Parsing the short-sighted, China-bashing midterm ads

October 29, 2010: 12:38 PM ET

Members of both parties are using China as a scapegoat for America's economic woes. But China is a key trade partner for many of these states, which is going unnoticed in the sometimes xenophobic attack ads.

With midterm elections only days away, a spate of political ads has emerged that treats China like an economic plague. Though polls show that the Democrats risk losing control of the House of Representatives, it seems China bashing on the campaign trail has become the weapon of choice regardless of party affiliation.

Politically, this might make sense. Americans are anxious about the economy amid the rapid rise of developing countries including China. So it's not entirely a shocker to hear politicos turn to protectionist rhetoric.

According to an April survey of 1,000 voters, many think the most effective way to improve the country's economic prospects is to "crack down" on unfair trade practices and do more to help American manufacturers. What's more, survey results presented to the Alliance for American Manufacturing reveal that the majority saw American-made goods as superior to those from China. The study also found that 58% of respondents felt the U.S. is not the strongest economy in the world, while 36% think that China holds that title.

Indeed, these are unnerving times. The U.S. is slowly recovering from the longest recession in recent history. Unemployment is still at an uncomfortable 9.6%. And it will probably take several more years before the nation's housing market recovers from huge falls in housing prices.

China is an easy scapegoat. But politics aside, it's hard not to wonder if the recent campaign ads are perhaps missing the bigger picture.

The ties between the U.S. and its economic rival are increasingly deep and arguably irreversible. America has long run a huge and unsustainable trade deficit with China, but U.S. exports to the East Asian giant are surging. Since 2000, when China was required to significantly reduce trade barriers, American-made goods sold to the country have surged 330%, while exports to the rest of the world rose only 29%. The remarkable increase is partly due to the fact there was so little U.S. exports to China prior.

Still, China remains the third-largest export market for American-made products. In 2009, the U.S. exported $69.6 billion worth of goods to China, chiefly in computers and electronics. This is behind Canada ($204.7 billion) and Mexico ($129 billion), according to the U.S.-China Business Council, a nonprofit comprised of about 220 American companies that do business with the country.

Also, during the 2009 global economic recession, U.S. exports to China stayed roughly the same from 2008 levels. Exports to the rest of the world fell by about 19% during the same period, according to the Council, which based its analysis in a 2009 report on U.S. government trade statistics.

The rise in exports underscores the fact that the Chinese and U.S. economies are becoming increasingly intertwined. It's true that American exports make up only a relatively small part of the economy – probably not enough to really drive growth for a while. But does it make sense – at least economically – for politicos to play on the fears of unemployed Americans?

Next week, U.S. voters will elect 435 members to the House of Representatives and fill 37 of the 100 seats in the Senate. As the China bashing continues on the campaign trail, Fortune takes a look at targeted states of anti-China ads highlighted recently in The New York Times.

Ohio:

It's easy to see why Ohio would be easy ground for China bashing. It's a key manufacturing state and xenophobic politicos have used it as an easy political strategy. In this ad, Ohio congressman Zack Space accuses his Republican opponent Bob Gibbs for supporting free-trade policies that he says exported Ohio jobs to China. An image of a festive Chinese dragon appears with the narrator wryly saying: "As they say in China, Xie, Xie Mr. Gibbs."

And as the Times reported, Republican Congressman John Boehner, House minority leader, blamed President Obama and Democratic Congresswoman Nancy Pelosi, House majority leader, during a recent speech in Ohio for a "stimulus that shipped jobs overseas to China…"

Indeed, manufacturing jobs have been declining for almost a decade. But what's also worth noting is that Ohio is among the top 15 exporting states to China. In 2009, Ohio sold $1.9 billion worth of goods and services to China, much of it in transportation equipment, according to the U.S.-China Business Council.

And during the economic recession when Ohio exports to the rest of the world dropped by 26% between 2008 and 2009, sales to China actually rose 3%, according to the Council.

Nevada:

The stakes are high for Sen. Majority Leader Harry Reid, who has been widely viewed as one of the most vulnerable incumbents in the mid-term elections. It's almost not surprising that Reid would go as far as airing this ad with images of Chinese factory workers criticizing Republican opponent Sharron Angle for supporting corporate tax breaks that helped outsource jobs to China and India.

Again, the xenophobic kicker: Reid calls Angle "a foreign worker's best friend."

Reid might have a stronger argument than some other states that have gained relatively more from exports to China. While China is Nevada's fourth-largest export market, it exported only $211 million worth of goods in 2009 compared with Ohio's $1.9 billion. What's more, Nevada's exports to China during the global downturn fell far more -- 43% -- than exports to the rest of the world, which fell by 5%.

California:

Democratic Sen. Barbara Boxer aired this recent ad charging that Republican opponent Carly Fiorina, a former chief executive at Hewlett-Packard (HPQ), outsourced thousands of jobs to China and India. True, California's unemployment rate of 12.4% in September is higher than the national rate of 9.6%.

What's not mentioned in the ad is that California remains the largest exporter of goods and commodities to China, followed by Washington, Texas, Louisiana and Oregon, according to the U.S.-China Business Council. In 2009, California sold $9.7 billion worth of goods to China, mostly computers and electronics.

So while Boxer may bash China, workers were employed in some way to make those sales happen.

Colorado and Pennsylvania:

Ryan Frazier, a Republican running for Colorado congressional seat, recently ran an ad criticizing incumbent Ed Perlmutter for supporting cap-and-trade legislation, which some think could push more manufacturing jobs overseas. Or more specifically, China as the ad features the country on a world map.

And then there's Pennsylvania, where Democratic Representative Joe Sestak, who is running for state senator, recently aired an ad accusing Republican opponent Pat Toomey of "fight for jobs" in China.

It's true the U.S. imports from China way more than it sell to the country. But it's hard to ignore that while still relatively small Colorado and Pennsylvania see China as a key export market. Between 2000 and 2009, exports in Pennsylvania to China rose 458% compared with a 44% rise of exports to the rest of the world during the same period.

It may be shortsighted for politicians to disregard China as a trading partner. Even if only to get elected.

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About This Author
Nin-Hai Tseng
Nin-Hai Tseng
Writer, Fortune

Nin-Hai Tseng covers economics and finance. Before joining Fortune, Tseng was a reporter at The Orlando Sentinel and a public affairs associate at GE. She holds an MPA from Columbia University and a BS in Journalism from the University of Florida. She lives in New York City.

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