With just days to go to the US Elections on November 6th one of the most interesting outcomes to watch is the reaction of China to the results. Whilst it's understandable that everyone's focus is on the Presidential election, the Senate and House votes matter as they have a major impact on Sino-US relations too.
At various times over the past few years odd Congressional players have been urging successive administrations to label the Chinese 'currency manipulators' . On my trip to China I noted evidence of this at a micro level (see here). Since the President oversees the Executive branch of the US government, the US Treasury has avoided assigning this label to the Chinese for foreign policy reasons. Will the election of Mitt Romney change this?
During the both the primary and general election campaigns Romney has taken a 'hardline stance' on China. During the primaries he said that "China was stealing intellectual property rights from the US and other nations and responsible for a large number of cyber attacks on US facilities and bases". More recently he has accused China of manipulating its currency. Perhaps if the Republicans win back control of the House of Representatives, the Treasury may be urged to change its stance after all. A move Obama's campaign have said would be "highly disruptive" to the bi-lateral relationship given the sanctions the US would levy against China as a result.
Yet on recent foreign policy 'problems' the Chinese have hardly been supportive of the more 'liberal' approach that the US and Europe thinks is likely to improve levels of international trade. Chinese support for Syria's President Assad at the UN is a case in point and demonstrates that China is not ready to step up to its broader responsibilities as a global Leader/Player.
Interestingly, it seems likely that the Big US business supporters of Romney may lobby against him taking too tougher a stance against China. The Washington Post recently reported that General Motors sells more cars in China than in any other country. Three years ago, Apple counted on China for just 2 percent of its revenue; in the most recent quarter, it was 16 percent. Starbucks thinks that China will be its second-biggest market by 2014. In short this constituency is looking for a slowing China economy to take up the slack from the brow beaten US consumer.
In the end, all these economic issues may play second fiddle to plain old political ones. It is arguable that the US Elections are not the most important 'elections' anyway this year. Two days after they are held China hosts its Communist Party Congress which will see more than 2,000 delegates gather in Beijing to formally anoint the country’s next generation of leaders. At least if Romney is elected he will have already made his pile of cash in the private sector. Yesterday's extraordinary New York Times story on how Chinese Premier We Jiabao's family has made billions since he has been in power highlights some key differences between the two political systems.
Then again, it also illustrates some similarities. Things are never allowed to get in the way of profit making business. As usual, Money makes the world go round...