Maxed out my 401(k). What next?

NEW YORK (Money Magazine) -- I'm in my mid-30s and max out my 401(k) and a Roth IRA every year. I also invest $4,500 a year in mutual funds. What more should I be doing to prepare for retirement? Should I invest in individual companies in addition to funds? -- Brian B., Jacksonville, Fla.

Sounds like you're already taking the most important steps to get on the path to a secure retirement. You're saving on a regular basis, maximizing tax-advantaged options -- you're even going above and beyond by investing a substantial sum in a taxable account each year.

Assuming all that saving amounts to a reasonable percentage of your annual income -- say, 15% or so -- I don't think you need to make any radical changes.

That said, you may be able to enhance your retirement prospects by improving your retirement-planning strategy a bit. The key, though, is concentrating your efforts in areas that are likely to have the highest payoff.

Here's what I recommend:

1. When it comes to investing, keep it simple. Unless you believe you have unique insights into the financial prospects for specific companies, I'd pass on investing in individual stocks. Without an edge, you're not likely to outperform the market averages, and you could end up dragging down your returns.

Similarly, ignore the endless variety of niche funds and ETFs that investment firms constantly churn out. Here, I'm talking about funds and ETFs that home in on particular sectors of the market -- oil, gas, platinum, gold, currencies, individual foreign countries, etc. -- or that employ risky or arcane investing techniques, a la inverse funds and leveraged ETFs. It's tough to integrate such investments into your portfolio in a coherent way, and they're ultimately not worth the extra expense and effort.

Related: Ground rules for retirement investing

Instead, focus on building a straightforward portfolio of broadly diversified stock and bond funds that will give you exposure to all areas of the market. For guidance on how to divvy up your money -- between stocks and bonds overall and among particular types of stocks and bonds -- just plug the ticker symbol for the Vanguard target-date retirement fund designed for someone your age -- in your case, the 2040 (VFORX) or 2045 fund (VTIVX) -- into Morningstar's Portfolio X-Ray tool. You don't have to mimic its allocations precisely, but you probably don't want to stray too far from them either.

2. Aim for lower costs. Your best shot at boosting your returns without taking on additional risk is to invest as much as possible in low-expense funds. Generally, that means looking for stock funds that have expense ratios below 1% and bond funds with expense ratios less than 0.75%. You can do even better, though, by sticking to low-cost index funds and ETFs like those on the MONEY 70 list of recommended funds.

Of course, in your 401(k) you're limited to the menu of investments offered by your plan. But by perusing the fee disclosure the Department of Labor now requires plan sponsors to provide, you should be able to sift through your 401(k)'s investment roster and choose reasonably priced options.

3. Beware investment pitches based on tax benefits. After investing all you can in tax-advantaged 401(k)s and IRAs, you can plow any extra savings into taxable accounts, as you're already doing to the tune of $4,500 a year.

Just be careful. Many advisers are quick to recommend variable annuities or life insurance investments for taxable accounts because of their potential tax savings. Problem is, these options typically come with high fees, not to mention a mind-numbing level of complexity.

Related: The case for investing in bonds, too

A better solution is to stash any saving you do outside 401(k)s and IRAs in tax-efficient investments like index funds, ETFs and tax-managed funds. You'll likely pay far lower expenses, which will give you a better shot at a higher after-tax rate of return.

4. Save more as your income rises. There's a natural tendency for people to ratchet up their lifestyle at a faster rate than their paycheck as it grows. But that can lead to problems come retirement time. The reason: As your income climbs, the percentage of your pre-retirement salary that Social Security will replace starts to shrink.

So the more you earn during your career, the more you'll have to depend on your personal savings to maintain your standard of living in retirement. To avoid having to scale back your lifestyle during retirement, try to increase the percentage of your income you save as your earnings increase.

5. Monitor your progress. Over the course of a career, any number of setbacks -- layoffs, market downturns, etc. -- can derail even the best laid retirement plans. That's why it's crucial to evaluate how things are going and make adjustments if necessary.

You can do that several ways. One is to periodically assess the balance of your retirement accounts relative to your annual income. Another is to rev up an online calculator like our Retirement Planner. The important thing, though, is that one way or another you come away with a realistic sense of whether your current saving and investing plan is working and, if not, make the necessary tweaks to put you back on track.

You already appear to be off to an excellent start in your retirement planning. And if you follow these five tips, your chances of making a smooth transition from the work-a-day world to your post-career life should be just as upbeat.

