A heavy price to pay for this war !
Global Trends By MARTIN KHOR
In recent weeks, the media and some political leaders have warned that a new ‘currency war’ has broken out. Unless quickly resolved, it can have a severe effect on the global system.
"There are clear signs that the US is preparing to lower the value of its dollar"
THE past few weeks have seen the emergence of global currency chaos, which is a new threat to prospects for economic recovery.
In fact the situation is being depicted by the media and even by some political leaders as a “currency war” between countries.
The general idea being conveyed by this term is that some major countries are taking measures to lower the value of their currency to gain trade advantage.
If the value of a country’s currency is lower, the prices of its exports are cheaper when purchased by other countries, and thus, the demand for the exports will go up.
And on the other hand, prices of imports will become higher in the country, thus discouraging local people from buying the imports.
The end result is that the country will get higher exports and lower imports, thus boosting local production and improving the balance of trade.
The problem is that other countries which suffer from this action may “retaliate” by also lowering the value of their currencies, or by blocking the cheaper imports through higher tariffs or outright bans.
Thus, a situation of “competitive devaluation” may arise, as it did in the 1930s, which can contribute to a contraction of world trade and a recession.
The present situation is quite complex and involves at least three inter-related issues. First, the United States is accusing China of keeping the yuan at an artificially low level, which it claims is causing its huge trade deficit with China.
A US Congress bill is asking for extra tariffs to be placed on Chinese products. China claims such a measure would be against WTO’s rules, and that a sudden sharp appreciation of the yuan would be disastrous for its export industries, nor would it solve the problem of the US trade deficit.
Japan, whose yen has appreciated sharply against the dollar, intervened on the currency market on Sept 15 by selling two trillion yen in order to drive its value down.
Last week, Japan criticised South Korea for taking the same intervention measure to curb the appreciation of the won.
Second, there are clear signs that the US is preparing to lower the value of its dollar, through a new round of “quantitative easing”, in which the Federal Reserve will spend probably hundreds of billions of dollars to buy up government bonds and other debts.
This will increase liquidity in the market, which would reduce long-term interest rates and thus contribute to a recovery.
But this would also have two other effects. It would weaken the US dollar further (thus opening the US to the accusation that it is also engaging in competitive depreciation).
And the new liquidity would also add to a surge in capital flowing out from the US (where returns to investment are very low) to developing countries.
In the past, such surges of “hot money” would have been welcomed by the recipient countries. But many developing countries have now learnt, through the hard way, that sudden and large capital inflows can lead to serious problems which include:
> The capital inflow will lead to excess money in the country receiving it, thus raising the pressure on consumer prices, while fuelling “asset bubbles” or sharp rises in the prices of houses, other property and the stock market. These bubbles will sooner or later burst, causing a lot of damage.
> The large inflow of foreign funds will build up pressures for the recipient country’s currency to rise against other currencies significantly.
Either the financial authorities would have to intervene by buying up the excess foreign funds (which is known as “sterilisation”) and thus build up foreign reserves, or allow the currency to appreciate and this would have an adverse effect on the country’s exports.
Experience, including of the Asian crisis of 1997-99, shows that the sudden capital inflows can also turn into equally sudden capital outflows when global conditions change.
This causes economic disorder, including sharp currency depreciation, loan servicing problems and balance of payments difficulties.
At the International Monetary Fund annual meeting in Washington last week, there was a conflict of views between the US which accused China of deliberately suppressing the value of its yuan and not allowing it to appreciate more, and China which accused the US of planning quantitative easing and increasing liquidity to deliberately devalue its currency.
Meanwhile, even serious Western analysts and newspapers have recognised the threat posed to developing countries by large inflows of capital coming from the developed countries in search of higher yield.
In an editorial entitled “The Next Bubble”, the International Herald Tribune warns that Wall Street is snapping up assets of emerging economies.
Noting the problems caused by huge inflows of capital, the editorial asks developing counties to pay close attention and to consider capital controls to slow inflows.
The third recent development is some developing countries have introduced capital controls to slow down the huge inflows of foreign capital.
The Institute of International Finance estimates that a massive US$825bil (RM2549bil) will flow to developing countries this year, an increase of 42% over last year.
