As I noted in last night’s links post, there were many references to China in yesterday’s debate between President Obama and Mitt Romney. Most of them were throwaway comments that do not really deserve mention, but the one about the fake Apple store in Kunming requires some attention, although not for the reason you might think.
To get you up to speed, this is what Romney said during the debate (here’s the full transcript):
China’s been cheating over the years. One by holding down the value of their currency. Number two, by stealing our intellectual property; our designs, our patents, our technology. There’s even an Apple store in China that’s a counterfeit Apple store, selling counterfeit goods.
Romney’s reference there was to the now infamous retail store in Kunming that was copying Apple store design elements. It was a big news item over a year ago even though, as is the case with many China IP stories, there was nothing remarkable about it. But, you know, it was about Apple, so the media went nuts. It got so bad at one point that I turned in frustration to Onionesque parody and wrote “China Takes Knock-offs to New Level With Fake American News Bureau.”
After the debate Tuesday night, the so-called “Fact Checkers” went to work. If you’re not familiar with this phenomenon, here’s how it started. In speeches, advertisements, and debates, candidates lie repeatedly. Several years ago, the media was roundly criticized for allowing such statements to go out there without being challenged. Some folks apparently thought that the media should not only transcribe what candidates say but also take a critical look at the content. Imagine that.
Thus was born the Fact Checker movement. Now whenever a candidate uses a number or makes a declarative statement of fact, legions of interns immediately jump on The Google or The YouTube, hoping to catch someone in a lie. I’m glad we have Fact Checkers, but sometimes the whole thing gets silly.
Among the problems in the debate identified by the Fact Checkers was Romney’s Apple store comment. You see, the store in question doesn’t actually sell counterfeit Apple products, but real ones. It isn’t an authorized reseller, and although some of the products may be coming in from Hong Kong or elsewhere in Asia, they are at least genuine.
Oooh. Busted! Romney lied!
Sorry if I fail to get excited about this, Fact Checkers. To me, the whole point in checking facts is to make sure that the public isn’t misled. When Romney used incorrect fiscal budget numbers in the debate, for example, he did it to make Obama’s record look worse than it really is — this was dishonest and a perfect target for the Fact Checkers.
In this case, in assuming that the fake Apple store sold fake Apple products, who was Romney trying to mislead, and to what end? I believe it was a simple mistake and an irrelevant one at that. The comment neither helped Romney nor hurt Obama and therefore wasn’t worthy of Fact Checker attention.
Unfortunately, several stories have now been written about the comment, and some of which have gone even further than a simple exercise in fact checking. Most of these completely miss the real story involving Romney’s China bashing strategy and the misleading way that China’s IP record is being used. Of course, that part of the story doesn’t have the magic word “Apple” in it.
You already know that Romney has been bashing China brutally for many months now. In the debate, he kept it coming, complaining about currency, trade and intellectual property. The common thread for Romney: China is a cheater. The political logic is thus:
1. The U.S. economy is slow.
2. China cheats on currency, trade and IP.
3. If Obama had been tougher on China, the U.S. economy would be stronger as a result.
Get it? I would guess, by the way, that if the U.S. economy wasn’t so bad, Romney would have never brought up China in the first place. This whole thing is a pragmatic political strategy.
So China cheats. What does that mean? On the RMB, Romney calls China a currency manipulator. I wrote about this topic (yet again) a couple days ago. I think the ship has sailed on this issue, but Romney can’t just walk away from it at this point and shrug it off with a dismissive “Never mind” à la Roseanne Roseannadanna. (Wow, I just dated myself in a big way. Yes, I remember the 70s.)
On trade, I assume that when Romney talks about cheating, he means violations of WTO or U.S. law. So when he discusses “getting tough,” what does he think should be done? The obvious answer is take disputes to the WTO, which has a mechanism in place for dealing with these kinds of bilateral trade problems, such as illegal subsidies. The problem for Romney, though, is that Obama has already been doing that, and in fact at a faster rate than his Republican predecessor.
Which leaves intellectual property and the Apple store. As I said, whether Romney was mistaken about counterfeits is irrelevant. His broader point was that “China” has been “stealing our intellectual property.” As an example of IP infringement, the fake Apple store was acceptable; there are better and worse examples, but it doesn’t matter. I think we can stipulate to the fact that China has an IP enforcement problem.
But look closely at Romney’s language. He makes the same argument that many other critics make when talking about China IP, and it’s misleading. First, he implies that “China” is behind all this infringement. Remember, it’s “China” that’s the big cheater.
Why is that incorrect? When folks hear that “China” steals American IP, there is an unsaid implication that this is government policy. Imagine a dingy room somewhere in Zhongnanhai where the Party elite sit around a beat-up card table in their 1980s Members Only jackets, smoking cigarettes and drinking hot tea out of paper cups. One of them will say “Last week’s plan to distribute pirated DVD rips of “Prometheus” is going well. How about we go after Cisco’s patents this week?”
OK, I know that’s a completely unrealistic portrayal of the Chinese government in action. I mean, no one would bother to distribute pirated copies of “Prometheus.” Who would download it, even if it was free? (Epic fail.)
But I digress.
The point is that Romney was taking advantage of the notion that China’s government is monolithic and that everything that goes on here, including all IP infringement, is somehow done at the behest of Beijing to further the nation’s industrial policy. That’s nonsense of course. With very limited exceptions, when it comes to IP enforcement, there is no “China,” but rather individual courts, administrative offices, and officials. I could go on at length about how IP infringement in China hurts Chinese companies much more than foreign firms, but you’ve heard it before numerous times.
That isn’t to excuse IP infringement or to pretend that central government policy does not influence IP enforcement. However, and this is the second point, to label the entire country a “cheater” is also quite misleading. What does “cheater” mean here? It makes for a great sound bite, like other comfortable phrases like “level playing field,” with the added advantage that “cheater” carries with it the suggestion that the individual, or country in this instance, is a small child playing a game. This is of course purposefully demeaning. Why is it that we don’t refer to criminals who engage in white collar crime “cheaters”?
The word “cheater” suggests a game and rules. It is an analogy to international trade, which is the game, and relevant WTO or domestic law, which are the rules. Romney is saying that China is purposely allowing IP infringement (i.e., breaking the rules) to better its trade position (i.e., winning the game). As with the suggestion that China’s central government is somehow condoning, or even directing, all IP infringement in the country, the implication that China’s IP enforcement problems are somehow an intentional attempt to circumvent trade rules is way off the mark.
However, Romney will pay no political price for this and neither will any journalist bring this topic up. It’s not at all interesting or engaging, it’s complicated, and no editor would ever want to see it written.
Romney’s statement about counterfeit Apple store products was a simple, irrelevant mistake. His overall point about IP in China, however, was intentionally misleading. The Fact Checkers missed out on the real deception.