First Published: October 19, 2012: 3:46 PM ET

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Recall: Sunscreen could burst into flames on skin

Maybe not so great for your active lifestyle.

NEW YORK (CNNMoney) -- A recall is underway for Banana Boat products that could give new meaning to the word sunburn.

Energizer Holdings (ENR), the consumer goods conglomerate that produces Banana Boat products, announced Friday that certain of the brand's sunscreen sprays may potentially burst into flames on users' skin if they come in contact with a flame or spark before the spray is completely dry.

Energizer said it has received reports of four "adverse events" in which the sprays have caused burns in the U.S., and one in Canada. The company said it believes the problem stems from the fact that the spray valves on the products in question dispense more than is typical in the industry, meaning that the spray takes longer to dry.

"If a consumer comes into contact with a flame or spark prior to complete drying of the product on the skin, there is a potential for the product to ignite," Energizer said in a statement.

Related: Ford recalls 2013 Escaps for serious fire risk

Consumers who have purchased the Banana Boat sprays subject to the recall are being advised, obviously, not to use them. Click here for a full list of affected products.

Energizer said it is ordering retailers not to sell the sprays and has notified the Food and Drug Administration.

First Published: October 19, 2012: 3:52 PM ET

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Bankrupt car battery maker spurs China-U.S. bidding war

A123 may be in bankruptcy court, but it is still subject to a bidding war for its assets.

NEW YORK (CNNMoney) -- Lithium battery maker A123 Systems may have been forced to file for bankruptcy protection this week, but the company is still attractive enough to spark a bidding war for its assets.

A123 (AONE), a major supplier to the U.S. electric car industry and recipient of $249 million in government stimulus funding, announced Tuesday that it had filed for bankruptcy.

The same day, A123 said it had entered into a $125 million deal for the sale of its automotive assets to U.S. parts maker Johnson Controls (JCI, Fortune 500). As part of the deal, Johnson Controls agreed to provide A123 the funding it needs to operate during bankruptcy reorganization.

But Chinese auto parts maker Wanxiang Group went to federal bankruptcy court in Delaware on Thursday, arguing it has a better offer for A123 already on the table, and seeking to be the one to provide bankruptcy financing to A123.

Earlier this year, Wanxiang agreed to pay $465 million for a controlling stake in A123. But the deal ran into government opposition due to the investment in the company by the Energy Department and the company's contracts with the U.S. Defense Department.

Bankruptcy judge Kevin Carey gave the first round to Johnson Controls on Thursday, allowing A123 access to the first $15 billion of financing from Johnson Controls -- once Johnson Controls agreed to cut the interest rate to match the offer from Wanxiang (see correction below).

But a decision on who will get to buy the assets, and at what price, is still pending before the court, which is charged with getting the best deal possible for creditors.

Related: A123's bankruptcy -- Good for America

Michael Lew, analyst with Needham Co., said the bidding war is proof that no matter what financial problems forced A123 into bankruptcy, the industry sees it as a valuable business going forward.

"Electric cars aren't a good value proposition right now. But over time the market will evolve," said Lew. "Johnson Controls' interest validates A123's business."

Related: Year of the electric car blows a fuse

Lew said he believes there could be additional bidders for A123 before the issue is settled, and that it's difficult to predict who will win. He said while Wanxiang might have the more lucrative offer at the moment, the deal could be rejected if the bankruptcy court determines it won't win regulatory approval.

"Their offer is bigger, period. But there is a concern about all of the IP [intellectual property] going to China," he said.

Related: Smart's electric car might actually be...smart

Neither Johnson Controls nor A123 responded Friday to requests for comment on the bidding war, and Wanxiang could not be reached for comment.

Correction: An earlier version of this story incorrectly stated the amount of financing available to A123 from Johnson Controls. It is $15 million not $15 billion.

First Published: October 19, 2012: 2:55 PM ET

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AMD announces job cuts amid declining PC sales

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NEW YORK (CNNMoney) -- Chipmaker AMD announced Thursday that it was cutting 15% of its workforce, with declining PC sales sending its revenues sinking.

The company said the cuts, expected to be completed by the end of the year, should save roughly $20 million in the fourth quarter and $190 million next year. The announcement came as part of AMD's third-quarter earnings release, which showed sales fell 25% versus a year ago.

"The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD," company CEO Rory Read said in a statement, adding that this shift is happening "at a much faster pace than we anticipated."

