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Romney Will Lose in China 'Cheater' Debate

Stocks in this article: YOKU CEO

Government intervention in business is an issue Romney has tiptoed around among conservatives and tea party supporters in his own party. The former Massachusetts governor has blamed the president for expansion of government during his term -- bailouts, Obamacare, picking so-called winners and losers in the energy sector -- which those Republican supporters have blamed for the country's current $16 trillion debt.

It's not uncommon for the government to step in on behalf of American businesses, in the case of China. Obama has filed eight cases against China at the World Trade Organization in his term.

It may be a wise decision in order to protect American enterprises. Romney could benefit among voters by promoting government intervention similar to that which Obama and virtually every American president before him has taken, and note that it's a necessary step to eliminate so-called cheating and help mature the investment relationship between the U.S. and China.

A complaint among Americans is that U.S. firms have moved their operations to China, which has hurt jobs here -- Romney has rolled out blame in the past week against Obama's policies for allowing this to happen.

Charles Schwab's Gibley said the mood could be shifting.

"You're starting to see some companies move out of China and potentially back to the United States, just because the wage differential -- that ability to arbitrage the difference in wages is narrowing," said Gibley.

The costs of manufacturing overseas have risen, particularly in China as its yuan currency has strengthened against the U.S. dollar.

Economic reforms that have evolved in China since the end of Mao Zedong's leadership came with influence by the United States. Deng Xiaoping, who eventually became the leader of the Chinese Communist Party, understood that a shift from the Soviet-Stalinist model of socialism to a market economy was in the country's best interest.

Stanford's Lewis said Romney could focus on collaborative innovation -- technology transfer and technology sharing in which Chinese and U.S. companies work together to advance technology.

"Let's face it, the U.S. has a very substantial technological lead on China ... but we are moving towards much greater integration of our two economies," said Lewis.

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