While former Massachusetts Gov. Mitt Romney has made challenging China for currency manipulation a staple of his campaign, “reality” has mooted that policy, the head of the U.S. Chamber of Commerce said Wednesday.
Addressing the Atlantic Council, Chamber President Thomas Donohue said that “I think maybe reality has now gotten Romney off the hook on what he said he would do the first day he came into office,” referring to the presumptive GOP nominee’s promise that on his first day in office he would declare China to be a currency manipulator. That China keeps its currency at an artificially low value in comparison to the dollar is a longtime, bipartisan complaint against that country. The problem for Romney, Donohue noted, is that “in 2011 there was a major adjustment in the value of the Chinese currency and then in early 2012, just recently, they announced that they’re making a further adjustment. So the bottom line is they’re within striking distance. You can’t make the argument anymore.”
Indeed. Reuters reported last week that “the Chinese currency has risen 31 percent against the dollar over the past seven years, eroding a chunk of the price advantage Chinese exports once enjoyed on world markets.” The news service added that, “Experts say the United States increasingly will have to temper its tone toward China on economic policies--at least behind closed doors--given that the raw argument of currency manipulation no longer holds as much water.”
(As an aside, I love Donohue’s use of the phrase “off the hook,” apparently implying that he doesn’t think that Romney actually wants to start a trade war with China, but might have taken such a hard line for, oh I don’t know, political reasons in the midst of a primary. I know—that would be totally out of character for the human weather vane, right?)
Anyway, in fairness to Mittens, Donohue also noted that Romney is not alone in pushing the China currency issue. “I told [New York Democratic Sen. Chuck] Schumer, ‘Go check those numbers because your argument’s going right out the back door,’” he said. Last year the Senate passed a Schumer-sponsored bill which would aimed to force China to let the value of the yuan rise.
President Obama has also made hay on the issue, calling on China in February to “play by the same rules” on trade. But his administration’s tune is already changing. “The cumulative effect of what China has done is very significant and very promising,” Treasury Secretary Tim Geithner said at Brookings on Wednesday, according to the Washington Post. That same Post article notes that U.S. exports to China are reaching record levels (or as Donohue put it: “Our exports to China have exploded. They’re up a massive amount over the last couple of years.”)
So here’s the political exit question: Which comes first? Romney dropping his anti-China talking point or President Obama bragging about how his trade policies have started to tame the dragon?