Balance of Payments: What a Bash

By Bruce Stokes

Congress Daily
May 2, 2008

Japan-bashing was a major theme of the 1988 presidential primaries and an
important subtext of the 1992 presidential contest, with its backdrop of
tough economic times. Yet China-bashing has not emerged as a dominant issue
in the 2008 campaign, even as the economy has slowed amid the perception
that jobs are heading overseas.

Despite this week's announcements by Democratic presidential contenders
Sen. Hillary Rodham Clinton of New York and Sen. Barack Obama of Illinois
that they would co-sponsor legislation to allow companies affected by
Chinese currency manipulation to seek remedies, the candidates have largely
left China alone.

This is all the more curious given the harsh criticism of the North
American Free Trade Agreement by Clinton and Obama. Moreover, new public
opinion data released today show a dramatic increase in voter concern about
trade and its adverse impact on people's lives. And pollsters say the
public blames China.

In the 1988 presidential primaries, Rep. Richard Gephardt, D-Mo.,
threatened tough measures to shrink what was then a record $56 billion
trade deficit with Japan.

To be sure, Gephardt lost. But there is no evidence he failed because of
his trade critique, which was well received. And today the public would
appear to be at least as receptive to trade criticism as it was back then.

A Pew Research Center survey finds that public support for trade
agreements has fallen 14 points since 2001. Nearly half of those surveyed,
48 percent, say free-trade agreements like NAFTA and the policies of the
World Trade Organization are a bad thing for the United States. The poll
was conducted April 23-27 among 1,502 adults.

Voters blame trade for their personal economic woes. Nearly half of those
questioned say free-trade agreements have hurt their financial situation
and that of their families. That sentiment is 12 points worse than in
December 2006.

Three-in-five Americans now think free-trade agreements lead to job
losses. Not quite half thought that in 2006. And over half the public -- 56
percent -- think such deals lead to lower wages for Americans, a
significant jump in such sentiment in the last year.

Much of this increase in anti-trade sentiment can be attributed to deep
public pessimism about the economy. Only 11 percent of those questioned
rate the nation's current economic conditions as good or excellent.

This profound negativity might explain why voters even blame trade for
problems globalization arguably helps solve rather than create.

Economists credit imports with holding down prices by providing consumers
with lower-cost foreign-made goods. But faced with rising prices for
imported commodities, such as oil, a plurality of Americans -- 39 percent
-- now blame free-trade agreements for higher prices in the United States.

In addition, half of those surveyed think free-trade agreements slow down
the U.S. economy, despite the fact that exports are one of the few sources
of U.S. economic growth.

More important, from the perspective of Democratic presidential
candidates, registered Democrats and independents are more likely than GOP
voters to say free-trade agreements are a bad thing and that they lead to
job losses, lower wages and slower economic growth.

Why this antipathy for trade and its appeal among Democrats and
independents has not morphed into more China-bashing is a mystery.

In 2007, the U.S. trade deficit with China was three times the deficit
with Japan. There is widespread concern about the safety of products
imported from China.

Moreover, in 2006, a majority of Americans had a favorable opinion of
China. Now only two-in-five look favorably on Beijing. And a growing
percentage think China's economy is having a bad influence on the United
States.

"Every time we test, China is at the top of voter concern, especially
among independents," said Celinda Lake, president of Lake Research
Partners, a Democratic polling firm. "In a campaign, you need an enemy on
the economic side. And, right now, China makes a pretty good enemy."

China has certainly not escaped criticism on the campaign trail. Clinton
and Obama have called for tougher enforcement of U.S. trade laws in
relations with China and have vowed to counter Beijing's manipulation of
the Chinese currency.

In the current Indiana primary campaign, the Alliance for American
Manufacturing, funded by the United Steelworkers, U.S. Steel and Allegheny
Technologies, is running a "China Cheats" ad campaign in newspapers in
seven Hoosier media markets.

China has yet to become the boogeyman of this election. Why? One answer
might be that Japan-bashing didn't work in the past. But then why
NAFTA-bash in Ohio? China also holds a great deal of U.S. debt. But that is
a Wall Street concern, not a Main Street problem. And who ever liked a
creditor anyway?

Lake thinks candidates' failure to go after China might reflect the
cosmopolitan nature of those who run campaigns. "This is the elites being
held back because of their own instincts," she said. "And maybe because
they see it as more racist than nationalistic."

And it could be that China-bashing is yet to come. China's crackdown on
Tibet and the upcoming Olympics offer candidates opportunities to criticize
Beijing. Once Americans face the contradiction between the wealth of China
that will be on exhibit in August and mounting evidence of Beijing's human
rights abuses, both Democrats and Republicans might see more political
advantage in China bashing in the fall campaign.

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