Both ends of the political spectrum seem to be competing to be tougher on China economic issues. They’re both wrong.
Chinese policy does warp the global economy in a number of ways, but 99 percent of our current problems is of our own making. Bashing China feels good but accomplishes nothing.
President Obama has announced a new World Trade Organization case against China. This is another in a series of steps featuring the new bureaucracy added last winter. Some of these are minor in impact; others are outright harmful.
On the right, the Republican National Committee recently sent out a list of supposed failures in China policy. The list relies on a number of protectionists and repeats mistaken claims that Chinese currency policy costs American jobs.
Protectionists say that a weak Chinese currency costs American jobs and that a strong one would restore jobs. The facts say that a weaker RMB is associated with low American unemployment and a stronger RMB is associated with high American unemployment.
Either Chinese currency policy has the opposite effect than protectionists expect or, more likely, it just doesn’t matter. The U.S. creates jobs when we handle our own economy properly, and it loses them when we don’t; what China does is almost irrelevant.
This is the real lesson of the political back and forth. If you’re talking a lot about China, you’re not talking enough about how to fix American policy and really help the economy. That’s a mistake no matter who’s making it.