China seeks to strengthen its trade negotiation team, including by involving Commerce Minister Zhong Shan, as Beijing and Washington restart talks on a range of thorny issues.

Zhong joined a phone call with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Tuesday " the first time he had been part of a direct conversation with Washington's negotiators " in a move that observers said showed Beijing's need to enlist more experts as the talks get tougher.

It was the first telephone call between top negotiators since Chinese President Xi Jinping and US President Donald Trump agreed to resume stalled talks on the year-long trade war during their summit in Osaka, Japan, on June 29. Even before talks officially restart, China's imports of American farm products " which the two sides have yet to agree on " are looming as the next contentious issue.

China's team is led by Vice-Premier Liu He, a long-time confidant of Xi who has been spoken of highly by White House officials. But observers say there are concerns over a lack of trade expertise on Beijing's team compared to Washington officials like Lighthizer, who is said to be respected by the Chinese for his knowledge, even if they have found him difficult to negotiate with.

Commerce Minister Zhong Shan has experience dealing with trade disputes with the US and the EU. Photo: Simon Song alt=Commerce Minister Zhong Shan has experience dealing with trade disputes with the US and the EU. Photo: Simon Song

Bringing in Zhong could be an effort to address those concerns, according to Dali Yang, a political scientist at the University of Chicago.

"[The] arrangement has been criticised in China for not having as much expertise as the US side, which has been led by Lighthizer," Yang said, noting that Liu has been the sole top negotiator for Beijing for the 11 rounds of talks until now.

"As the two sides seek to close the negotiations, it makes sense for the Chinese side to give its experts more of a role, with the involvement of Zhong as well as Yu Jianhua," Yang said.

Yu, a vice-minister of commerce, is China's former ambassador to the United Nations and a veteran on trade issues and the World Trade Organisation.

Wei Jianguo, a former vice-minister of commerce, said that the ministry would play an important role in future talks, which are expected to include services " a sector the US wants to expand in its trade with China.

Wei Jianguo said the commerce ministry would play an important role in future trade talks. Photo: Handout alt=Wei Jianguo said the commerce ministry would play an important role in future trade talks. Photo: Handout

Like Yu, Zhong has experience dealing with trade disputes with the US and the European Union.

Zhong worked under Xi during his time in Zhejiang province, and was appointed vice-minister of commerce in 2008. He led a trade delegation negotiating with Washington on Chinese tyre imports in 2009, the first major US-China trade conflict during Barack Obama's presidency.

But the talks were unsuccessful, and the US went ahead with anti-dumping duties of up to 35 per cent on Chinese tyres exported to the US. A challenge at the WTO also failed, with a ruling against China in the case two years later.

Zhong did help China reach a deal in a major trade dispute with the European Union over Chinese solar power products and telecoms equipment in 2013. He also led a delegation to the US in 2016, meeting officials in the commerce and treasury departments and the office of the USTR to discuss how to resolve trade conflicts and balance bilateral trade. He became commerce minister in 2017.

Zhong has not been directly involved in the trade talks over the past year, or included in the teams sent to Washington, though he did appear in an opening ceremony group photograph with US negotiators in Beijing.

According to a government source speaking on condition of anonymity, it made sense to include Zhong in the discussions.

"It was abnormal for him not to participate in the trade talks over the last year. His direct involvement is a return to a normal track," the source said.

There had also not been enough briefings and exchanges of views on the trade dispute within the government, the source said. Zhong, for example, had to privately approach a vice-minister of commerce and key member of China's negotiation team, Wang Shouwen, about progress during previous rounds of trade talks.

Yu Jianhua is China's former ambassador to the United Nations and a veteran on trade issues and the World Trade Organisation. Photo: Xinhua alt=Yu Jianhua is China's former ambassador to the United Nations and a veteran on trade issues and the World Trade Organisation. Photo: Xinhua

Another source who was briefed on the trade talks said that Yu, another commerce vice-minister, had also begun offering advice on the negotiations since he took up the role in April, though he had not been directly involved in the discussions.

Lu Xiang, a senior researcher on US issues at the Chinese Academy of Social Sciences, said that the commerce ministry had become more involved.

"Vice-Premier Liu He is in charge of the overall direction of the frontline trade discussions, and as the text [of the deal] goes deeper and gets more detailed, many technical issues need to be handled by the Ministry of Commerce," Lu said.

James Zimmerman, a partner in the Beijing office of international law firm Perkins Coie and former chairman of the American Chamber of Commerce in China, said that including officials with more expertise in the negotiations could suggest an increased commitment to the trade talks.

"I don't read this as an indication of a shake-up of China's trade team, but rather a reflection of Beijing's intent to commit the resources and leadership to resolving the pending issues," he said.

Vice-Premier Hu Chunhua will lead an employment guidance group within the State Council. Photo: AP alt=Vice-Premier Hu Chunhua will lead an employment guidance group within the State Council. Photo: AP

Beijing has also been bracing for more fallout from the trade war, which has seen job losses and faltering growth, setting up an employment guidance group within the State Council. It will be led by Vice-Premier Hu Chunhua, who is in charge of the commerce ministry; another government source said that Hu had also been asked to get more involved in the negotiations with Washington.

Observers said both China and the US were still seeking a deal, but the two sides remained far apart on some issues.

"It is unclear what the US wants exactly," Lu said. "It wants China to open up its market, but it also wants US companies to move back. And there is doubt from both sides over whether a sensible deal can be reached with the Trump administration."

Additional reporting by Kristin Huang

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

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