Editor’s Note: Oded Shenkar is the Ford Motor Company Chair in Global Business Management at the Fisher College of Business at Ohio State University. He is the author of “Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge.”
Story highlights
This week, President Obama announced a trade complaint against China
Oded Shenkar says politicians tend to get tough on China in election season
He says Obama is tackling Chinese auto subsidies to appeal to Ohio voters
Shenkar: U.S. had plenty of opportunities to deal with unfair Chinese trade practices
You know the presidential election is in full swing when politicians are getting tough on China. While both Democrats and Republicans promise to do just that, it is the Obama administration, being in the driver’s seat, that has been leading the charge.
On Monday, the Obama administration filed a trade case against China at the World Trade Organization, arguing that it provides subsidies to its auto and auto parts industries that hurt American manufacturers.
If you had any doubts that the new complaint against unfair Chinese trade practices is part and parcel of the election campaign, consider these factors.
This week’s complaint is the third one this year, and it comes just about two months before Election Day. Where was the administration before?
Ohio is a key battleground state, and automotive components happen to be one of the most important segments of the local economy. Why is Obama focusing on Chinese auto subsidies now? Note also that he made the announcement in Ohio during a campaign rally.
Tough with China? Give me a break. We don’t know whether Obama conveyed to the Chinese what he told the Russians (just let me get through the election, and I will be more flexible), but it’s no secret to anyone that China holds more than $1 trillion in U.S. debt. When you owe another country that much debt, it may not be so easy to act tough.
The Obama administration had plenty of opportunities to take steps that would genuinely challenge the Chinese. For example, it could have labeled China as a currency manipulator, which would have allowed the U.S. to take measures such as imposing tariffs unilaterally rather than through the WTO. Likewise, the administration has done little to offer vigorous protection of American intellectual property rights, which impacts a much broader array of U.S. business interests. And the administration has failed to take other concrete steps that would reduce China’s competitive advantage.
Let me make it clear. I am not defending China, and I have often offered criticism of Chinese practices and continue to do so. However, I find the current round of China-bashing disingenuous and brazen in its kowtowing to politically viable groups. What we need is an effective strategy of how to deal with China in the long term rather than engage in election season tactics.
We should also face up to some of our own self-inflicted wounds. There are things under our control that undermine our competitiveness in relation not only to China but to numerous other countries.
For a starter, maybe our government should try to tackle the huge and growing debt that makes us beholden to other countries like China. Our educational system does not provide nearly enough to prepare our graduates for the skills and knowledge that companies require to succeed in a global workplace. And we should reconsider regulations that discourage companies from setting up plants in the U.S. while China looks attractive in comparison.
Instead, what we have are slogans that used to be quite popular with the Chinese in hardline communist days, e.g., doubling our exports in five years. How, exactly? Maybe the Obama administration and the Romney camp can start addressing those questions first.
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The opinions expressed in this commentary are solely those of Oded Shenkar.