China-bashing? No, not again

US Republican presidential candidate Donald Trump speaks during a campaign rally in Cedar Rapids, Iowa February 1, 2016. [Photo/Agencies]

It is US election season again, so it must be time to attack China on everything to do with economic and trade matters.

China may have made a couple of mistakes recently, but some of the claims being made by US presidential candidates, Republicans in particular, during their debates are so preposterous that they need to be corrected. For example, more than one candidate has claimed China has kept its currency artificially low to gain advantage in international trade. Republican front-runner Donald Trump has even pledged to impose tariffs on Chinese products to "level the playing field" even though that would be contrary to World Trade Organization rules.

The yuan has indeed slipped by about 6 percent against the US dollar in recent months - but only after rising more than 20 percent in recent years, which still means an overall gain of almost 13 percent. A true reading of the position is that the yuan has been pulled up by the strong dollar, and most economists would say it is now overvalued compared with most other currencies.

Some observers have blamed China's reduced commodity buying for the fall in world prices, most spectacularly that of oil from more than $100 a barrel to $30. Yet China's imports in 2015 were equivalent to 6.7 million barrels a day - a record high. The real reason for the sharp decline in oil prices is the substantial increase in supply.

And as China rebalances the economy to put more emphasis on the services sector, and less on domestic infrastructure spending, it needs less steel (and hence iron ore) and concrete. But as the Belt and Road Initiative starts to take off, some of the slack will no doubt be taken up by projects in countries along the routes.