Brazil has doubled the tax on foreigners buying local bonds while Thailand recently imposed a 15% withholding tax on interest and capital gains earned by foreign investors on Thai bonds and South Korea has warned of new limits on forwards, while banks are asked not to lend in foreign currency.
There are fears that if the currency chaos or currency war is not solved soon, the world will face a threat of trade protectionism, either it takes the old form of an extra tariff, or a new form of competitive currency depreciation.
Moreover, the quantitative easing that the US is now planning may exacerbate the speculative flows of funds in search of profits, and this can be destabilising to the recipient countries and the global economy.
SHANGHAI — The International Monetary Fund was meeting central bank officials in China Monday to discuss ways to strengthen the global economic recovery, amid mounting fears of a damaging all-out currency war.
The People's Bank of China hosted the conference in the country's financial hub Shanghai, bringing together central bank chiefs and other officials from Asia, Africa, Europe, and North and South America, the IMF said.
The Shanghai conference follows IMF and World Bank annual meetings earlier this month, where finance officials discussed how to strengthen the recovery from the worst recession since World War II and the global financial system.
It also comes ahead of this week's key Group of 20 meeting in South Korea, where currency reform is expected to dominate talks, amid fears that nations could adopt trade barriers to counter the rising prices of Asian exports.
"The conference is part of the ongoing international examination of the policy challenges posed by the global financial crisis," the Washington-based IMF said in a statement.
PBOC chief Zhou Xiaochuan and IMF managing director Dominique Strauss-Kahn will co-chair the meeting, the institution said.
The US Federal Reserve was expected to be represented by Kevin Warsh, a member of the central bank's policy-setting Federal Open Market Committee.
Monday's meetings had been planned for several months and Il-Houng Lee, the IMF's resident representative in China, said all discussions would be carried out behind closed doors.
The talks were focused on macro-prudential policies -- the big systemic picture of reducing the risk of too-big-to-fail institutions, Chinese central bank policy adviser Xia Bin told reporters outside the meeting room.A news conference has been scheduled for 6:00 pm (1000 GMT).
In the run-up to the G20 finance ministers' meeting, which begins Friday in preparation for a Seoul summit next month, South Korea has warned that frictions over the currency upheaval are growing and could lead to trade protectionism.
The United States, facing mid-term elections next month, has ratcheted up the pressure on China to allow the yuan to rise more rapidly, but Beijing insists its currency must not be used as a "scapegoat" for US economic woes.
With Beijing keeping a tight grip on the yuan, many other Asian economies are suffering as their currencies soar against the dollar. Despite Europe's debt woes, the euro has also surged.
In its statement, the 187-nation IMF added the meeting followed an IMF-sponsored gathering in South Korea of Asian policymakers and leaders in July, at which it "committed to forging a new relationship with the region."
A year ago, the Group of 20 developed and developing nations tasked the IMF with stepping up its focus on global systemic stability.
Authorities agreed a broader approach was needed to spot weakness in the increasingly interconnected financial system, to complement the traditional micro-prudential regulations of bank-by-bank audit and supervision.
Asia-Pacific leaders will meet for a summit in Japan following the G20 gathering in Seoul next month.
Sen. Barbara Boxer (D-Calif.)
Lt. Gov. Lee Fisher (D-Ohio)
Gov. Joe Manchin (D-W.Va.)
Sen. Harry Reid (D-Nev.)
Rep. Joe Sestak (D-Pa.)
Governor
Gov. Ted Strickland (D-Ohio)
Susana Martinez (R-N.M.)
From the marquee battle between Senator Barbara Boxer and Carly Fiorina in California to the House contests in rural New York, Democrats and Republicans are blaming one another for allowing the export of jobs to its economic rival.
In the past week or so, at least 29 candidates have unveiled advertisements suggesting that their opponents have been too sympathetic to China and, as a result, Americans have suffered.
The ads are striking not only in their volume but also in their pointed language.
One ad for an Ohio congressman, Zack Space, accuses his Republican opponent, Bob Gibbs, of supporting free-trade policies that sent Ohioans’ jobs to China. As a giant dragon appears on the screen, the narrator sarcastically thanks the Republican: “As they say in China, xie xie Mr. Gibbs!”
In an ad featuring Chinese music and a photo of Chairman Mao, Spike Maynard, a Republican challenger in West Virginia, charges that Representative Nick Rahall supported a bill creating wind-turbine jobs in China.
