Mitt Romney is running several TV ads that call China a cheater when it comes to trade. But the GOP presidential candidate is cheating his own campaign by causing confusion on this issue and distracting America from the real root of our economic problems.

One ad begins by observing that manufacturing in the United States has suffered under President Obama while Chinese manufacturing has grown. It accuses China of “cheating” and takes the president to task for not taking action. 

Another ad criticizes China for stealing “American ideas and technology” and again criticizes Obama for missing “seven opportunities” to take action.

But this rhetoric is both confusing and dangerous.

Let’s being with a few facts. China’s market is not as open to imports as is America’s. According to the Index of Economic Freedom , out of a possible total of 100, China scores only 71.6 on trade freedom; there are 117 other countries with more open markets. By contrast, the United States scores 86.4, not bad, but there are still 37 countries more open to international trade than America. On investment freedom the U.S. score of 70 ties it for 37th place with several other countries while China’s dismal score of 25 ranks it at only 146th.

Yes, it would better if China had more open markets and respected the intellectual property of Americans to say nothing of its own people. And progress, though slow, has been made in recent years under all presidents. 

But American trade restrictions on imports to the United States from China—what Romney seems to be threatening—are restrictions on the liberty of American consumers. We would have fewer choices and pay higher prices.

In addition, trade restrictions serve special interests—industries, unions—in the United States at the expense both of consumers and other businesses. Those special interests keep political pressure on politicians to keep favored restrictions in place. It takes a long and politically grueling process to remove them, too.

Further, trade is a topic that confuses many Americans. Many think of trade as a win-lose proposition, so if America runs a trade deficit with some country, we’ve lost. But most of us run trade deficits with our local grocery stores. They never buy anything from us. So what? The funds come back around to us in our paychecks and other earnings, in the end.

Sure, international trade brings in other issues. For example, America accuses China of manipulating its currency to seek trade advantages. But with the U.S. government’s huge debts and deficits, we’re lucky that the Chinese and others still accept our currency. As long as they do, they have to put trade surplus funds somewhere: what they do, in fact, is increase the investment funds available in dollars.

Romney should understand that Obama’s rhetorical, regulatory, and tax war on the “rich” and the wealth creators in this country and the uncertainly about the costs of his policies are what is causing investors and entrepreneurs to sit on perhaps a trillion dollars in capital rather than put it into productive enterprises. It’s not principally a problem with Chinese trade policy—it's a problem with economic freedom in America.

Romney has been the target of a lot of attacks for being a capitalist who shipped jobs overseas. But as a capitalist he should appreciate that major reason companies shut operations in the United States is the cost of government regulations, estimated to be well over a trillion dollars annually.

Rather that creating confusion about both the cause of our economic problems in general and trade in particular, Romney should focus his fire not on Chinese communists but on American tax-spend-and-regulate policies.
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Hudgins is director of advocacy for The Atlas Society.

For further reading:

*Bradley Doucet, “ When Atlas Shrugged .” What happened in the 1930s when U.S. investors sat it out like they are doing today? Brad explains.

*Walter Donway, “ Nationalizing the Financial Industry. ” Is the Bernanke Fed destroying our capital markets? Walter makes the case.

*William R Thomas, “ Is China the land of economic freedom? ” Will takes a long view of the question.

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Edward Hudgins

About The Author:

Edward Hudgins is research director at the Heartland Institute and former director of advocacy and senior scholar at The Atlas Society.

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