You might hear a lot about China at tonight's foreign-policy-themed presidential debate. We'd better hope that most of it is bogus posturing, because most of what the candidates usually say about China is dumb.
Aside from al Qaeda there are few more reliable bogeymen in politics than China. They took our jerbs! Plus, they're foreigners. Communists, even. Also, Chinese-Americans are not yet a big voting bloc in the U.S. It's almost too easy for our politicians to bash away at China, at least until the election is over.
Mitt Romney quickly seized the mantle of top China-basher in this election, promising to label China a currency manipulator on a very busy Day One in the White House. But President Obama has been no slacker in China-bashing himself. Together, they uttered the word "China" 21 times in their debate last week, and never in a complementary way, like "This china pattern goes really well with the drapes."
Instead, all you heard was about how China is destroying America's economy and about how each guy would be better at cracking down on big mean China once and for all. Politicians of both parties have been saying this kind of stuff for years, but they almost never follow up, because they either know, or find out quickly, that getting into a giant fight with China is bad for business, which is ultimately bad politics.
Here are the four dumbest things the candidates have been saying about China, and why they're dumb:
Dumb Thing One: China is a currency manipulator. Why, yes China is a currency manipulator. But then so is nearly every other manufacturing country in the world, according to this list by the Peterson Institution for International Economics (via Ezra Klein). If cracking down on currency manipulation is all it takes to fix the economy, then Switzerland, Hong Kong and Bolivia had better watch out. Update: And you can bet that neither Romney nor Obama is going to call out Israel for currency manipulation, despite the fact it's the worst currency manipulator in the world, according to Business Insider's Matthew Boesler.
What's more, in order to tap the brakes on its oft-overheating economy, China has recently been letting its currency get stronger, which hurts its exports. That's because a stronger currency makes the goods you produce more expensive in overseas markets. It's the main reason China has kept its currency artificially weak for so many years, opening itself up to constant criticism. The currency is still arguably undervalued, but it has risen steadily in strength, for the most part, for the past eight years, notes Tim Fernholz at Quartz.
And as Klein notes, when we gripe about China's currency manipulation, we are really griping about the dollar being too strong against China's currency. All we have to do is weaken the dollar more, something the Federal Reserve has arguably been doing fairly aggressively since the financial crisis. How much more dollar weakening are we willing to risk?
Dumb Thing Two: We owe too much money to China. We do owe quite a lot of money to China -- China held $1.15 trillion in U.S. debt as of August, according to the Treasury Department. But if China didn't own all of that debt, then our interest rates might be much, much higher. You could forget about a housing comeback, at least not without another huge plunge in prices.
And China is slowly losing its position as America's top lender. It has shed nearly 10 percent of its U.S. debt in the past year. Japan, meanwhile, has increased its holdings by nearly 24 percent in the same time period and now holds $1.12 trillion in debt. It's only a matter of time before it resumes its place as the biggest holder of U.S. debt, as it once was. Will we then go back to the 1980s, when Japan was our favorite country to bash?
Dumb Thing Three: Higher tariffs will show China who is boss. Romney threatened in the last debate to hit China with tariffs if it doesn't get in line. Tariffs on Chinese goods mean higher prices for you at Wal-Mart -- it's a tax on you, in other words, as Slate's Matt Yglesias points out. How much disposable income are you willing to sacrifice to teach China a lesson?
Meanwhile, as Lily Kuo of Quartz points out, Chinese direct investment in the U.S. might be responsible for creating 400,000 jobs here by the year 2020, according to a recent study by the Rhodium Group. That's not all that many in the grand scheme of things, but "getting tough" with China could inspire Chinese investors to take their money elsewhere and leave us with zero extra jobs.
Dumb Thing Four: We can take back our jerbs. Candy Crowley asked in the last debate when we were getting iPhone and iPad manufacturing jobs back here in the U.S. As Yglesias pointed out, this was kind of a dumb question, as those things have never been made in the U.S. And they probably never will be, given that the global supply chain, and China's infrastructure, are uniquely set up to make it much cheaper and easier all around to produce stuff in China, the New York Times noted recently. That's not something that can be quickly, if ever, turned around with some harsh words or tariffs.
We might be willing to pay the extra $65 per iPhone that it might cost if iPhones were were made with U.S. labor instead of Chinese labor, according to some estimates. But cheap labor is not the only reason iPhones are made in China.
The truth of the matter is that we don't want some of the manufacturing jobs that Chinese workers are doing cheaply. In fact, a growing number of Chinese don't want to do those jobs, either, or they want higher pay or better conditions, which means some day the Chinese might be bashing the Vietnamese or somebody else for taking their lousy manufacturing jobs.