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‘We’re getting killed by China’: Populism in the US presidential race makes China a target

Even though the actual election is fourteen months away, the buzz around a few candidates in the US Presidential race shows no sign of dying down. This is the wacky stage of American Presidential politics, when the least presidential figures get to shine. And this time round China has become a talking point in that rambunctious arena. Populist candidates on the left and the right, Senator Bernie Sanders in the Democratic primary and Donald Trump in the Republican one, have been talking about China in very stark terms.

When he is not caught up in shouting matches about Mexican rapists or menstruation, real-estate mogul Donald Trump is focusing his campaign on trade and the fact that “the US is losing trade wars left and right”. When news of China’s devaluation of the yuan came out last week, he set the stage with tweets like “Devalue means suck the blood out of the United States!” and “I’ve been warning about China since as early as the 80’s. No one wanted to listen. Now our country is in real trouble.” Although, in a back-handed way, Trump has been known to compliment China’s leaders: “They’re just smarter than we are. Their leaders are smarter than ours, they’ve realised they can steal our jobs and call it free trade, but when American products want to get into their market, they throw up boundaries that make them unaffordable. They lower their currency so that they can export like mad and steal our jobs. That’s smart, but much worse is that our leaders are stupid, because they let the Chinese get away with it. I would not let them get away with it!”

donald trump

Donald Trump. Photo: Wikimedia Commons.

With such rhetoric, there is not much space for a more mature analysis of China’s devaluation of the yuan, which is modest and more in tune with market sentiment than previous mercantilist moves that the Beijing government employed in order to gain advantage on the international market years ago. In fact, reactions to the most recent devaluation were in line with those heady days in the 2000s, when China could legitimately be called a currency manipulator. Senator Lindsey Graham, another Republican hopeful, called the devaluation “just the latest in a long history of cheating,” and told an audience in South Carolina that the devaluation “shows that China does not play by the rules”.

The assumption among some officials in Washington still seems to be that China is trying to boost its export machine at the expense of American workers. However, economic policy in Beijing has shifted dramatically in recent years, while American politicos are stuck in the past. If China really wanted to close even more factories in Detroit and Seattle, its devaluation would have been on the order of 15 percent or 20 percent, not a mere 3 percent. Moreover, they would have to enforce a wage decrease in China’s own factories, where more and more workers have been leaving low-paid jobs and wages have gone up to retain skeleton crews of assembly-line workers. China today is no longer the China of the early 2000s, but the rhetoric in the US seems not to have caught up. Carly Fiorina, former CEO of Hewlett-Packard and another Republican primary candidate, called the currency devaluation “another sign we need to be much, much tougher with China”.

donald trump

Donald Trump. Photo: Flickr.

Since the devaluation on August 11, the meme in the GOP that “China does not play by the rules” has caught on. To date, seven Republican hopefuls have repeated it in one way or another. The reality that China’s devaluation was a response to financial markets has been lost. The fact that Beijing wanted to buy itself some breathing room to redouble its economic reform efforts and shift from exports towards services is not cut out for sound bites. Neither of these goals should cause unease in Washington. The first, a market-determined yuan, is exactly what the White House has long recommended. The second, a services boom, is something that can only help American manufacturers in the long run when living standards go up and household budgets increase.

Meanwhile, the China-bashing goes on. Donald Trump has even spoken admiringly of his populist equivalent in the Democratic primary race, Senator Bernie Sanders. “I was watching him and he talked about trade and he was talking about how we’re getting ripped off left and right on trade, and I [said], you know, I think I can take that paragraph and just use it in my speeches,” Mr. Trump said last week on MSNBC’s Morning Joe. “It’s what I’m saying — it’s one of my big things.”

Both and Sanders have come out against the Trans-Pacific Partnership, a trade deal being negotiated between the United States and 11 other countries including Japan, Australia and Canada. TPP is often seen as a counterweight to China’s dominant trading position, but China is the go-to bogeyman of what is wrong with international trade anyway, for both candidates. “We’re getting killed by China, we’re getting killed,” Trump says. “Now here’s the difference between Bernie Sanders and myself: I negotiate. I will make great deals with China; he can’t do that, he’s incapable of doing that. But he knows the problem, at least. He’s not going to be able to anything about it, but he does know the problem, and if you look at his words on trade and my words on trade, man — I was just looking at it yesterday, actually. I said, that’s pretty close, you know, so in terms of that, we’re very close.”

bernie sanders

Bernie Sanders. Photo: Flickr.