Shipments of personal computers are on pace to fall this year for the first time since the dot-com bust of 2001, according to research firm IHS iSuppli.

Related: Intel sales sink as PCs slump

"Reducing our workforce is a difficult, but necessary, step to take advantage of the eventual market recovery and capitalize on growth opportunities for our products outside of the traditional PC market," Read said.

AMD (AMD, Fortune 500) employed 11,705 people as of February. The company's shares tumbled 14% last week after it issued a warning about its third-quarter revenue. Shares were down 0.4% in after-hours trading Thursday.

First Published: October 18, 2012: 4:50 PM ET

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Former GE execs get prison terms in bid-rigging case

The three men sentenced Thursday formerly worked in General Electric's GE Capital unit.

NEW YORK (CNNMoney) -- A trio of former financial executives from General Electric are headed to prison after being found guilty of defrauding taxpayers in the municipal bond market.

The men are the first to be sentenced as part of the government's ongoing investigation of bid-rigging in auctions for the investment of municipal bond proceeds by some of Wall Street's biggest firms. The probe has yielded 20 indictments so far, with defendants coming from institutions including Bank of America (BAC, Fortune 500), JPMorgan (JPM, Fortune 500) and UBS (UBS).

The three men sentenced Thursday formerly worked at General Electric's (GE, Fortune 500) GE Capital unit, where prosecutors say they colluded with counterparts at other firms to rip off bond issuers. Two men -- Dominick Carollo and Peter Grimm -- received three years in prison, while the third, Steven Goldberg, got four years.

Prosecutors had requested 10 years in prison for Carollo, as well as up to 12 years for Grimm and 17 for Goldberg.

How the scheme worked: When states and local governments issue bonds, they usually don't spend all the proceeds right away. To figure out how to invest the extra money, they hire brokers who manage a bidding process among financial institutions competing for their business.

Bids are solicited from firms like UBS and JPMorgan, which submit the interest rates they're willing to offer on the extra bond proceeds. The winning institution, generally, is the one that offers the highest rate of return.

In cases like that of the former GE executives, prosecutors say the process was corrupted when executives from different firms conspired with one another, dividing up business in advance and devising their bids in cooperation, a practice known as bid-rigging. This allowed the winning bidders to offer issuers lower rates of return than they would have secured through an honest process.

Related: Bankers nabbed in bid-rigging scandal

"Quite simply, the defendants stole money from taxpayers and conspired to manipulate the competitive bidding system to benefit themselves instead of the towns and cities that needed this money for important public works projects," Richard Weber, head of the IRS's criminal division, said in a statement. The three men helped rig dozens of bidding processes, the government says, costing municipalities around the country millions of dollars.

John Siffert, a lawyer for Goldberg, said he planned to appeal.

Attorneys for the other two defendants did not respond to requests for comment. A GE Capital spokesman declined to comment.

First Published: October 18, 2012: 6:35 PM ET

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Ahead of Windows 8, Microsoft posts flat sales

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NEW YORK (CNNMoney) -- As Microsoft prepares to launch Windows 8 -- a product it hopes will be transformative -- the company posted financial results on Thursday showing that its sales are treading water.

PC sales have been woeful, dragging Windows revenue down 9% during the quarter. Windows sales typically stall ahead of an anticipated new product launch, and Microsoft is gearing up for a massive one: Windows 8 and Surface, the first PC tablet of the company's own design, will go on sale Oct. 26.

But Microsoft gave no indication Thursday that Windows 8 or Surface will do anything to quickly change that trend. Windows sales to businesses are slowing, the company said, and economic conditions -- particularly in Europe -- are increasingly tough. Microsoft declined to give an outlook for either product, only saying that the company is "excited" about the launches.

Wall Street analysts, grasping at straws for any hint about how Microsoft's biggest product launches in nearly two decades will fare, got no help from Microsoft Chief Financial Officer Peter Klein on a conference call held Thursday afternoon.

When asked why Microsoft's estimate for growth in the cost of goods delivered was only in the high single digits for the current quarter if the company felt the expensive Surface tablet would sell well, Klein answered only: "We'll see how it goes. Next question."

Another question, about negative reviews mentioning Windows 8's potentially confusing user interface, got a pat response from Klein: "In the past, innovations delivered way more value, capability and usability."

Microsoft seems to be taking the same wait-and-see approach to Windows 8 that analysts expect potential customers to take.

Shares of Microsoft (MSFT, Fortune 500) fell 1% after hours.

