Clinton sounds the China alarm as ’08 issue

What is the remedy?
If dependency on China is the problem, then what’s the solution that Clinton offers?

How would she as president “ensure foreign governments don't own too much of our public debt”? And how much is too much?

In her CNBC interview Clinton said she would "not at this time" call for Congress to limit by law the amount of debt held by foreigners.

Economists agree that reducing U.S. dependency on Chinese and other foreign buyers of Treasury securities would require higher taxes, cuts in federal spending, increases in Americans’ saving, or a combination of all three.

Clinton has not yet spelled out her plan to do any of these three. In her CNBC interview Thursday she referred to the need for "fiscal responsibility," but did not specify any cuts in spending or increases in taxes.

In her letter to Paulson and Bernanke she mentioned a fairly painless step: requiring that the administration sound "an alarm bell when U.S. foreign-owned debt reaches 25 percent of GDP" and requiring it to write a plan of action to address that indebtedness.

Populism, Wal-Mart and China as '08 issues
A Democratic strategist not currently working for any of the presidential contenders said he expects one 2008 theme to be “economic populism that reflects the overall anxiety the American people have over the economy and that their children’s future is being traded and sold to countries, like China.”

He said, “The reality is that one-sided trade agreements with China have led to millions of good paying manufacturing jobs lost to benefit a few companies, like Wal-Mart, all the while America has gotten weaker.”

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This strategist argued that Clinton has a problem when it comes to China.

“Arguably, no candidate may be more vulnerable on China, and Wal-Mart than Senator Clinton,” he said. Why? Because she once served as a member of Wal-Mart’s board of directors and because, as president, her husband persuaded Congress in 2000 to award China with permanent normal trade relations status and smooth the accession of China to the World Trade Organization.

Since then, as China has increasingly become part of the global trading system, Chinese exports to the United States have soared.

But if the mood of the electorate in 2008 is anti-China, other Democratic presidential contenders would have their own China history to contend with: as senators, John Edwards, Chris Dodd, and Joe Biden all voted for the Clinton administration’s China trade deal.

Looking back on 2000 accord
And former vice president Al Gore, who some Democrats see as an alluring potential entry into the ’08 race, was a leader of the Clinton administration’s effort to pass the China deal.

“If we open up China’s markets,” he predicted in 2000, “the expected liberalization and opening of the Chinese market will inevitably produce pressures for liberalization of (political and social) conditions there.”

Some of the Democrats’ labor union allies were bitterly disappointed in Gore. “One moment, presidential candidate Gore is telling the labor movement that he believes in human rights, workers rights…. The next, Vice President Gore is holding hands with the profiteers of the word and singing the praises of the U.S.-China WTO accession agreement,” said United Auto Workers president Stephen Yokich in 2000.

Among actual or potential 2008 Democratic contenders, there are only two who voted “no” on the China trade deal and whose “no” vote might now look attractively prescient to voters in anti-China frame of mind: Wisconsin Sen. Russ Feingold, who has taken himself out of the presidential fray, and Rep. Dennis Kucinich of Ohio who is very much in it.

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