On trade, McCain's the man for HK
It is still another six months until the United States election, and almost nine months before the new president gets his or her feet under the Resolute desk in the Oval Office.
But with opinion polls now ranking 'the economy and jobs' as the number one concern among American voters and lobby groups howling that China has stolen 2 million American jobs by cheating on trade, trade relations between Washington and Beijing are fast becoming one of the campaign's hottest topics.
For Hong Kong, which makes much of its living servicing China's foreign trade, the positions of the three prospective candidates are vitally important.
And they could hardly be more different. Whereas Republican senator John McCain is a staunch supporter of free trade, his Democratic opponents Hillary Clinton and Barack Obama are engaged in a fierce competition to see who can bash China the hardest.
Although Mr McCain's position on trade would surely gain the backing of Hong Kong's business community, it is unlikely to win him many friends among America's blue-collar workers. He has consistently opposed erecting trade barriers against Chinese imports. 'It sounds like a lot of fun to bash China ... but free trade has been the engine of our economy,' he told an audience in Michigan last year. 'Free trade should be the continuing principle that guides this nation's economy.'
In contrast, both Ms Clinton and Mr Obama have clearly been swayed by reports like one from the Economic Policy Institute which claimed last year that the US has lost 1.8 million manufacturing jobs since 2001 because of unfair Chinese trade practices.
This sort of stuff is dangerous nonsense. As the first chart below shows, manufacturing employment has been in decline in the US since the late 1970s. And while it is true that there has been a steep fall since China joined the WTO in 2001, that had far more to do with the 2001 recession and improving productivity than with unfair competition from China. As the second chart shows, US manufacturing output has never been higher.
That has not stopped Ms Clinton thumping the tub on trade with China. 'We need to immediately and aggressively crack down on China's unfair trade practices,' she said last month, on another occasion adding: 'They manipulate their currency, they give illegal subsidies, they abuse workers' rights. And what do we get in return? Tainted fish, lead-laced toys, and poisoned pet food and polluted pharmaceuticals.'
Mr Obama has been equally strident. Last month he accused Beijing of undercutting American manufacturers by deliberately undervaluing the yuan, and threatened retaliation. 'Look, here's the bottom line: You guys keep on manipulating your currency, we are going to start shutting off access to some of our markets.'
This sort of protectionist talk is disturbing. Hopefully it will turn out to be mere empty campaigning, to be quietly dropped should either candidate actually win office. Happily, with nine months to go, there is still plenty of time for both candidates to change their minds.