The company's other divisions fared better during the quarter, helping to keep overall sales flat year over year. Sales of Office rose 1%, excluding some revenue deferrals for Office upgrades that were given to the recent crop of Office 2010 users. They will receive free upgrades to Office 2013 when that product launches in the next few quarters.

Strong sales in the Server and Tools division -- up 8% -- were boosted by continued demand for Microsoft's updated SQL Server product for businesses, which was released in April. Slightly higher online services sales were helped by a 15% rise in ad revenue -- mostly due to more Bing searches.

Xbox slipped 1% thanks to a slumping video game console market.

Overall, the Redmond, Wash.-based company had revenue of $17.3 billion in its fiscal first quarter. Those results include $1.4 billion in early Windows 8 and Office sales that the company has chosen to defer until the next few quarters. Excluding that deferred revenue, Microsoft had sales of $16 billion, short of the $16.4 billion analysts surveyed by Thomson Reuters were expecting.

Microsoft said its net income fell 22% to $4.5 billion for the quarter, which ended Sept. 30. Those results did not include a charge of 13 cents per share for the deferred Windows and Office sales. Including the charge, Microsoft earned 53 cents per share. Wall Street analysts, who stripped out the deferred profit from their estimates, had expected earnings of 56 cents per share.

Rival Google (GOOG, Fortune 500) also reported its quarterly finances Thursday, posting a 20% drop in earnings year over year, on struggles in mobile. Apple (AAPL, Fortune 500) is on deck, set to report its earnings on Oct. 25.

First Published: October 18, 2012: 4:56 PM ET

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China's GDP growth slides to 7.4%

HONG KONG (CNNMoney) -- More bad news about the global economy: Growth slowed last quarter in China to its lowest level since early 2009.

China's economy grew 7.4% in the third quarter compared to the previous year, the National Bureau of Statistics said Wednesday, marking a deceleration from an 7.6% growth rate in the prior quarter.

The 7.4% GDP increase was in line with analyst expectations.

China's economy has grown at an average of around 10% a year for the past three decades, allowing the country to rocket past international competition to become the world's second largest economy. Along the way, China's markets have opened to the rest of the world, trade has increased dramatically and many of China's citizens have joined an emerging middle class.

The recent slowdown can be blamed on a variety of factors. China's government was aiming for a slight deceleration, as it tried to tame its real estate boom and rapid inflation.

But the economy has slowed more dramatically than expected. Europe's debt crisis and lackluster growth in the United States have sapped demand for China's exports, leading to a decline in manufacturing growth in China. The country's equity markets have also been hit, and the Shanghai composite is on track for its third straight annual decline.

Related: Meet China's middle class

Chinese Premier Wen Jiabao said earlier this week that China's economic growth is stabilizing, despite disappointing corporate profits. According to the state's official Xinhua News Agency, Wen said that China faced considerable difficulty in the last quarter, but he also expressed confidence that the government will achieve its full-year economic and social goals.

There are other signs of stabilization. China's labor markets remain robust, and exports for September exceeded forecasts.

"Slower growth does not appear to be generating significant job losses," Mark Williams, chief Asia economist at Capital Economics, said in a research note. "Fears that sub-8% growth might trigger social unrest have not materialized."

But policymakers have other concerns as well. China's once-in-a-decade leadership transition is scheduled to start Nov. 8. The timing of the event, which will reshape the ranks of China's Communist Party, could put any policy changes on hold.

Related: Candidates talk tough on China

The government has already made relatively modest efforts to encourage growth this year. The People's Bank of China twice lowered interest rates, and the central bank has also cut the amount of money banks are required to hold in reserves.

Policymakers confirmed more action last month, finalizing the details on a $157.7 billion investment in 55 new infrastructure products.

"As long as the labor market remains healthy, policymakers will see little need to stimulate a strong turnaround in investment," Williams wrote.

First Published: October 17, 2012: 10:21 PM ET

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Toys R Us: Free layaway till December

Toys R Us has unveiled a slew of deals and incentives this holiday season aimed at luring in customers.

NEW YORK (CNNMoney) -- Toys R Us announced it will extend its free layaway plan until Dec. 16, the company said Wednesday.

The toy company began offering free layaway in early September. It was slated to charge a $5 service fee after Oct. 31.

But the company said it decided to extend the program after seeing its popularity with customers.

"We've seen a fantastic response from parents and gift-givers who value the opportunity of paying for their holiday purchases over time, without having to incur an upfront fee," said Troy Rice, executive vice president for stores and services at Toys R Us.

