Long march for Romney's threats against China

As Romney and Obama duel over who can better change China's economic behavior, it's time for a fresh perspective on how much the US can change any country.

REUTERS
Police stand guard on Beijing's Tiananmen Square, decorated for the coming National Congress of the Communist Party of China. Top leaders have asked policy think-tanks to draw up their most ambitious reform proposals in decades that could curb the power of state firms and give more freedom to the setting of the yuan currency.

China has long served as a mirror for Americans, a reflection of their own interests. Today, for example, it’s a mirror on what ails the US economy – a need for better competitiveness and education. But it also shows up in the arguments between Mitt Romney and President Obama over how to deal with the Chinese trade challenge.

Just a few decades ago, China was simply the “red menace,” or a model of governance (communism) to be avoided and blocked. Before that, it served as an object for projecting American ideals onto the world with almost missionary zeal. In 1940, for example, US Sen. Kenneth Wherry stated in a speech: “With God’s help, we will lift Shanghai up and up, ever up, until it is just like Kansas City!”

In the early 19th century, trade with a newly opened China was an expression of an America becoming a global power. And Chinese immigrants, imported as cheap labor for building railroads in the United States, provided the first impression of an America becoming less white and Protestant.

With a population that is nearly a quarter of humanity, China can’t help but serve as a mirror. Whatever it does – such as manipulate its currency – has an outsized effect, forcing a reaction.

And one thing its current leaders have done very well since 1979 is practice economic nationalism, or playing by China’s own rules as it competes for global markets. Even though it joined the World Trade Organization in 2001, it has bent the WTO’s rules to its advantage.

This insular and mercantile approach has lifted hundreds of millions of Chinese out of poverty. But the effect is to stoke economic nationalism in China’s competitors. In the US, warnings of a Chinese “threat” have been part of presidential campaigns for 20 years. They have reached their loudest in the Romney campaign, forcing Mr. Obama to respond.

Mr. Romney promises to officially declare China a “currency manipulator” if elected – “on Day 1” of his administration. It is a popular promise in places like Ohio. And Romney would slap trade barriers on Chinese goods to force Beijing to change its ways.

But if that happens, the US will be simply mirroring China’s economic nationalism. A trade war could easily break out, like that of the 1930s which only prolonged the Depression. And for trade sanctions to work, the US would have to target many other countries that practice the same kind of strong economic nationalism. China just happens to be the largest culprit.

Rather than reflect China’s behavior in a dangerous tit-for-tat trade battle, the US has no choice but to persuade the Chinese to see themselves as part of the whole of humanity, with the task of setting fair rules for economic competition.

The US helped other nations after World War II to set aside strong nationalism for the sake of a global order, reflected in bodies such as the World Bank and United Nations. This universal approach takes patience, even sacrifice, but it has proved far better than simply imitating the bad habits of other nations.

Chinese leaders know they must change. In a report last February, an influential government advisory body in Beijing issued a report in conjunction with the World Bank, stating:

“It is imperative that China adjusts its development strategy as it embarks on its next phase of economic growth. At its core, this adjustment requires changing the role of government and its relations with the market, the private sector, and society at large.... The government will need to transform itself into a lean, clean, transparent and highly efficient modern government that operates under the rule of law.”

With new leaders taking power in Beijing next month, China has a chance to reflect a more universal view in how to run its economy. Americans may then see themselves in Chinese behavior – an open society trading freely and fairly with others.

Perhaps Kansas City might someday want to be more like Shanghai.

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