And on Wednesday, Senator Harry Reid, the majority leader, began showing an ad that wove pictures of Chinese factory workers with criticism that Republican Sharron Angle was “a foreign worker’s best friend” for supporting corporate tax breaks that led to outsourcing to China and India.
The barrage of ads, expected to total in the tens of millions of dollars, is occurring as politicians are struggling to address voters’ most pressing and stubborn concern: the lack of jobs.
“China is a really easy scapegoat,” said Erika Franklin Fowler, a political science professor at Wesleyan University who is director of the Wesleyan Media Project, which tracks political advertising.
Polls show that not only are Americans increasingly worried that the United States will have a lesser role in the years ahead; they are more and more convinced that China will dominate. In a Pew poll conducted in April, 41 percent of Americans said China was the world’s leading economic power, slightly more than those who named the United States.
The attacks are occurring as trade tensions continue and the United States is pressuring the Chinese government to allow its currency to rise in value, a central topic under discussion at the International Monetary Fund meeting in Washington this weekend.
The ads are so vivid and pervasive that some worry they will increase hostility toward the Chinese and complicate the already fraught relationship between the two countries.
Robert A. Kapp, a former president of the US-China Business Council, said that even though tensions had flared in the past, he had never seen China used as such an obvious punching bag for American politicians.
“To bring one country into the crosshairs in so many districts, at such a late stage of the campaign, represents something new and a calculated gamble,” he said. “I find it deplorable. I find it demeaning.”
Not all of the ads are solely about China; a few mention India or Mexico. A recent ad from Mrs. Boxer accuses Ms. Fiorina, a former chief executive at Hewlett-Packard, of outsourcing thousands of jobs to “Shanghai instead of San Jose, Bangalore instead of Burbank,” and of “proudly stamping her products ‘Made in China.’ ”
It is no accident that Democrats, in particular, have been eying China as a line of attack. This spring, national Democrats, including the House speaker, Nancy Pelosi, began to encourage candidates to highlight the issue after reviewing internal polling that suggested voters strongly favored eliminating tax breaks for companies that do business in China. The party first began emphasizing the issue in a special election for a Pennsylvania House seat in May, said Representative Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee.
Never mind that there is hardly any consensus as to what exactly constitutes outsourcing and how many of the new overseas jobs would have stayed in American hands. The Democrats cite studies this year from the Economic Policy Institute, a liberal research organization, that assert three million jobs have been outsourced to China since 2001 because of the growing trade imbalance.
But Republicans, backed by some academics, say the number is much smaller. Indeed, Scott Kennedy, director of the Research Center for Chinese Politics and Business at Indiana University, said that most of the jobs China had added in manufacturing through foreign investment had come from Taiwan, Hong Kong and South Korea, not from the United States.
Still, some Republicans clearly see the issue as potent, and they are counterattacking with ads stating that the Obama administration’s stimulus package helped to create $2 billion in wind-turbine technology jobs in China, a claim the Treasury Department and the American Wind Energy Association say is dubious.
Representative John A. Boehner, the House minority leader, in a speech Friday in Ohio, blamed President Obama and Ms. Pelosi for a “stimulus that shipped jobs overseas to China instead of creating jobs here at home.”
Evan B. Tracey, president of the Campaign Media Analysis Group, which tracks political advertising, said that “China has sort of become a straw-man villain in this election” in a way that elicits comparisons to the sentiments toward Japan in the 1980s over car manufacturing and Mexico in the 1990s over the North American Free Trade Agreement.
While China’s growth has slowed a bit recently, its economy is still projected to surge by about 10 percent this year, continuing a remarkable three-decade streak of double-digit expansion.
“In a lot of ways it’s a code word: ‘Let’s be mad at China, because then the voters will connect the dots and say our manufacturing plants have been shut down because of China, and all the unfair labor practices, and throw on the fact that we’re basically selling all our debt to China,’//” Mr. Tracey said.
Even as the ads play up Americans’ unease with the threat posed by modern China, they often employ outdated and almost cliché depictions.
In a new spot for Representative Joe Sestak, who is running for the Senate in Pennsylvania, a gong clangs as a narrator says of his Republican rival, Pat Toomey: “He’s fighting for jobs — in China.”
