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U.S. candidates pass over tough China questions in final debate

U.S. President Barack Obama (R) and Republican Presidential nominee Mitt Romney shake hands at the conclusion of the final presidential deba
U.S. President Barack Obama (R) and Republican Presidential nominee Mitt Romney shake hands at the conclusion of the final presidential deba

By Paul Eckert

WASHINGTON (Reuters) - President Barack Obama and Republican challenger Mitt Romney vowed on Monday to get tough on China's trade policies, but they mostly used the Asian giant as a foil to air competing domestic economic programs in their final debate before the November 6 election.

In a showdown that was supposed to be limited to foreign policy, both men focused on the economic aspects of the complex U.S.-China relationship, touching only briefly on the security challenge that fast-rising China poses to a U.S.-led alliance system in Asia.

Human rights, China's support for states that are foes of the United States and intensifying maritime territorial disputes that pit China against U.S. allies Japan and the Philippines went unmentioned in the 90-minute debate in Boca Raton, Florida.

Also unmentioned was the impending leadership change in the world's second largest economy, as well as China's economic slowdown, which could have profound consequences for U.S. exporters.

China is "both an adversary, but also a potential partner in the international community if it's following the rules," said Obama, who touted his administration's efforts to hold China accountable for breaching global trade rules.

The loss of American jobs due to the absence of a level playing field in trade is "why we have brought more cases against China for violating trade rules than ... the previous administration had done in two terms," said Obama.

"And we've won just about every case that we've filed, that has been decided," he said. The Obama administration has prevailed in about eight World Trade Organization cases against China, industry sources calculate.

Romney, whose campaign rhetoric toward China has often been harsh, agreed that "we can be a partner with China. We don't have to be an adversary in any way, shape or form."

But he and the president soon turned the China question back to domestic affairs.

Romney cited a U.S. valve-maker whose products he said were being counterfeited in China, right down to the serial numbers and packaging.

"We have an enormous trade imbalance with China, and it's worse this year than last year, and it's worse last year than the year before. And so we have to understand that we can't just surrender and lose jobs year in and year out," he said.

Obama said investment in education and research was the true way to stay ahead of China.

"Over the long term, in order for us to compete with China, we've also got to make sure, though, that we're ... taking care of business here at home," he said.

Obama repeated criticism that Romney had invested in firms that sent jobs to China and added that Romney's budget would not address U.S. needs in education and research. Romney said government deficits and military cuts under Obama made the United States appear weak in Chinese eyes.

'CURRENCY MANIPULATOR' DECLARATION ON DAY ONE

Romney repeated a pledge he first made early this year to press China to stop suppressing the value of its currency to make Chinese exports cheaper than those of U.S. competitors.

On revaluing its currency, China is "making some progress; they need to make more," said the former Massachusetts governor.

"That's why on day one, I will label them a currency manipulator, which allows us to apply tariffs where they're taking jobs," said Romney.

The U.S. Treasury Department named China a currency manipulator five times from 1992 to 1994, but it has been 17 years since any country has been so designated.

A finding of manipulation requires the Treasury to start negotiations on exchange rates, both bilaterally and through the International Monetary Fund.

John Frisbie, president of the U.S.-China Business Council, a group of businesses that trade with China, said that engagement with China had led to the strengthening of China's yuan, or renminbi, by more than 30 percent since 2005.

"Evidence has shown that the best way to make progress is through comprehensive engagement and legal actions - not political rhetoric," he said in a statement.

Romney shrugged off concerns his approach would trigger a trade war, saying there was already a trade war going on that had led to a U.S. trade deficit

"It's a silent one. And they're winning," said Romney.

Scott Paul, executive director of the Alliance for American Manufacturing, an advocacy group that champions pressing Beijing over currency and other trade barriers, said Monday's debate "didn't really break new ground on China."

But he said the focus on the trade deficit with China and its impact on manufacturing was long overdue.

"The real winner was American manufacturing. It's clear that both candidates believe it is critically important that China play by the rules," Paul said.

(Editing by Warren Strobel and Peter Cooney)

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