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SPECIAL REPORT CHINA IN THE US ELECTION


and US-Japan trade accounts appear more balanced. If US politicians really want to reclaim jobs, they would be much better off focusing on the higher-tech manufacturing jobs of their closer Asian allies than on the low-wage assembly jobs of the Chinese, Huang said. “Tose workers in Taiwan, South


Korea and Japan are being paid US$30,000, US$40,000 per year,” Huang said. “Tose are the kinds of jobs that you could reasonably ask, why aren’t Ameri- cans producing these things?” Tis situation is slowly changing as


Chinese wages increase and low-wage assembly jobs move across the border to Southeast Asia. Just as US politicians previously censured Japan and the “four Asian tigers” (South Korea, Hong Kong, Taiwan and Singapore) in past decades, the US may shift its focus in the future to criticizing Vietnam or Cambodia as they generate larger trade surpluses, said Li of CASS.


Talk isn’t cheap


US political rhetoric may not be well grounded in facts, but it can still have practical consequences. Analysts worry that the contentious political process could add to already widespread mistrust between the countries. Due to the rapid spread of the inter-


that they can’t afford an all-out trade war with China.”


Bigger fish to fry Furthermore, these “tough on China” pol- icies are unlikely to bring jobs back to the US or have much effect on the looming US trade deficit. While the deficit with China is by far America’s largest, the US imported more than it exported with 11 of its 15 largest trading partners in 2011. Te most likely effect of tougher poli-


cies on China would be to displace trade from China to other developing coun- tries, increasing the cost of some goods for US consumers in the process, Wales said. “Te major beneficiaries wouldn’t be workers in the US; they’d be workers in Vietnam, Mexico and other developing economies.”


30 China Economic Review • November 2012 Besides, much of the US-China trade


deficit results from higher-value compo- nents from countries like Japan, South Korea and Taiwan passing through China for assembly on their way to West- ern markets, argues Huang of Carnegie. Huang illustrates this with the exam-


ple of the Apple iPad, which retails for roughly US$650 in the US. Of that sticker price, Apple takes in about US$300 in revenue, while about US$250-300 of the total value goes to manufacturers of the iPad’s high-tech components in coun- tries like South Korea, Japan and Taiwan. Only about US$15 is absorbed by China to pay for the labor that is used in assem- bly. Yet the total value of the product is recorded in the US-China trade deficit. Te result is that the US-China trade deficit balloons, and the US-South Korea


net, Chinese are more exposed to the US political process now than in any election in the past. Chinese official newspapers regularly take the candidates, especially Romney, to task over their “irresponsible” and “foolish” comments. “It is advis- able that politicians, including Romney, should abandon … short-sighted China- bashing tricks and adopt at least a little bit of statesmanship on China-US ties,” state-run Xinhua News Agency wrote in an editorial in mid-September. Chinese also worry that US postur-


ing will damage the image they are trying so hard to improve abroad. Anti-China rhetoric in the election will undoubt- edly influence people’s views towards China, potentially harming relations, said He of CASS. Perhaps most importantly, China-bashing gives leaders in both the US and China less scope to concentrate on important international and domestic issues, such as reviving their economies. Admittedly, the real nature of the


US-China economic relationship is diffi- cult to capture in a 30-second sound bite. But if US politicians want to revive their economy, they need to try.


Imaginechina


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