An ad for Ryan Frazier, a Republican running for Congress in western Colorado, shows Forbidden City-style doors opening to reveal China on a world map, as the voiceover criticizes the Democratic incumbent, Ed Perlmutter, for supporting cap-and-trade legislation, which some Coloradans believe will drive more manufacturing jobs overseas.
Consultants from both parties are monitoring polling and voter reaction to gauge the effectiveness of the ads and to determine how long to continue showing them. Based on the back-and-forth between candidates on the campaign trail, the issue does not appear to be going away anytime soon.
At a Senate debate in Connecticut on Monday night between the Democrat Richard Blumenthal and the Republican Linda E. McMahon, Mr. Blumenthal repeatedly tried to raise concerns about the business practices of World Wrestling Entertainment, the company in which Ms. McMahon served as chief executive.
A tense moment occurred when Mr. Blumenthal asked: Why does Ms. McMahon’s company manufacture its popular action figure toys in China, rather than here at home? She said it was not her decision, but that of the toy company, and moved on.
"There are clear signs that the US is preparing to lower the value of its dollar"
THE past few weeks have seen the emergence of global currency chaos, which is a new threat to prospects for economic recovery.
In fact the situation is being depicted by the media and even by some political leaders as a “currency war” between countries.
The general idea being conveyed by this term is that some major countries are taking measures to lower the value of their currency to gain trade advantage.
If the value of a country’s currency is lower, the prices of its exports are cheaper when purchased by other countries, and thus, the demand for the exports will go up.
And on the other hand, prices of imports will become higher in the country, thus discouraging local people from buying the imports.
The end result is that the country will get higher exports and lower imports, thus boosting local production and improving the balance of trade.
The problem is that other countries which suffer from this action may “retaliate” by also lowering the value of their currencies, or by blocking the cheaper imports through higher tariffs or outright bans.
Thus, a situation of “competitive devaluation” may arise, as it did in the 1930s, which can contribute to a contraction of world trade and a recession.
The present situation is quite complex and involves at least three inter-related issues. First, the United States is accusing China of keeping the yuan at an artificially low level, which it claims is causing its huge trade deficit with China.
A US Congress bill is asking for extra tariffs to be placed on Chinese products. China claims such a measure would be against WTO’s rules, and that a sudden sharp appreciation of the yuan would be disastrous for its export industries, nor would it solve the problem of the US trade deficit.
Japan, whose yen has appreciated sharply against the dollar, intervened on the currency market on Sept 15 by selling two trillion yen in order to drive its value down.
Last week, Japan criticised South Korea for taking the same intervention measure to curb the appreciation of the won.
Second, there are clear signs that the US is preparing to lower the value of its dollar, through a new round of “quantitative easing”, in which the Federal Reserve will spend probably hundreds of billions of dollars to buy up government bonds and other debts.
This will increase liquidity in the market, which would reduce long-term interest rates and thus contribute to a recovery.
But this would also have two other effects. It would weaken the US dollar further (thus opening the US to the accusation that it is also engaging in competitive depreciation).
And the new liquidity would also add to a surge in capital flowing out from the US (where returns to investment are very low) to developing countries.
In the past, such surges of “hot money” would have been welcomed by the recipient countries. But many developing countries have now learnt, through the hard way, that sudden and large capital inflows can lead to serious problems which include:
> The capital inflow will lead to excess money in the country receiving it, thus raising the pressure on consumer prices, while fuelling “asset bubbles” or sharp rises in the prices of houses, other property and the stock market. These bubbles will sooner or later burst, causing a lot of damage.
> The large inflow of foreign funds will build up pressures for the recipient country’s currency to rise against other currencies significantly.
Either the financial authorities would have to intervene by buying up the excess foreign funds (which is known as “sterilisation”) and thus build up foreign reserves, or allow the currency to appreciate and this would have an adverse effect on the country’s exports.
Experience, including of the Asian crisis of 1997-99, shows that the sudden capital inflows can also turn into equally sudden capital outflows when global conditions change.
This causes economic disorder, including sharp currency depreciation, loan servicing problems and balance of payments difficulties.
At the International Monetary Fund annual meeting in Washington last week, there was a conflict of views between the US which accused China of deliberately suppressing the value of its yuan and not allowing it to appreciate more, and China which accused the US of planning quantitative easing and increasing liquidity to deliberately devalue its currency.
