Interestingly, China's currency manipulation, putting tariffs on them etc. is not an issue that has clear partisan dividing lines.
Early in Obama's terms, he put a couple of random tariffs on Chinese imports, car tires among them. Why he chose to add a couple of tariffs to a small number of products was a bit confusing, it didn't really affect much, but made the American car tire industry happy.
Currently Mitt Romney is saying he'll bring China before the WTO as a currency manipulator and will apply broad tariffs on Chinese goods.
Of course, if China's currency was suddenly allowed to float or we slapped enough tariffs on Chinese imports to make the price ''fair'', the American consumer would be hit very hard.
I do believe that their currency should be allowed to float ultimately, and that it will help rebalance the world economy, encouraging Chinese consumption and U.S. production.
But in the short term, China's cheap currency allows us to buy cheap stuff. If that went away, people would hurt for quite a while during the transition
Well a few things I should point out that many may not know:
1) China keeping its artificially devalued essentially acts as a purchasing power tax on its population and a purchasing power subsidy on our population
2) If you keep your currency devalued, yes you can keep low capital cost manufacturing more competitive, but it makes you horribly non competitive in high capital cost manufacturing. Ever wonder why China hasn't been able to break into much tech manufacturing, auto manufacturing(of which they've been trying for years), planes, ships, etc.? The reason is because they've made the cost of purchasing expensive machinery and very high skill people way to expensive.
3) Market forces are now catching up with their property markets and exporters and will either force them to change or enter a period of Japan like decay. So it really isn't to much of a long term issue
4) When we buy Chinese goods they have a surplus of dollars in China. Now they have to use that money to buy something in the US. In most cases they are buying treasuries and a few other bonds and equity positions. That should allow the United States to redirect capital to an efficient place and build up new industries really fast, but instead what happens is the Federal Reserve creates an artificially low price of money and the capital shows up in asset bubbles instead of almost exclusively prudent investments.
5) Lets point out that the Chinese actually have allowed their currency to appreciate considerably over the last couple years and we are actually the ones that have allowed our currency to depreciate courtesy of the Fed. So increasingly we are the problem.
