A loss for Romney and a loss for US economic relations with China

The outcome of the Florida primary election yesterday puts a damper on the prospects for strengthened trade relations between the US and China. The US has been suffering from Lou Dobbs-fashioned protectionism, a belief that the US is actually made worse off as a result of trade with countries such as rapidly-growing China. Adherents of this hysteria not only fear outsourcing (hiring of non-US labor for US-based companies) but also the purchasing of products manufactured in other nations. Then-presidential candidate John Kerry memorialized this sentiment four years ago through his frequent reference to "Benedict Arnold CEOs."

Why does yesterday's Florida primary matter in this analysis? Because Governor Mitt Romney and Rudy Giuliani took a big hits in their loss to John McCain, one who has freely acknowledged his poor grasp on economics. It is always a scary thing when a non-economic mind wins the popularity contest over someone who has an intimate understanding of the US and world economy, such as Mitt Romney. Mitt Romney (and Rudy Giuliani, for that matter) understands the opportunity that China's growth presents. Not only that, he has demonstrated the energy and articulation that will be required of our next president to turn the rising and hurtful tide of protectionist sentiment.

Candidates such as Governor Romney and Mayor Giuliani frequently speak of China's growth as a threat to US world leadership, but they also understand that by engaging with China we create greater opportunity for the United States. This is unlike the protectionists who want to throw up tariffs to block engagement with this powerful source of wealth.

Unfortunately, protectionist sentiment is alive and well among some of the Republican candidates. Mike Huckabee, for instance, remarked in the recent Florida debate regarding the recent economic stimulus package: "One of the concerns that I have is that we'll probably end up borrowing this $150 billion from the Chinese and when we get those rebate checks, most people are going to go out and buy stuff that's been imported from China." Thankfully, Rudy Giuliani casts wisdom on this issue in his response to Romney's question on the subject:

"It's a great opportunity for us to engage, to engage in trade. And the more America engages in trade, the more we get to know a country; the less likely we are to have military hostilities."

"I think we have to look at the rise of China as a wonderful opportunity. I see 20 million or 30 million people coming out of poverty in China every year. To me, that's 20 million or 30 million more customers for the United States. That's 20 or 30 million people we can be selling things to. We should be thinking like aggressive, entrepreneurial Americans. What can we sell to China? We can sell them energy independence. They need it more than we do. We can sell them health processes. We can sell them information processes. They're at a level of development that's here. We're at a higher level of development. They need to buy what we have."
Although non-economic-minded John McCain is now the clear front runner and Mr. Giuliani is on the verge of abandoning the race as a result of yesterday's victory, the contest is not over. Hopefully, economic conservatives will realize the promise that Mitt Romney's candidacy presents and will propel him to a come-from-behind victory. Turning the tide of protectionist sentiment hinges on this hope.