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Romney Will Lose in China 'Cheater' Debate

Stocks in this article: YOKU CEO

A passing glance at Romney's trade policy with China in his "Plan for Jobs and Economic Growth" reveals a mix of reasonable and antagonistic headlines. The more negative ones include "Impose Targeted Tariffs or Economic Sanctions" and "Designate China a Currency Manipulator and Impose Countervailing Duties."

The currency manipulator line is a common one that Romney has used on the election trail, but it is also popular among Democrats.

It may be empty rhetoric.

"Labeling China as a currency manipulator is probably one of the political things out there, but it's not really clear what the appropriate level for the yuan is," said Michelle Gibley, director of international research at Charles Schwab. "To think that by forcing China to appreciate their currency that suddenly our trade balance with them will equalize is probably a mistaken assumption."

In other words, the United States is the largest consumer in the world, so if we aren't buying our toys from China, we'll find them somewhere else.

On the other hand, Romney has highlighted some serious concerns in his trade policy with China, like "Protect and Pursue Legal Rights" and "Improve Enforcement at the Border," which calls out "unscrupulous exporters in China and elsewhere" to evade measures the United States imposes in response to unfair trade practices.

"The business community that has traditionally been the biggest backer of U.S.-China relations, because of Chinese policy actions -- intellectual property, national champion industries in China -- has caused the business community to pull back and want the U.S. government to play more of a role," said Thomas Fingar, former chief of the China Division at the U.S. State Department.

Fingar added that the business community recently has deferred to the government to "play the heavy" to go in and thump the Chinese on the head so it could continue to do business without the broader worries of intellectual property theft and other illegal actions by Chinese firms.

This part of Romney's plan -- to punish Chinese companies for unfair and illegal actions -- suggests the Republican nominee's willingness for government intervention to mix with "free enterprise" so as to promote an open market that provides more a favorable investment environment for American firms.

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