This is the latest salvo from Toys R Us as it prepares to win over customers during the crucial holiday season. Recently, the company said it will match prices at competing retailers, a direct challenge to Wal-Mart (WMT, Fortune 500)and Amazon (AMZN, Fortune 500).

The company also unveiled toysrusmovies.com, a new digital service for users to stream and download movies and television shows, along with its own tablet device, Tabeo, geared toward kids.

The free layaway applies to gift items such toys, video games and swing sets and requires a 20% down payment. It doesn't apply to commodities such as diapers.

Layaway shoppers have been flocking to stores for "big gift items" like bikes or Power Wheels toys, according to Katie Reczek, a spokesperson for the retailer. She said customers are using layaway to purchase pricier items, such as electronics.

Related: Holiday hiring is headed for a five-year high

Wal-Mart and Kmart have also upped the ante with their layaway programs. Kmart waived fees for shoppers, while Wal-Mart reduced its upfront fee to $5 from $15, and also offers an "ad match" program, where it matches the lower prices advertised by local competitors.

Toys R Us also said Wednesday it would donate $200 worth of toys to the Marine Toys for Tots Foundation every time a "generous benefactor" pays off the layaway balance of someone in their local communities this year. It will donate up to $1 million worth of toys.

First Published: October 17, 2012: 10:51 PM ET

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Average student loan debt nears $27,000

NEW YORK (CNNMoney) -- Thanks to rising tuition and a tough job market, college seniors graduated with an average of nearly $27,000 in student loan debt last year.

Two-thirds of the class of 2011 held student loans upon graduation, and the average borrower owed $26,600, according to a report from the Institute for College Access & Success' Project on Student Debt. That's up 5% from 2010 and is the highest level of debt in the seven years the report has been published.

The increase comes at a time when unemployment has remained stubbornly high for college graduates -- it was at 8.8% for 2011. Those without a college degree are more than twice as likely to end up without jobs, however. The unemployment rate for recent high school graduates was 19.1% last year.

Many students in the class of 2011 also entered college right before the recession hit, with many families suddenly finding themselves unable to afford the tuition payments. At the same time, many public colleges have hiked tuition significantly in response to state budget cuts, while private colleges have also been increasing tuition.

One thing that has likely kept student debt loads from growing even larger in recent years is increased federal financial aid, the report said.

Related: Colleges with the highest-paid grads

"In these tough times, a college degree is still your best bet for getting a job and decent pay," said TICAS President Lauren Asher. "But, as debt levels rise, fear of loans can prevent students from getting the education they need to succeed."

The school you choose matters: The amount of debt a student has upon graduation can vary dramatically depending on the school they attend.

Of the 1,057 colleges in the study, average debt per graduate ranged from $3,000 to $55,250. At 114 colleges, graduates had average debt above $35,000, while 64 colleges said that more than 90% of seniors graduate with debt.

Tuition, fees, the availability of financial aid and the cost of living all factor into the amount of debt students wind up with, the report found.

"Students and parents need to know that, even at similar looking schools, debt levels can be wildly different," said Asher.

While Indiana University of Pennsylvania and Clarion University of Pennsylvania are both public four-year colleges and charge annual tuition and fees of roughly $7,500, for example, graduates of Indiana University of Pennsylvania had average debt of $32,416 while Clarion University graduates had average debt of only $3,815.

Related: Extreme ways to pay for college

The Project on Student Debt said since certain schools didn't submit data, it didn't have enough information to rank colleges by their debt, but it did highlight "high debt" schools and "low debt" schools.

The schools where students graduated with the highest average debt loads -- between $31,900 and $46,700 -- include Franklin Pierce University in New Hampshire, La Salle University in Pennsylvania, Morgan State University in Maryland and Kentucky State University.

Franklin Pierce graduates, for example, owed an average of $44,702, while Kentucky State graduates owed an average of $36,293.

Schools with the lowest average debt -- between $3,000 and $9,750 -- include Williams College in Massachusetts, Yale University in Connecticut, Pomona College in California, College of the Ozarks in Missouri and Berea College in Kentucky.

Yale graduates were $9,254 in debt, while Pomona graduates owed $7,540.

State-by-state: The money students owed varied significantly from state to state as well -- ranging from $17,227 to $32,440.

Students in New Hampshire owed the most, with average debt of $32,440, and Pennsylvania followed with average debt of $29,959. Utah and Hawaii had the lowest levels of debt, at $17,227 and $17,447, respectively.

