Rich Lowry

Hillary Clinton has met the enemy, and it is foreign investment. She unleashed a barnburner of a speech at a New York fundraising event the other day and reserved special salvos for China. She warned that we are ?giving up our fiscal sovereignty? to the Chinese. Our borrowing from Beijing makes it impossible to ?get tougher on China,? she said, because, ?How do you get tough on your banker??

This line runs in the family. At the Democratic Convention last year, Bill Clinton lambasted the Bushies for borrowing ?from foreign governments, mostly Japan and China. Sure, they?re competing with us for good jobs, but how can we enforce our trade laws against our bankers?? House Minority Leader Nancy Pelosi and other Democrats have made similar arguments, as they portray Chinese investment in the U.S. as a national-security threat.

We?ve been here before. All the same things were said 20 years ago about Japanese investment. Now China is becoming the boogeyman. Somehow it is always pesky ASIATICS who are the focus of this kind of populist roundhouse, which combines economic illiteracy and political demagoguery to make for an irresistible, Clintonian cheap shot.

China-bashing is rich coming from the Clintons. In the 1992 presidential campaign, Bill Clinton called ?most favored nation? trading status for China ?unconscionable.? In office, his conscience quickly gave way, as he embraced most-favored-nation status and sent his commerce secretary to Beijing to grovel for business deals. In 1996, Chinese agents helped raise funds for his reelection campaign. When the Clintons complain of kowtowing to China and dependence on Chinese money, they know whereof they speak.

By rights, Japan should still be the chief ?how dare they invest here? whipping boy, but Japan-baiting feels so 1985. Its economy is still four times bigger than China?s, and it owns more U.S. treasuries. It has roughly $680 billion to China?s $225 billion. If the U.S. economy is threatened by a foreign power it is Japan, which ? by the Clintons? logic ? should have taken us over long ago.

When other countries buy up our debt, it isn?t nefarious. As David Malpass of Bear Stearns points out, Japan owns so many U.S. bonds because its aging population wants to own safe but relatively high-performing assets. The Chinese, meanwhile, link their currency to the dollar and invest their dollar holdings in U.S. treasuries. This dollar linkage has provided a stable environment for robust Chinese economic growth. Democrats who complain about cheap Chinese labor should welcome this, since sustained growth is the only way to boost a country?s wages.

Rich Lowry

Rich Lowry is author of Legacy: Paying the Price for the Clinton Years .
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