PBS Newshour

Putting Candidates' Assertions of “Getting Tough with China” in Context

Editor's Note: On October 17, 2012, Kenneth Lieberthal answered questions from PBS's Jeffrey Brown on how China plays into the 2012 U.S. presidential election. Watch the interview at pbs.org, and read an excerpt below.

JEFFREY BROWN: Ken Lieberthal, same question to you. And you heard the president say the currency has appreciated.

KENNETH LIEBERTHAL: I think it is a serious problem to brand them a currency manipulator. First of all, a lot of countries around the world intervene to affect the value of their currency. Japan has many times over the years and so have many others. We haven't branded any of them a currency manipulator ever. Secondly, the Chinese currency now is very close to a market clearing price would be. You see that reflected in China's current account balance. The bottom line is, the current account balance is now well within the standards that we, ourselves, have advocated, saying that if it is within those standards, it really is not a big problem. The Obama administration has pressured China from the start on currency values. They are now close to a market clearing rate. But the big issue is twofold. One, currency value is not, by any means, the biggest issue in U.S./China economic and trade relations. So it diverts attention from the big issues. And, secondly, to brand them a manipulator would be to single them out in a way that would start off the next administration on a very bad foot and risk a trade war.