Related: Nearly one-in-five households have student loans

Overall, students in the Northeast and Midwest had the most debt, while Western and the Southern states had students with the least amount of debt.

The 1,057 colleges that were polled in the study represent half of all public and private nonprofit four-year schools. Because the data is voluntarily reported by colleges, actual debt is likely higher than the report indicates -- especially because so few for-profit colleges chose to report data.

Private student loans, which are found to be more risky and expensive than federal loans, accounted for one-fifth of the amount of debt students owed.

As students pile on more debt, they are also having a harder time repaying it. The percentage of borrowers who defaulted on their federal student loans within two years of their first payment jumped from 8.8% to 9.1% in fiscal year 2011, the U.S. Department of Education reported earlier this month.

First Published: October 18, 2012: 12:24 AM ET

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Tough talk on China

HONG KONG (CNNMoney) -- President Obama and Mitt Romney each used their second presidential debate to talk tough on China.

Romney pledged that he would label China as a currency manipulator on his first day in office -- a promise he frequently works into his campaign speeches. And he accused China of "stealing" designs, patents and technology pioneered by U.S. companies.

"There's even an Apple store in China that's a counterfeit Apple store, selling counterfeit goods," Romney said. "They hack into our computers. We will have to have people play on a fair basis."

Obama was more circumspect in his use of language, but he touted the trade complaints his administration has filed against China over auto parts. Obama also recently blocked the sale of American wind farm companies to a Chinese firm.

Talking tough on China has become a campaign ritual for politicians of both parties -- even if, as experts predict, the rhetoric moderates after Nov. 6 regardless of who wins.

Related: Americans: China is an economic threat

The latest criticisms from the Republican candidate comes after the Treasury Department last week delayed the release of a report that has in the past criticized China for keeping the value of its currency artificially low.

Delays are nothing new, but the next edition of the report is now unlikely to be issued until after the election.

The president has run a campaign that has repeatedly sought to draw connections between Romney's tenure at Bain Capital and the outsourcing of American jobs to China.

"Mitt Romney: tough on China? Since when?" a recent ad asked.

"[Romney] says he's gonna take the fight to them, he's going to go after these cheaters, and I've got to admit, that message is better than what he has actually done about this thing," Obama said earlier this month in Ohio.

Romney and Obama are not the first presidential candidates to beat up on China.

Bill Clinton famously referred to China's leaders as the "butchers of Beijing" during the 1992 presidential race. Four years later, George W. Bush criticized Clinton for being too easy on China.

"These guys all ate crow," said David Zweig, an associate dean at Hong Kong University of Science and Technology. "Once in office, presidents tend to change their behavior."

That shift is not surprising given the nature of the relationship. China is one of the United States' largest trading partners, and the economies of the two countries -- the largest and second largest in the world -- are increasingly interconnected.

Related: Ford posts record Chinese sales

Beijing holds more than $1 trillion in U.S. debt, and U.S. exports to China are on the rise. China's currency, the yuan, has been allowed to appreciate in recent years but many American businesses argue it still does not reflect its true market value, giving Chinese exporters an unfair competitive advantage.

Many analysts worry that Romney's plan to label China a currency manipulator could backfire, and the specificity of the promise leaves him few options but to follow through.

"He has created a huge problem for himself," Zweig said. "He has said consistently he will do it. So how does he climb down from that?"

Economists are even more worried about the second part of Romney's initial China plan, which is to direct the Department of Commerce to institute countervailing duties on Chinese imports if China "does not quickly move to float its currency."

That could spark a trade war between the two countries -- a circumstance likely to end unhappily for both Beijing and Washington.

Related: Romney's China attacks worry business

The Obama administration has taken protectionist actions, introducing tariffs on Chinese-made solar panels and tires.

But the benefits have been hard to discern, and consumers have ended up paying more for goods. According to a study by the Peterson Institute for International Economics, the tire tariff cost American consumers a total of $1.1 billion in 2011.

Chinese officials have tolerated the campaign rhetoric with relatively good humor so far. Comment has been restricted to editorials in state-run media that are particularly critical of Romney.

Zweig said that China's top officials are very much in tune with the realities of American politics, even down to which states are crucial to secure electoral victory.

But talk is one thing, Zweig said, and action is another. Should a future administration depart from precedent and become significantly more aggressive toward China, Beijing will respond.

First Published: October 16, 2012: 7:29 PM ET

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