Romney rips Obama on China despite investments
WASHINGTON — Mitt Romney sharpened his criticism of President Obama’s handling of China’s trade practices this week, claiming the administration was dawdling as the global power gained strength by stealing American ingenuity and artificially lowering its currency.
But the Republican presidential nominee — both during his business career and in some recent financial investments made on his behalf — has invested in Chinese manufacturing companies that use some of those same practices, according to Romney’s financial forms statements and a review of shareholder disclosure statements.
The issue highlights the tightrope Romney has to walk whenever he criticizes a practice of the Obama administration that may overlap with his own financial holdings and past business dealings.
When Romney was in charge of Bain Capital, for example, the firm invested millions in a company that manufactured household appliances using cheaper labor in Dongguan, China.
Romney also has between $500,000 and $1 million invested in a Bain Capital fund that has been used to purchase shares of GOME, a Chinese electronics company, according to the financial disclosure form Romney filed in June. That company — in which Bain has been one of the largest outside shareholders — is being sued by Microsoft Corp. for selling computers with pirated versions of its Windows and Office software.
Romney frequently criticizes China for intellectual property theft, the type of practices that GOME is alleged to have benefited from. Romney’s campaign said that his investments are held in a blind trust, and are controlled by a trustee, R. Bradford Malt.
“Governor and Mrs. Romney’s assets are managed on a blind basis,” said campaign spokeswoman Michele Davis. “They do not control the investment of these assets, the investment decisions are made by a trustee.”
Malt declined to say whether Romney’s money was still invested in the Bain trust that has been used to invest in GOME.
When Romney was at Bain, the firm also invested in a Chinese company called Global Tech Appliances Inc., which manufactured washing machines and other products at Chinese factories to export to US consumers.
According to Securities and Exchange Commission documents that were first reported by Mother Jones magazine, a Bain Capital affiliate, Brookside Capital Partners Fund, acquired about 6 percent of Global Tech Appliances on April 17, 1998. Romney was listed as the “sole shareholder, sole director, President and Chief Executive Officer of Brookside Inc. and thus is the controlling person of Brookside Inc.”
A French appliance manufacturer called SEB successfully sued Global Tech in the United States for copying its patented deep-fat fryers, winning $2.65 million in a decision upheld by the Supreme Court in 2010. The legal case began in 1998.
Romney appeared to reference the Global Tech investment in a video that appeared on YouTube about three weeks ago. In the 2-minute video, which was shot surreptitiously and purports to be taken at a high-dollar Romney fund-raiser, Romney describes some of the spartan working conditions at a company Bain officials were planning to buy.
“When I was back in my private sector days, we went to China to buy a factory there,” he says. “It employed about 20,000 people. And they were almost all young women between the ages of about 18 and 22 or 23. They were saving for potentially becoming married, and they work at these huge factories.”
Romney said the women were packed into dormitories, 12 per room in bunk beds, and only earned a “pittance.”
For much of the past year, Romney has criticized China’s currency practices, saying President Obama hasn’t done enough to crack down on them. If he’s elected, Romney has pledged, he would label China a currency manipulator, which has undervalued its currency to boost exports.
“They steal our technology, they hack into our computers — they also steal our know-how, our patents,” Romney said in Fairfax, Va., on Thursday. “This is wrong. We’re going to crack down on China when they manipulate their currency, when they steal our goods, and when they don’t protect intellectual property. We’re going to make sure China understands we mean business.”
His campaign this week also began airing ads claiming that Obama has overseen a loss in manufacturing jobs at a time when China has been gaining them. Since January 2009, the ad notes, 582,000 manufacturing jobs have been lost.
“For the first time, China is beating us,” a narrator says in an ad released on Thursday, as a stack of boxes is used to illustrate lost American jobs and the gains in China. “Barack Obama: Failing to stop cheating, failing American workers.”
Both the Obama campaign — and the Chinese government — called Romney’s attacks misleading on Friday. The Obama campaign said the ad was misleading because it used job losses that took place in the first few months that Obama took office, before his policies were in place. When measured against January 2010, the United States has gained 512,000 manufacturing jobs, according to the Bureau of Labor Statistics.
“Governor Romney’s hypocrisy apparently knows no ends,” former Ohio governor Ted Strickland said Friday on an Obama campaign conference call. “He claims he’ll crack down on China, but he’s never done that, and I don’t think he ever will. The truth is, Mr. Romney’s made a fortune investing in firms that specialize in shipping jobs to China and other low-wage countries.”
The Obama campaign also released a new television ad criticizing Romney’s rhetoric on China and relying heavily on a Washington Post story in June that detailed several companies that Bain invested in that utilized outsourcing.
“Romney’s never stood up to China,” the narrator says. “All he’s done is send them our jobs.”
China’s official Xinhua news agency, in a strongly worded editorial on Friday, criticized Romney and said his policies would ignite a trade war and damage the precarious global economy. It also noted the profits Romney has made from investments in China. “It is rather ironic that a considerable portion of this China-battering politician’s wealth was actually obtained by doing business with Chinese companies before he entered politics,” Xinhua wrote.