Romney's deceit on China

Romney's deceit on China

October 14th, 2012 in Opinion Times

Mitt Romney is telling American voters that as president he would take a hard line on China to challenge and get back the tons of manufacturing jobs that American businesses have moved to China in the past two decades to take advantage of cheap labor. But his personal business interests and heavy investments in China, and the American jobs he literally has helped move to China and continues to do so to this day, tell an entirely different story about where he stands on China's export juggernaut.

Romney is heavily invested in China through Bain Capital, the private equity firm he founded and in which he retains a huge portion of his $250 million fortune in investments. He began leading Bain's investments in China in the late 1990s, and Bain's current prospectuses now tout and lure more investments to China -- investments which continue to grow the fund portfolios that expand Romney's personal wealth.

Equally telling, Bain's prospectuses praise the very aspects of China's manufacturing and export tactics -- extraordinarily cheap labor (85 percent of western norms), government tax incentives, the country's huge foreign reserves, and its trend lines for overtaking the U.S. economy. Yet these advantages, touted by Bain to appeal to new investors, are precisely the advantages that Romney, in his alter ego as presidential candidate, now claims from the campaign trail that he would reverse.

Do the math.

Research by a New York Times investigative team dug up and reported last week the history of a raft of transactions referenced in Romney's 2012 campaign finance disclosure statements and other documents that illuminate Bain's deep connections in China since at least 1998. The team found that:

• Romney had as much as $2.25 million invested in at least eight Chinese factories that export heavily, including a company, Asimco Technologies, that bought out and closed two Grand Haven, Mich., auto camshaft factories that employed 500 workers in 2007.

• Romney has invested additional millions of dollars in Bain funds that, since 2006, have quadrupled their investments and now hold a controlling $2.6 billion stake in shares of Sensata Technologies, a 4,000-employee Chinese manufacturer of vehicle, aircraft and electric motors. Two years ago, Sensata bought a Freeport, Ill., plant that makes auto sensors; It is now in the process of shutting down the 170-employee plant and moving it to a government built-and-subsidized plant in the Chinese coastal province of Jiangsu, which gets tax breaks for export-oriented companies.

Freeport workers, who had to train their Chinese owners, have pleaded futilely with Romney to reverse the deal. They also discovered in bankruptcy hearings that Asimco's Chinese owners had the company transfer money to China to obtain a tax rebate there for relocating the company and most of its equipment and jobs to Jiangsu Province's special export zone. The bankruptcy, of course, now threatens the Illinois workers' benefits and future.

• Bain Capital had invested $234 million in China's Gome Electrical Appliances in 2009, despite an accusation by Microsoft that the Chinese retailer was selling computers with software pirated by Gome. It also invested in a Hong Kong appliance maker that was sued for copying a French company's deep-fryer.

• Romney has invested as much as $1 million each in Bain's Capital Funds IX and X, and as much as $250,000 in Bain's Capital Asia Fund, all of which are held by Bain in entities in the tax-haven of Cayman Islands, and are used by Bain to invest in China.

• The Bain Capital Asia Fund 2007 also invested $39 million in Feixiang Group, a manufacturer of chemicals which had qualified for government tax subsidies for "high-tech" industrial exporters. Though Romney claims to have put his holdings in a blind trust, it is managed by the same law firm that has long represented both Romney and Bain, including some of the Bain funds in which Romney is invested.

These findings not only show that Romney's investment strategies support China's continued export success and profits. They also coincide with other off-shored jobs and plant closings in the United States that Bain engineered after taking on heavy debt to finance lavish executive pay-offs in highly leveraged buy-out deals.

Romney, of course, rejects the corporate raider image for which he is well-known in New England, but Bain's China deals clearly support the wide belief that Romney's rise to the financial elite has been, and continues to be, constructed on profits from raided plants and off-shored jobs, especially those sent to China.

American voters who would trust him to reverse course now, after wooing Wall Street on promises to again unleash their fast deals and casino trading, are not studying his history. Nor are they considering the continuing downgrade of factory wages in America today, and the diminishment of America's middle class, that are due to the wage competition of cheap labor abroad that Romney himself has documentably nurtured to enhance his own vast wealth.