[Mb-civic] An article for you from an Economist.com reader.

Mon Feb 20 19:30:00 PST 2006

- AN ARTICLE FOR YOU, FROM ECONOMIST.COM -

Dear civic,

Michael Butler (michael at intrafi.com) wants you to see this article on Economist.com.

(Note: the sender's e-mail address above has not been verified.)

Subscribe to The Economist print edition, get great savings and FREE full access to Economist.com.  Click here to subscribe:  http://www.economist.com/subscriptions/email.cfm 

Alternatively subscribe to online only version by clicking on the link below and save 25%:

http://www.economist.com/subscriptions/offer.cfm?campaign=168-XLMT

PORTMAN'S COMPLAINT
Feb 16th 2006  

Can the White House hold back rising Sinophobia in Congress?

DURING the 2004 presidential campaign, the White House withstood the
lure of China-bashing. While John Kerry promised to get tough with the
regime in Beijing and congressmen of both parties branded China an
unfair trader, George Bush's team, to its credit, rejected calls to
threaten tariffs to force the Chinese government to revalue its
currency. 

 This year, standing firm against Sinophobia could prove trickier. The
White House is weak. Congressional Republicans are nervous about losing
seats in November's mid-term elections. And the anti-China fervour on
Capitol Hill has, if anything, become stronger. 

 Politicians are wary of China on many fronts. Defence hawks worry
about Beijing's military clout. Conservatives who have long complained
about the country's human-rights abuses are now much exercised by the
role of American internet firms in the trampling of individual freedom.
On February 15th, for instance, managers from Yahoo!, Cisco, Microsoft
and Google were hauled to a congressional hearing called to consider
whether the internet was "a tool for suppression" in China. Chris
Smith, a conservative Republican from New Jersey, is drafting a bill
that would require such firms to keep computer servers out of
countries, principally China, that abuse human rights. 

THE PROTECTIONIST URGE
For most congressmen, however, the biggest problem with China is trade.
They claim that Beijing's cheap currency, refusal to respect
intellectual-property rights and general inability to play by the rules
is harming America's economy. The swelling bilateral trade deficit
between America and China is seen as "proof" that China is an unfair
trader. New figures show that the bilateral deficit jumped by a quarter
last year, to reach a record $202 billion. 

In the House, one group of Democrats wants to create a trade
enforcement office in Congress, allowing lawmakers, rather than the
administration, to issue indictments of America's trading partners.
Meanwhile, in the Senate, Byron Dorgan, a Democrat from North Dakota,
and Lindsey Graham, a Republican from South Carolina, want to rescind
China's "permanent normal trading" status, granted in 2000, and return
to an annual review. That would be against the rules of the World Trade
Organisation--as would a 27.5% tariff on Chinese goods that Mr Graham
and Charles Schumer, a Democrat from New York, want to impose unless
Beijing revalues its currency. Mr Schumer wants a vote on this bill in
March. 

 These bills are more about political posturing than making laws, but
they show Congress's mood. More moderate but still dubious ideas, such
as imposing anti-subsidy duties on China, have widespread support. More
than 20 anti-China bills are now sitting in the congressional hopper,
according to Gary Hufbauer of the Institute for International
Economics. The worry is that the Republicans will allow some sort of
law through this year, if only to inoculate themselves against
Democratic attacks in the mid-term elections. 

 The Bush strategy seems to be to head off the worst legislation by
talking tough on China, while sticking to a policy of engagement behind
the scenes. Robert Portman, Mr Bush's top trade negotiator, unveiled
his "top-to-bottom review" of China policy this week. In his
accompanying letter to Congress, he pulled no punches. "Our bilateral
trade relationship with China today lacks equity, durability and
balance in the opportunities it provides," he says, before making it
clear that America will "use all options available" to deal with this. 

 Look at the actual report, however, and a subtler picture emerges,
detailing the benefits to America of the relationship and playing down
the trade deficit. Mr Portman argues that the Sino-American
relationship has "matured", and now goes beyond simply ensuring China's
compliance with WTO rules. Echoing his predecessor Bob Zoellick, who is
now deputy secretary of state, Mr Portman believes that a more modern
China has to behave as a "responsible stakeholder" in the global
trading system. His proposals are modest, such as the creation of a new
"China enforcement task-force" within his own office (similar units
already exist in the Commerce Department). 

 Will this two-track strategy (sounding tough, acting reasonably) work?
The hope is that the rhetoric will give moderate congressmen in both
parties just enough ammunition to fend off their more extreme
colleagues. A lot depends on whether Mr Bush recovers his popularity
with the electorate (which would give Mr Portman more clout with
Republicans in Congress), and on whether China-bashing shows more sign
of attracting voters than it did in 2004. The White House may minimise
the damage. But brace yourself for a Sinophobic law of some sort before
the mid-term elections. 

See this article with graphics and related items at http://www.economist.com/world/na/displaystory.cfm?story_id=E1_VVNQVJD

Go to http://www.economist.com for more global news, views and analysis from the Economist Group.

- ABOUT ECONOMIST.COM -

Economist.com is the online version of The Economist newspaper, an independent weekly international news and business publication offering clear reporting, commentary and analysis on world politics, business, finance, science & technology, culture, society and the arts.
Economist.com also offers exclusive content online, including additional articles throughout the week in the Global Agenda section.

-	SUBSCRIBE NOW AND SAVE 25% -

Click here: http://www.economist.com/subscriptions/offer.cfm?campaign=168-XLMT

Subscribe now with 25% off and receive full access to:

* all the articles published in The Economist newspaper
* the online archive - allowing you to search and retrieve over 33,000 articles published in The Economist since 1997
* The World in  - The Economist's outlook on the year
* Business encyclopedia - allows you to find a definition and explanation for any business term

- ABOUT THIS E-MAIL -

This e-mail was sent to you by the person at the e-mail address listed
above through a link found on Economist.com.  We will not send you any
future messages as a result of your being the recipient of this e-mail.

- COPYRIGHT -

Economist.com privacy policy: http://www.economist.com/about/privacy.cfm