Mitt Romney wants you to be angry at China.
In his "Day One" TV ads, Romney reiterates his pledge to make "standing up to China" one of the top priorities he'll tackle on his first day in office, if elected president.
Romney's beef against China entails some familiar problems, such as its penchant for ripping off western technology and stealing intellectual property, and an exchange rate that Chinese officials keep artificially low, to make their exports cheaper than those from other countries.
There's some legitimacy to those claims. But Romney's approach to resolving these problems is puzzling, because it could trigger a trade war that hardly any American companies want, and could even make many products more expensive for American consumers.
Romney wants to officially designate China a "currency manipulator," for instance, and enact other measures that could lead to tit-for-tat tariffs on products that China and the United States trade. That would push up prices. A trade war could also cause unpredictable blowback for U.S. companies operating in China, where rule of law is often subjective and dependent on the good graces of government officials.
Romney is clearly trying to differentiate himself from President Obama, who he claims has "singularly failed in handling commercial relations with China." He may also be hoping to win a few votes among blue-collar workers who resent the "offshoring" of jobs to China, which has been one factor behind the shrinking of America's manufacturing sector.
But Romney is also stoking irrational fears about China and exploiting misunderstandings about how global trade works. Americans who fear the decline of their living standards and of their nation as a whole naturally look for somebody to blame, and China, with its booming factories and rigid communist government, is an easy target.
But China is hardly the invincible bogeyman its bashers imagine. China's economy is growing rapidly, and may be bigger than America's in a few years. But its output per capita—the true measure of wealth and living standards--is still less than one fifth that of the United States. Recent follies involving the dissident Chen Guangcheng and the disgraced Communist Party heavy Bo Xilai reveal China's government to be insecure and corrupt, rather than destined for dominance. And it's not really China's fault that U.S. firms have become uncompetitive and jobs have disappeared in some sectors; overpaid, underskilled workers and outdated business models are often the reason offshoring happens in the first place.
The United States hasn't labeled China a currency manipulator since 1994, and China has, in fact, been gradually allowing the value of its currency, the yuan, to rise. Obama's policies toward China are actually quite similar to those of his predecessor, Republican George W. Bush. Most big U.S. companies operate in China these days, and they're becoming more interested in selling their products to prosperous Chinese consumers than simply exploiting cheap Chinese labor for goods they can sell elsewhere. Besides, those cheap Chinese exports that Romney objects to have helped keep inflation low in America, which is a break for many working families.
Meanwhile, there's a nascent recovery in the U.S. manufacturing sector, thanks to efficiency gains at American factories, rising labor costs in China, and the relatively low value of the dollar (which some people think is the result of deliberate manipulation by the Federal Reserve). Tough competition from China has actually made American manufacturers better, partly because the government has not protected U.S. firms from overseas competition.
Romney's China-bashing is making voters stupid because it vastly oversimplifies an economic relationship that's complex and requires subtlety. Most American companies that do business in China wish there were better laws governing piracy and a freer, more transparent economy there. But they also realize that China is evolving rapidly from a repressed agrarian society into a booming capitalist nation, with growing pains similar to what other nations have gone through. Threatening to punish China won't do anything to make Americans better off. It shouldn't win votes, either.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.