Political football

I’ll be tougher on China: Romney

“Imagine a person, tall, lean and feline, high-shouldered, with a brow like Shakespeare and a face like Satan, a close-shaven skull, and long, magnetic eyes of the true cat-green. Invest him with all the cruel cunning of an entire Eastern race, accumulated in one giant intellect, with all the resources of science past and present, with all the resources, if you will, of a wealthy government… Imagine that awful being, and you have a mental picture of Dr Fu-Manchu, the yellow peril incarnate in one man.”

That was how the novelist Sax Rohmer introduced his readers to his archetypal Chinese villain in 1913.

Just under a century later and the ‘Fu-Manchu syndrome’ is flourishing. And nowhere more than in Washington, where China is increasingly cast as America’s bogeyman.

That tendency has got more pronounced during the current election cycle. Last week both presidential candidates battled for headlines on who could get tougher with the Chinese.

Mitt Romney – who has said he would label China as a “currency manipulator” on his first day in office – has been bashing Beijing (and his opponent) in the swing state of Ohio. “President Obama’s credibility on this issue has long since vanished,” the Republican presidential candidate insisted. “I will not wait till the last months of my presidency to stand up to China.”

In part, that was a response to action taken by Barack Obama in lodging a case against China with the World Trade Organisation, alleging that subsidies on Chinese car parts and cars hurt US manufacturers, forcing them to move manufacturing jobs overseas. Cynics noted that the timing couldn’t have been more political.

Aiming for four more years in the White House, the Democrat contender also criticised his opponent for shipping American jobs to China during his stint running private equity firm Bain Capital.

“Now, I understand my opponent has been running around Ohio claiming he’s going to roll up his sleeves and take the fight to China,” Obama told a crowd in Cincinnati. “But here’s the thing: his experience has been owning companies that were called ‘pioneers’ in the business of outsourcing jobs to countries like China. Pioneers! Ohio, you can’t stand up to China when all you’ve done is send them our jobs.”

And it was about to get worse for Romney. It was then made public that his latest tax returns show investments made by his blind trust in CNOOC. Obama’s campaign strategist David Axelrod was quick to capitalise, telling ABC: “The guy who goes around America saying he’s going to bash China invested in a Chinese state oil company.”

The trust made three separate stock purchases in CNOOC, although Romney claims he has no control over the its investment decisions.

Whether it was a good investment or not, it now looks like very poor politics. Then again, it’s a mark of how toxic the debate is turning, when putting money into a blue chip Chinese multinational ends up incurring such negative coverage.

Not that all the American electorate approves of the Sinophobia. Chris Chocola, president of the Club for Growth lobby group, told the Financial Times that all the tough talk on China is counter-productive. “When you start to threaten a trade war with China, you’re hurting the economy, not helping it,” he complained. “What we need is politicians who stand up and say trade with China is good.”

Beijing’s leaders would almost certainly agree – although they are hitting back against the latest US filings to the WTO by filing a complaint of their own against an amendment made to the American Tariff Act of 1930. The US Ministry of Commerce pushed the bill through when it lost a key trade case in a US court last year related to penalties levied on imported Chinese tyres. Beijing claims that the amendment, which hits 24 types of Chinese products with punitive countervailing duties, is inconsistent with WTO rules.

On the other hand, it’s definitely consistent with the ‘fear of Fu-Manchu’ mentality currently stalking the US political debate…

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.