Senator Sanders is not just critical of China, unlike the real-estate mogul running in the Republican arena; the self-described Democratic Socialist is skeptical about trade on the whole, striking a chord with a Democratic base that instinctively loves protectionism and that has largely been ignored in the past. He does not just criticise Chinese currency manipulation or unfair trade practices; he also criticises international trade as “biased towards Wall Street and bad for the American worker”. In April he rose up in the Senate to repeat his opposition to NAFTA, the free trade deal with Canada and Mexico. According to the National Economic Council, the deal has added 12.6 billion USD to the overall economy since it was passed by President Clinton in December 1993. He then went on to a broadside attack on trade with China. “All of corporate America, all of Wall Street, all the big money interests were pushing free trade with China,” he said, and went on to lament the losses of American jobs to both Chinese companies and US outsourcing, calling trade with China “an unmitigated disaster”.

Sanders is very clear about his trade policies, and it is this clarity that appeals to certain groups in the Democratic base when he says: “Enough is enough! If we are serious about rebuilding the middle class and creating the millions of good paying jobs we desperately need, we must fundamentally rewrite our trade policies.” However, it is the unelected Socialists in China that have lifted hundreds of millions out of poverty, while the single elected one in the US is complaining about China’s economic impact in a narrow focus on the American worker. Redistribution of wealth, a Socialist dogma if there ever was one, clearly does not extend outside the American borders for Bernie Sanders. Just like when Karl Marx defended British ownership of India as a reward for the British proletariat, Sanders is solely concerned with “the American worker”. When he says “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country,” he forgets the underarm spray deodorant is providing for jobs in countries where the workers are far less well off than in the United States, and that the sneakers are made in countries where free trade has made children’s lives better in countless ways. When an unapologetic Socialist friend of mine once complained that without a federally mandated minimum wage, salaries just did not go up, he, like his idol Bernie, forgot that salaries had gone up very fast globally, in countries competing with a high minimum wage in the United States and even higher welfare benefits in Europe.

bernie sanders

Bernie Sanders. Photo: Wikimedia Commons.

Like most of the advocates of “economic patriotism”, Sanders worries a great deal about trade with people of different skin colours, such as Asians and Latin Americans, but never complained about the very large trade deficit that the United States enjoys with Sweden, which as a share of bilateral trade volume is not much different from the trade deficit with China. Sanders does not rail about Canadians and Germans “stealing our jobs”, while, in fact, they have been doing exactly that in the much more lucrative high-end manufacturing sector. Sanders’ opprobrium is reserved almost exclusively for the Chinese and the Latin Americans, as when he demanded of his rival, Hillary Clinton, in the words of an old protest song, “Which side are you on?” The bad guys, or American workers “seeing their jobs go to China or Mexico?” I would not go as far as some commentators have in calling Sanders’ criticism of free trade ‘racist’, but it is the modern equivalent of dreaming about autarky, a level of economic self-sufficiency that is impossible in today’s world, even for the delusional rulers of North Korea.

Where the GOP candidates are using incendiary speech against China lamenting that the second largest economy does not play by the rules, Senator Sanders wants to rip up the rulebook altogether. This is not the rhetoric of the 2000s, but the rhetoric of the 1930s and in many ways much more dangerous. When the world economy is in rough waters, protectionism will only power the destructive waves. When populist sentiment in the 1930s persuaded Congress to pass protectionist measures such as the Smoot-Hawley tariff, the plunge into darkness was deeper and became more difficult to climb out of. Automobile manufacturer Henry Ford spent a whole evening at the White House trying to persuade President Hoover to veto protectionist legislation, calling it “economic stupidity”. The tariff bill passed and in response many countries passed retaliatory legislation, furthering the crisis known as the Great Depression. This is the tinderbox that Senator Sanders is playing with.

Donald Trump is a blustering fool, but Bernie Sanders is a dangerous intellectual.

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'We're getting killed by China': Populism in the US presidential race makes China a target