Why Is GOP Front Group "Club For Growth" Defending China’s Interests Against Those Of Domestic U.S. Manufacturers?

America’s manufacturing advocates have repeatedly criticized Beijing for deliberately undervaluing its currency, in violation of world trade law. This currency undervaluation helps to artificially lower the cost of China’s exports, while also taxing U.S. products entering the Chinese market.

Anger over the currency issue has occasionally flared into heated action on Capitol Hill. In 2005, the U.S. Senate approved a procedural vote to hold China accountable for its currency peg. And in 2011, the Senate actually passed a bill to make currency undervaluation actionable under U.S. trade law. At the same time, a majority of the House co-sponsored a similar bill, including 64 Republicans. The House bill ultimately languished when Boehner, who owes his Speakership to dark money from China funneled to shady Republican PACs through the U.S. Chamber of Commerce, refused to allow a floor vote.

The call for action on China continues to grow, however, due to the overwhelming support of the American people. In the current Congress, bipartisan currency legislation has been reintroduced in both houses.

Unfortunately, the Club for Growth, a “pro-growth” lobbying group led by former Indiana wingnut congressman Chris Chocola, actively seeks to block legislative action on China. Ironically, Chocola has come under fire for his contradictory stance on China’s currency peg. In 2005, Chocola introduced a bill in the House, the China Act, that would have imposed tariffs on China if it tried to manipulate its currency. It was an effort that undoubtedly proved popular among manufacturers and factory workers in Chocola’s home district. But as the current president of the free-market-leaning Club for Growth, Chocola has made a dramatic-- and blatantly unprincipled-- reversal.

In a recent alert to the House of Representatives, Chocola’s Club cautioned right-wing House members to “not co-sponsor the protectionist Currency Reform for Fair Trade Act (HR 1276).” Additionally, the alert warned that “Members who co-sponsor this bill will receive negative points on the Club's 2013 Congressional Scorecard.”

All of this is a far cry from Chocola’s prior Congressional effort of “making sure China plays by the rules.”

The question is why the Club for Growth is so wrong on China, and so oblivious to the irony of their stated position? Simply put, they are out-of-step with the American public in three contradictory ways:

First, while the Club is a pro-business and anti-tax group, their objection to action on China’s currency manipulation means that they are in fact supporting a hidden tax on U.S. producers. This is because China’s currency manipulation artificially inflates the cost of U.S. exports to the Chinese market, while also artificially lowering the cost of China’s exports to the U.S. market. Thus, the Club is pro-tax on U.S. manufacturers but anti-tax on Chinese manufacturers.

Second, national polling finds that an overwhelming majority of U.S. voters (including 68% of Republican voters) support action to combat China’s predatory trade practices, which they see as hurting U.S. job growth. A 2012 study by the Economic Policy Institute found that China’s currency manipulation and other predatory practices have led to growing U.S. trade deficits that resulted in the loss of 2.7 million U.S. jobs between 2001-2011. Thus, the Club for Growth is forestalling job creation by serving as a de facto pro-China lobby. Essentially, they are both out-of-touch with Republican voters and also holding Capitol Hill Republicans hostage on the jobs issue.

Third, Americans are also concerned about national security concerns related to China. Of note is a recent report by retired U.S. Army Brigadier General John Adams that found the U.S. now depends on China for such key military hardware as Hellfire missile propellant, the lanthanum metal used in night-vision goggles, and the high-tech magnets required to manufacture military-grade Humvees, Apache helicopters, and Virginia-class submarines. Thus, groups like the Club for Growth that advocate for open trade with China on “free market” principles are operating in a policy vacuum, one that does not take into account national security concerns.

It’s very telling that when the Club for Growth issued its alert to the House, and tried to warn Members not to support a currency bill, they never actually mentioned “China” in their text. That’s because no one wants to be seen as supporting or defending China. But that’s really what the Club for Growth is doing. The monthly trade figures came out yesterday, and our trade deficit with China climbed by $3.8 billion in May. The U.S.-China Strategic and Economic Dialogue (S&ED) talks start on Monday in Washington.