China quandary will confront next president

Tom Curry National affairs writer • Profile • E-mail

WASHINGTON - This election cycle, msnbc.com is presenting a weekly series Briefing Book: Issues '08 assessing some of the issues and controversies that the next president must confront.

These primers will define the problem or issue; outline the candidates' positions on the topic; evaluate shifts in the candidates' positions or votes; and forecast pitfalls for the next president.

We begin with China, the world’s fastest growing large economy and a growing military rival to the United States.

Beijing is the host of the Olympics which President Bush is attending. On arrival in China, Bush urged Chinese leaders to relax their autocratic rule and "let people say what they think," but the Chinese made clear they won't tolerate human rights lectures from Bush or others.

Why it’s a problem
Americans buy billions of dollars more of Chinese goods than the Chinese buy of American goods, leading to a large and growing trade imbalance.

For every Boeing 747 being sold to a Chinese airline, billions of dollars worth of electronics, toys, and clothing are sold to American customers.

Video   Issues '08: Candidates confront China Sens. John McCain and Barack Obama offer their positions on how to address Beijing's rising economic and military power. Produced by Andy Merten. msnbc.com

American manufacturers charge that China is manipulating its currency to gain advantage over U.S. firms, leading some in Congress to call for imposing punitive duties on Chinese imports.

As of the end of April, Chinese investors owned more than $500 billion of U.S. Treasury bonds, which made the Chinese second only to the Japanese as foreign holders of U.S. Treasury debt. These holdings give the Chinese leverage over the finances of the U.S. government and the value of the dollar.

Meanwhile, military tensions have been growing between Washington and Beijing.

Last year, the Chinese suddenly rejected a long-arranged port call for the U.S. aircraft carrier Kitty Hawk in Hong Kong.

The Chinese military also destroyed one of China's weather satellites with a ground-based missile, a step toward the militarization of outer space.

The United States has antagonized the Beijing regime by selling arms to Taiwan and awarding a congressional gold medal to the Tibetan spiritual leader, the Dalai Lama.

The build-up to the Olympics featured a crackdown on Tibetan nationalists, which in turn sparked calls for Olympic boycotts.

Slide show Modern China in pictures A click-through history from the last emperor to the present day.

Human rights activists have also fired criticism at the Beijing regime for doing business with repressive regimes in Africa, especially in Sudan.

Where the candidates stand
Democratic presidential candidate Sen. Obama said while campaigning in Pennsylvania on April 15, that as president he would say to the Chinese government, “You guys keep on manipulating your currency, we are going to start shutting off access to some of our markets. If you are doing the right thing and not trying to manipulate your currencies to our disadvantage then you will have access.”

He also promised last year, after a series of safety and lead contamination problems with Chinese toys, that if elected president he would ban their import.

"I would stop the import of all toys from China,” he said at one point in New Hampshire.

He added in Iowa, “I will work with China to keep harmful toys off our shelves. But I'll also immediately take steps to ensure that all toys are independently tested before they reach our shores and I'll significantly increase penalties on companies that break the rules….The more toys we import from China, the more risk to our children.”

Obama supports a bill that would permit U.S. companies to seek punitive duties on Chinese imports based on the alleged undervaluation of its currency.

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