spoke about cases that the U.S. has filed with the World Trade Organization and won, cases, he said, that have opened doors for U.S. exports to China. Let's listen.
(SOUNDBITE OF DEBATE)
OBAMA: In fact, just recently steelworkers in Ohio and throughout the Midwest, Pennsylvania, are in a position now to sell steel to China because we won that case.
BLOCK: And Adam, it sounds like that's mixing something adversarial, a challenge before the WTO, with this idea of being a trade partner.
DAVIDSON: Yeah. And again, WTO trade cases, this is a very routine part of global capitalism. Happens all the time among the best of friends. Now, I do want to make a note. Certainly exporting to China is a huge opportunity for lots and lots and lots of businesses. But I think the implication that President Obama hopes, that politicians generally hope to give, is this will mean a resurgence of jobs.
But the truth is, generally when a U.S. manufacturer is competing with a Chinese manufacturer, what I picture is a Chinese factory filled with workers, low-paid workers, although not so low paid as they used to be - China wages are rising - and the U.S. factory is probably filled with very high-tech equipment, really advanced machinery, and a very small number of highly skilled workers running that machinery. So yes, it would be great for lots and lots of reasons for us to export more to China. But I don't know that that would mean a sudden resurgence of jobs in manufacturing all throughout the Midwest. That seems unlikely.
BLOCK: OK. NPR's Adam Davidson in New York. Adam, thanks so much.
DAVIDSON: Thank you, Melissa. Transcript provided by NPR, Copyright National Public Radio.