Meanwhile, even serious Western analysts and newspapers have recognised the threat posed to developing countries by large inflows of capital coming from the developed countries in search of higher yield.
In an editorial entitled “The Next Bubble”, the International Herald Tribune warns that Wall Street is snapping up assets of emerging economies.
Noting the problems caused by huge inflows of capital, the editorial asks developing counties to pay close attention and to consider capital controls to slow inflows.
The third recent development is some developing countries have introduced capital controls to slow down the huge inflows of foreign capital.
The Institute of International Finance estimates that a massive US$825bil (RM2549bil) will flow to developing countries this year, an increase of 42% over last year.
Brazil has doubled the tax on foreigners buying local bonds while Thailand recently imposed a 15% withholding tax on interest and capital gains earned by foreign investors on Thai bonds and South Korea has warned of new limits on forwards, while banks are asked not to lend in foreign currency.
There are fears that if the currency chaos or currency war is not solved soon, the world will face a threat of trade protectionism, either it takes the old form of an extra tariff, or a new form of competitive currency depreciation.
Moreover, the quantitative easing that the US is now planning may exacerbate the speculative flows of funds in search of profits, and this can be destabilising to the recipient countries and the global economy.
IMF meets central bank chiefs in Shanghai
By D'Arcy Doran (AFP)
 | ||
| The People's Bank of China is hosting a conference in Shanghai, bringing together other major central bank chiefs | ||
The People's Bank of China hosted the conference in the country's financial hub Shanghai, bringing together central bank chiefs and other officials from Asia, Africa, Europe, and North and South America, the IMF said.
The Shanghai conference follows IMF and World Bank annual meetings earlier this month, where finance officials discussed how to strengthen the recovery from the worst recession since World War II and the global financial system.
It also comes ahead of this week's key Group of 20 meeting in South Korea, where currency reform is expected to dominate talks, amid fears that nations could adopt trade barriers to counter the rising prices of Asian exports.
"The conference is part of the ongoing international examination of the policy challenges posed by the global financial crisis," the Washington-based IMF said in a statement.
PBOC chief Zhou Xiaochuan and IMF managing director Dominique Strauss-Kahn will co-chair the meeting, the institution said.
The US Federal Reserve was expected to be represented by Kevin Warsh, a member of the central bank's policy-setting Federal Open Market Committee.
Monday's meetings had been planned for several months and Il-Houng Lee, the IMF's resident representative in China, said all discussions would be carried out behind closed doors.
The talks were focused on macro-prudential policies -- the big systemic picture of reducing the risk of too-big-to-fail institutions, Chinese central bank policy adviser Xia Bin told reporters outside the meeting room.A news conference has been scheduled for 6:00 pm (1000 GMT).
In the run-up to the G20 finance ministers' meeting, which begins Friday in preparation for a Seoul summit next month, South Korea has warned that frictions over the currency upheaval are growing and could lead to trade protectionism.
The United States, facing mid-term elections next month, has ratcheted up the pressure on China to allow the yuan to rise more rapidly, but Beijing insists its currency must not be used as a "scapegoat" for US economic woes.
With Beijing keeping a tight grip on the yuan, many other Asian economies are suffering as their currencies soar against the dollar. Despite Europe's debt woes, the euro has also surged.
In its statement, the 187-nation IMF added the meeting followed an IMF-sponsored gathering in South Korea of Asian policymakers and leaders in July, at which it "committed to forging a new relationship with the region."
A year ago, the Group of 20 developed and developing nations tasked the IMF with stepping up its focus on global systemic stability.
Authorities agreed a broader approach was needed to spot weakness in the increasingly interconnected financial system, to complement the traditional micro-prudential regulations of bank-by-bank audit and supervision.
Asia-Pacific leaders will meet for a summit in Japan following the G20 gathering in Seoul next month.
China Emerges as a Scapegoat in Campaign Ads
By DAVID W. CHEN Published: October 9, 2010
With many Americans seized by anxiety about the country’s economic decline, candidates from both political parties have suddenly found a new villain to run against: China.
An ad by Representative Zack Space of Ohio.
A Barrage of Ads
In the last few weeks, at least 29 candidates, either directly or through their supporters, have unveiled advertisements tapping into Americans’ anxiety over China’s economic might. The list includes 19 Democrats and 10 Republicans.
