China's Feisty Trade Negotiator Heads to Washington

(Bloomberg) -- China’s man tasked with finding a breakthrough in trade talks with the U.S. is a veteran trade bureaucrat and fluent English speaker who’s called America a "trade bully."

Vice Commerce Minister Wang Shouwen, 52, will lead a delegation of Chinese officials to Washington later this month, where he will meet U.S. officials led by Undersecretary for International Affairs David Malpass of the Treasury Department. The two men are challenged with finding a way to end an escalating trade war between the world’s two biggest economies after negotiations broke down two months ago.

China's Feisty Trade Negotiator Heads to Washington

Differences between the two sides have become a yawning gap since U.S. President Donald Trump imposed tariffs on washing machines and solar cells in January. Tit-for-tat tariffs have escalated since, with the U.S. viewing China as a strategic competitor and Trump saying he’s ready to effectively tax all imports from China, which reached more than $500 billion last year.

"Wang Shouwen faces a very difficult negotiation to try to bridge the large gulf in positions between China and the U.S.," said Rajiv Biswas, Asia Pacific chief economist at IHS Markit in Singapore. "Although the resumption of U.S.-China trade talks is good news, the process of finding a trade deal is likely to be protracted. Meanwhile, the trade war is likely to escalate further as additional tariff measures kick in."

Wang is a key official leading China’s trade talks worldwide and he led an advance team to Washington in May. He has a B.A. in engineering from Hunan University in Changsha, a master’s degree in economics from the University of International Business and Economics in Beijing and a doctorate in economics from Peking University.

Born in Xuancheng city in eastern Anhui province, Wang joined the Communist Party of China in 1986 and began his career in 1989, according to an official biography on the commerce ministry’s website. His work at the commerce ministry has included stints as deputy director of translation and interpretation services and director-general of the department of foreign trade. He was appointed vice minister in 2015.

The yuan strengthened and Chinese stocks pared earlier losses after the Ministry of Commerce announced the new round of talks. The Trump administration imposed duties on $34 billion of Chinese goods last month, prompting immediate retaliation from Beijing. Another $16 billion in levies will be effective later in August, with both sides threatening more.

Read more on the history of talks, tariffs, and what’s planned next

Like most other Chinese officials, Wang’s public comments rarely depart from the party’s rigorously rehearsed party line. However, in March this year at a conference in Beijing he was involved in an unusually frank and feisty debate with former World Trade Organization Director-General Pascal Lamy. Here is a summary of Wang’s views on trade from that discussion:

On reciprocal opening

Exact reciprocity of opening up is not necessarily fair because countries have different levels of development. China is still a developing country with a very limited level of development. In China many industries are still developing and these industries and their normal development is crucial for employment and for the social stability of such a large country.

On subsidies

We are all interested in subsidies. Under the WTO framework, the U.S. has the right to subsidize its farmers to the tune of about $19 billion and the EU is entitled to about 72 billion euros. In China we don’t have such rights. Those subsidies depress market prices and encourage overproduction, while developing economies cannot afford to subsidize their farmers so the competition has been very uneven.

On intellectual property rights

It’s fair to say that China’s IP protection brings enormous benefits to foreign IP holders. In 2001, when China acceded to the WTO, we as a whole country paid $1.94 billion in royalties for IP. In 2017 that number rose to $28.6 billion -- an annual growth rate of 17 percent.

On tariffs

The real weighted average of China’s tariffs is only 4.4 percent. This is much lower than other BRICS countries and is also very close to the level of developed countries. The trade-weighted average of U.S. tariffs is 2.4 percent. It’s 3 percent for the EU and 4 percent for Australia.

Take the following as an example: The Japanese average tariff on dairy products is 95.1 percent, the EU is 37.4 percent, and the U.S. is 16 percent. In China the tariff level is only 12 percent. The tariff on trucks in the U.S. is 25 percent, whereas in China the tariff is only 20 percent. If you look at shirts, men’s and women’s included, the import tariffs are about 30 percent in the U.S. In China it’s only about 15 percent.

To contact Bloomberg News staff for this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net

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With assistance from Editorial Board