China’s War Horse at the WTO Is Ready to Fight

(Bloomberg) --

There’s never been a more important time for China to exert its influence at the World Trade Organization, and Zhang Xiangchen is up for the challenge.

The 54-year-old has been China’s representative at the Geneva-based organization since 2017 and claims to have memorized the legal backbone of the WTO, the 34,000-word General Agreement on Tariffs and Trade.

“It’s not light reading,” said Wendy Cutler, a former U.S. trade negotiator who is now the managing director of the Asia Society Policy Institute in Washington. “He knows the WTO and the GATT inside and out.”

As a young trade deputy, Zhang was intimately involved in China’s WTO negotiations and in 2001 even the handed the pen to his minister to sign China’s agreement to join the club. He’ll need more than a strong legal memory to succeed in his latest balancing act: protecting China’s national interests while embracing a global system that U.S. President Donald Trump accuses Beijing of gaming for nearly two decades.

Trump holds a particular disdain for the WTO, has threatened to pull the U.S. out of it and has long argued that America made a mistake letting China join the organization in the first place.

In addition, the U.S. is blocking new appointments to a WTO panel that has the final say on global trade disputes, called the appellate body. The move could fundamentally disrupt the WTO’s ability to settle disputes that affect some of the world’s biggest companies.

Charting the Trade War

Slower exports largely explained weaker euro-area growth last year, but a close inspection of the data shows the trade war between the U.S. and China only had a small direct impact — instead it was due to the U.K. and Turkey. 

Today’s Must Reads

• French tech-giants tax | The U.S. will investigate a French plan to impose taxes on technology companies, a move that has been a prelude to new U.S. tariffs under the Trump administration. France isn’t backing off. 
• Japan-South Korea spat | Japan and South Korea plan to meet over Tokyo’s move to restrict vital exports to its neighbor, but neither has much political incentive to climb down from their worst dispute in decades.
• South China Sea | China is tightening its grip over waters that carry $3 trillion in trade, including more than 30% of the global maritime crude oil trade.
• No rate-cut panacea | Investors may think central banks can prevent a trade war-induced recession by cutting interest rates, but it’s never that simple, says Bank of Canada Governor Stephen Poloz.
• Stephanomics podcast | Trump’s trade policies have created winners and losers around the world. Among the big losers so far: Spanish olive farmers.

Economic Analysis

• China economic forecast | The truce in the trade war doesn’t change Bloomberg Economics’ baseline scenario of U.S. duties staying at the current level for a long time.  The impact could be substantial, with GDP growth slowing to 6.1% in 2019
• Trump’s tax bomb | The White House is using France’s digital tax in an attempt to divide and rule in the EU. It’s a big test of whether Europe’s leaders will stand by Paris

Coming Up

• July 12: China trade data, South Korea export prices
• July 16: WTO Deputy Director-General Alan Wolff, European Union Trade Commissioner Cecilia Malmstrom among speakers at the Banque de France’s “Bretton Woods: 75 years later” conference in Paris

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net, Brian Swint

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