House
Rep. Jason Altmire (D-Pa.)
Rep. Michael Arcuri (D-N.Y.)
Jon Barela (R-N.M.)
Rep. Joe Donnelly (D-Ind.)
Ryan Frazier (R-Colo.)
Raj Goyle (D-Kan.)
Denny Heck (D-Wash.)
Robert Hurt (R-Va.)
Ann McLane Kuster (D-N.H.)
Spike Maynard (R-W.Va.)
Rep. Scott Murphy (D-N.Y.)
Rep. Bill Owens (D-N.Y.)
Rep. Mark Schauer (D-Mich.)
Austin Scott (R-Ga.)
Rep. Zack Space (Ohio)
Tim Walberg (R-Mich.)
Rep. John Yarmuth (D-Ky.)
Tom Ganley (R-Ohio)
Rep. Ben Chandler (D-Ky.)
Bob Gibbs (R-Ohio)
Rep. Martin Heinrich (D-N.M.)
Stephen Fincher (R-Tenn.)
SenateRep. Jason Altmire (D-Pa.)
Rep. Michael Arcuri (D-N.Y.)
Jon Barela (R-N.M.)
Rep. Joe Donnelly (D-Ind.)
Ryan Frazier (R-Colo.)
Raj Goyle (D-Kan.)
Denny Heck (D-Wash.)
Robert Hurt (R-Va.)
Ann McLane Kuster (D-N.H.)
Spike Maynard (R-W.Va.)
Rep. Scott Murphy (D-N.Y.)
Rep. Bill Owens (D-N.Y.)
Rep. Mark Schauer (D-Mich.)
Austin Scott (R-Ga.)
Rep. Zack Space (Ohio)
Tim Walberg (R-Mich.)
Rep. John Yarmuth (D-Ky.)
Tom Ganley (R-Ohio)
Rep. Ben Chandler (D-Ky.)
Bob Gibbs (R-Ohio)
Rep. Martin Heinrich (D-N.M.)
Stephen Fincher (R-Tenn.)
Sen. Barbara Boxer (D-Calif.)
Lt. Gov. Lee Fisher (D-Ohio)
Gov. Joe Manchin (D-W.Va.)
Sen. Harry Reid (D-Nev.)
Rep. Joe Sestak (D-Pa.)
Governor
Gov. Ted Strickland (D-Ohio)
Susana Martinez (R-N.M.)
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Democratic Senatorial Campaign Committee
An ad by Representative Joe Sestak of Pennsylvania.
An ad by Representative Zack Space accuses his Republican rival, Bob Gibbs, of supporting policies that sent jobs to China.
In the past week or so, at least 29 candidates have unveiled advertisements suggesting that their opponents have been too sympathetic to China and, as a result, Americans have suffered.
The ads are striking not only in their volume but also in their pointed language.
One ad for an Ohio congressman, Zack Space, accuses his Republican opponent, Bob Gibbs, of supporting free-trade policies that sent Ohioans’ jobs to China. As a giant dragon appears on the screen, the narrator sarcastically thanks the Republican: “As they say in China, xie xie Mr. Gibbs!”
In an ad featuring Chinese music and a photo of Chairman Mao, Spike Maynard, a Republican challenger in West Virginia, charges that Representative Nick Rahall supported a bill creating wind-turbine jobs in China.
And on Wednesday, Senator Harry Reid, the majority leader, began showing an ad that wove pictures of Chinese factory workers with criticism that Republican Sharron Angle was “a foreign worker’s best friend” for supporting corporate tax breaks that led to outsourcing to China and India.
The barrage of ads, expected to total in the tens of millions of dollars, is occurring as politicians are struggling to address voters’ most pressing and stubborn concern: the lack of jobs.
“China is a really easy scapegoat,” said Erika Franklin Fowler, a political science professor at Wesleyan University who is director of the Wesleyan Media Project, which tracks political advertising.
Polls show that not only are Americans increasingly worried that the United States will have a lesser role in the years ahead; they are more and more convinced that China will dominate. In a Pew poll conducted in April, 41 percent of Americans said China was the world’s leading economic power, slightly more than those who named the United States.
The attacks are occurring as trade tensions continue and the United States is pressuring the Chinese government to allow its currency to rise in value, a central topic under discussion at the International Monetary Fund meeting in Washington this weekend.
