Would-be presidents have been twisting the dragon’s tail since 1950, when Robert Taft accused the Truman administration of “building up’’ the Chinese Communists. As candidates, Presidents Kennedy, Nixon, Reagan, Clinton, and George W. Bush all wanted tougher China policies. Fortunately, pragmatism usually won out, and cooperation ensued. Nixon’s rapprochement with Beijing created a potent partnership against the Soviet Union. China is now America’s second-largest trading partner (after Canada), and the largest holder of US government debt.
China, with its massive trade surplus and a political system that disturbs many Americans, is an easy political target. During the first 11 months of 2011, China exported more than $366 billion worth of goods to America and imported less than $95 billion of American goods. China’s critics argue that this trade surplus reflects Chinese policies - the artificial undervaluing of the Chinese currency and Beijing’s failure to protect intellectual property rights.
I wish more freedom and stronger property rights for all nations, and American exporters would benefit if the Chinese currency increased in value. But nothing in the history of US-China relations suggests that the Chinese are paper tigers who will fold if we start talking tough. And actually imposing tough trade sanctions on China is likely to create more cost than benefit for the United States.
Trade sanctions are a double-edged sword that hurt not just Chinese manufacturers but also US consumers. Shoppers at Target and Walmart benefit from inexpensive Chinese goods - even if low costs reflect currency manipulation. The creative minds at Apple can produce affordable iPads by assembling them in China. Environmentalists should cheer cheap Chinese solar panels - even if Chinese subsidies help make them cheap.
