China Trade Minister Steps Out of the Shadows for the First Time in U.S. Talks

(Bloomberg) -- The differences on substance are vast and the mistrust between the two sides high. Yet one of the biggest questions hanging over U.S.-China trade talks as negotiators prepare for the resumption of face-to-face talks in Shanghai next week is over the new prominence of an old China trade hand..After spending most of the past year in the relative shadows of the talks, Chinese Commerce Minister Zhong Shan has joined two conference calls with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in recent weeks and is expected to be at the table when the two sides start meeting in Shanghai on Tuesday next week..With that Zhong will for the first time be part of the small group of negotiators tasked with charting a path to end more than a year of tit-for-tat tariffs and a trade war blamed for causing a slowdown in the global economy..Zhong was not an unknown quantity for the U.S. with officials including Lighthizer having dealt with him multiple times at international summits over the past two years in his role as China’s trade minister, according to a senior administration official. He is seen as a capable and professional negotiator by the U.S. side, the official said..Tough Negotiator.But why Beijing has chosen to elevate him is unclear, said the official, and there are questions over how he could affect the tone in the talks. Zhong has a reputation as a tough negotiator and is seen by some on the U.S. side as a hard-liner who could make discussions even more hostile than they have been already..Though he hasn’t named Zhong, Larry Kudlow, director of Trump’s National Economic Council, has warned a number of times in recent weeks that the inclusion of new “hard-liners” on the Chinese side could complicate efforts to secure a deal with China, and thus lead Trump to impose more tariffs as he has threatened..Even as some in Washington see him as a hard-liner, Zhong may be better described as a party loyalist practiced in the art of sticking to official rhetoric..Trade Minister.A native of the trade powerhouse of Zhejiang province, Zhong was appointed trade minister in early 2017 at the onset of trade tensions with the U.S. and was an early interlocutor with the Trump administration..In his very first press conference as trade minister, Zhong flattered his U.S. counterpart Wilbur Ross -- who for a while led the American team and its early negotiations with China -- as an “excellent” entrepreneur and negotiator. He said he was willing to “deal with excellent people, because excellent people are good at thinking strategically for the long term.”.Zhong, like Ross, has faded into the background since those early efforts, especially after Vice Premier Liu He, who outranks Zhong in the Chinese system, was appointed to lead the Chinese team..While Zhong took part in plenary meetings and in occasional calls, according to people close to the talks, he rose to prominence recently when his name was included in official readouts of the two phone-calls this month. A White House statement Wednesday said Liu would lead the talks for China next week..Change in Lineup.Clete Willems, who until April was deputy director of Trump’s National Economic Council and worked on the China talks, said bringing Zhong on board may actually not be a bad sign for a final agreement..“There may be short-term disruption as the two sides adjust to the change in lineup, but ultimately his inclusion will be helpful by ensuring buy-in across China’s political spectrum,” said Willems, who is now a partner at Akin Gump..Even though Zhong wasn’t in all the small group meetings that Lighthizer and Mnuchin led with Liu, his deputy, Wang Shouwen, was heavily engaged in the talks and Zhong himself was involved at the periphery..‘Trade Frictions’.Since the talks collapsed in May, Zhong’s rhetoric toward the U.S. has become less complimentary than it once was..“The U.S. has started trade frictions with us. It violates the WTO rules and is typical unilateralism and protectionism,” he said in a recent interview with the People’s Daily. “We need to uphold the spirit of struggle and firmly defend the interest of our nation and people, as well as the multilateral trading system.”.Part of Zhong’s strength in China comes from his long-running links to Chinese President Xi Jinping. He became deputy governor of Zhejiang province in 2003 and worked under Xi, then the provincial party chief, before moving to Beijing as vice commerce minister in 2008. He was appointed China’s international trade representative in 2013 and was involved in the negotiation of a number of bilateral free-trade agreements. He was also dispatched to deal with the European Union on trade conflicts over solar products and telecommunication equipment..Nitty Gritty.With more experience in dealing with the nitty-gritty of trade negotiations than Liu and a lower political rank, Zhong is more likely to stick to detail and defer major decisions to the very top leadership, said Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies in Washington..“People who are working for the Chinese Communist party in these kinds of negotiations are all hardliners,” she said. “You will not find the gaps that you see in the United States between a Lighthizer and a Mnuchin, with which you can very clearly find differences in approach and differences in their views on what a deal might look like.”.Zhong nevertheless has a reputation as a tough operator. When he joined the ministry he told aides to tighten up their briefings before meetings with foreign counterparts, asking them to excise extraneous notes about the weather and focus on substance, according to a person familiar with internal deliberations..James Green, who dealt with Zhong in his role as former head of Beijing’s USTR office, described him as “refreshingly free from the dogma of other ministers.”.“I’ve seen him defend China’s position on the specifics of a trade matter, but free from rancor or ideology that can infuse the language of other officials,” he said..Regardless of the new constellation in negotiating teams, Willems cautions that expectations for next week’s meetings should be low. “The two sides haven’t gotten together in person in two and a half months and it’s going to take a while to regain the momentum that was lost.”.--With assistance from Peter Martin..To contact the reporters on this story: Jenny Leonard in Washington at jleonard67@bloomberg.net;Shawn Donnan in Washington at sdonnan@bloomberg.net;Jeffrey Black in Hong Kong at jblack25@bloomberg.net.To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Margaret Collins, James Mayger.©2019 Bloomberg L.P.

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China Trade Minister Steps Out of the Shadows for the First Time in U.S. Talks

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