The ads are so vivid and pervasive that some worry they will increase hostility toward the Chinese and complicate the already fraught relationship between the two countries.
Robert A. Kapp, a former president of the US-China Business Council, said that even though tensions had flared in the past, he had never seen China used as such an obvious punching bag for American politicians.
“To bring one country into the crosshairs in so many districts, at such a late stage of the campaign, represents something new and a calculated gamble,” he said. “I find it deplorable. I find it demeaning.”
Not all of the ads are solely about China; a few mention India or Mexico. A recent ad from Mrs. Boxer accuses Ms. Fiorina, a former chief executive at Hewlett-Packard, of outsourcing thousands of jobs to “Shanghai instead of San Jose, Bangalore instead of Burbank,” and of “proudly stamping her products ‘Made in China.’ ”
It is no accident that Democrats, in particular, have been eying China as a line of attack. This spring, national Democrats, including the House speaker, Nancy Pelosi, began to encourage candidates to highlight the issue after reviewing internal polling that suggested voters strongly favored eliminating tax breaks for companies that do business in China. The party first began emphasizing the issue in a special election for a Pennsylvania House seat in May, said Representative Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee.
Never mind that there is hardly any consensus as to what exactly constitutes outsourcing and how many of the new overseas jobs would have stayed in American hands. The Democrats cite studies this year from the Economic Policy Institute, a liberal research organization, that assert three million jobs have been outsourced to China since 2001 because of the growing trade imbalance.
But Republicans, backed by some academics, say the number is much smaller. Indeed, Scott Kennedy, director of the Research Center for Chinese Politics and Business at Indiana University, said that most of the jobs China had added in manufacturing through foreign investment had come from Taiwan, Hong Kong and South Korea, not from the United States.
Still, some Republicans clearly see the issue as potent, and they are counterattacking with ads stating that the Obama administration’s stimulus package helped to create $2 billion in wind-turbine technology jobs in China, a claim the Treasury Department and the American Wind Energy Association say is dubious.
Representative John A. Boehner, the House minority leader, in a speech Friday in Ohio, blamed President Obama and Ms. Pelosi for a “stimulus that shipped jobs overseas to China instead of creating jobs here at home.”
Evan B. Tracey, president of the Campaign Media Analysis Group, which tracks political advertising, said that “China has sort of become a straw-man villain in this election” in a way that elicits comparisons to the sentiments toward Japan in the 1980s over car manufacturing and Mexico in the 1990s over the North American Free Trade Agreement.
While China’s growth has slowed a bit recently, its economy is still projected to surge by about 10 percent this year, continuing a remarkable three-decade streak of double-digit expansion.
“In a lot of ways it’s a code word: ‘Let’s be mad at China, because then the voters will connect the dots and say our manufacturing plants have been shut down because of China, and all the unfair labor practices, and throw on the fact that we’re basically selling all our debt to China,’//” Mr. Tracey said.
Even as the ads play up Americans’ unease with the threat posed by modern China, they often employ outdated and almost cliché depictions.
In a new spot for Representative Joe Sestak, who is running for the Senate in Pennsylvania, a gong clangs as a narrator says of his Republican rival, Pat Toomey: “He’s fighting for jobs — in China.”
An ad for Ryan Frazier, a Republican running for Congress in western Colorado, shows Forbidden City-style doors opening to reveal China on a world map, as the voiceover criticizes the Democratic incumbent, Ed Perlmutter, for supporting cap-and-trade legislation, which some Coloradans believe will drive more manufacturing jobs overseas.
Consultants from both parties are monitoring polling and voter reaction to gauge the effectiveness of the ads and to determine how long to continue showing them. Based on the back-and-forth between candidates on the campaign trail, the issue does not appear to be going away anytime soon.
At a Senate debate in Connecticut on Monday night between the Democrat Richard Blumenthal and the Republican Linda E. McMahon, Mr. Blumenthal repeatedly tried to raise concerns about the business practices of World Wrestling Entertainment, the company in which Ms. McMahon served as chief executive.
A tense moment occurred when Mr. Blumenthal asked: Why does Ms. McMahon’s company manufacture its popular action figure toys in China, rather than here at home? She said it was not her decision, but that of the toy company, and moved on.
