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from The Washington Post…

Trump team fears new face on China trade team signals tougher stance

The G-20 summit seemed to offer signs of progress on a U.S.-China trade deal. But those hopes are fading.

By ROBERT COSTA and DAVID J. LYNCH | 8:01PM EDT — Wednesday, July 10, 2019


Chinese Commerce Minister Zhong Shan, regarded by some White House officials as a hard-liner, greets a Bangladeshi delegate in Beijing on July 4.
 — Photograph: Pool/Reuters.

THE Trump administration is increasingly concerned about prospects for a trade deal with China, amid an unexpected reshuffling of the Chinese negotiating team and a lack of progress on core issues since the Group of 20 summit in Japan, according to U.S. officials and senior Republicans briefed on the discussions.

Commerce Minister Zhong Shan, regarded by some White House officials as a hard-liner, has assumed new prominence in the talks, participating in a Tuesday tele-conference alongside Chinese Vice Premier Liu He, who has headed the Chinese trade team for more than a year.

Hopes for a deal also have been dented by China's failure to make large new purchases of U.S. farm products — despite President Trump's claim at the G-20 that Chinese President Xi Jinping had agreed to place such orders “almost immediately” — and the lack of any announced schedule for the next round of direct talks.

Zhong's sudden emergence comes two months after the U.S.-China trade negotiations collapsed with the Trump administration accusing Beijing of having reneged on a preliminary agreement.

“This has to be seen as a loss of confidence in Liu He and the desire of the leadership to bring in someone more politically savvy,” said Dennis Wilder, a former China analyst at the Central Intelligence Agency. “I am sure his instructions are to get tougher with the U.S.”

In an effort to revive the stalled trade talks, Trump agreed at the G-20 summit to postpone new tariffs on $300 billion in imports from China and to allow Huawei, a Chinese telecommunications company that U.S. officials call a national security threat, to continue buying American computer chips.

Trump told his trade team before the Tuesday call to secure the new Chinese orders for soybeans and wheat he believed he had been promised in Osaka, Japan. But Zhong and Liu offered no specific commitments, leaving negotiations at a virtual standstill, according to a White House official who spoke on the condition of anonymity because the official was not authorized to speak publicly.

The administration also has yet to reach agreement with the Chinese government on dates for chief trade negotiator Robert E. Lighthizer and Treasury Secretary Steven Mnuchin to visit Beijing for the next round of direct talks, though U.S. officials said they remain optimistic such a meeting will happen.

Craig Allen, president of the U.S.-China Business Council, said administration statements about how the president's shift on Huawei would be implemented have been “confusing to American companies” and reflected a broader lack of follow-through to the discussions in Osaka. “All of the things they spoke of — none of them have happened,” said Allen, who added that he worries about an erosion of trust between the United States and China.

U.S. officials and Trump allies have privately expressed concern this week that the Chinese are digging in and avoiding firm commitments.

“Republicans in general are frustrated that the Chinese have been so uncooperative at this stage, and it's now clear this is going to be a slow process,” said conservative economist Stephen Moore, an informal Trump adviser. “They keep backpedaling, and the hard-liners in China play right into the hands of hard-liners in the U.S.”

As the faint glow of the most recent Trump-Xi meeting fades, negotiators are confronting the same to-do list that vexed them two months ago. Talks broke down in early May over U.S. demands that China commit to rewrite its laws to address complaints over its theft of intellectual property and forced technology transfer policies.

The two sides also deadlocked over Beijing's demand that Trump remove all of the tariffs he imposed on $250 billion in Chinese goods last year.

“We're stuck at the same point we were before,” said Derek Scissors, a China expert at the American Enterprise Institute and occasional administration adviser. “We're not getting anywhere.”

Zhong, 63, rose to a cabinet-level post in Beijing in 2017 after running two state-owned companies and serving as vice governor of Zhejiang province when Xi was the top official there.

“Zhong is a hard-liner's hard-liner,” said former White House chief strategist Stephen K. Bannon, who remains close to several Trump advisers.

Zhong, who joined the Communist Party at age 18, is the second veteran trade official to be added to the Chinese team in recent weeks. In April, Yu Jianhua, one of China's most experienced trade negotiators and its ambassador to the United Nations Office in Geneva, returned to Beijing to bolster Liu's delegation.

Some China specialists said the Trump administration is over-reacting to a minor personnel move.

James Green, a senior trade official until earlier this year at the U.S. Embassy in Beijing, said Liu is in no danger of being upstaged by the commerce minister. Liu and Xi were childhood friends.

“Some folks in the White House, who may not have had the same deep level of experience in dealing with a wide range of Chinese interlocutors, may read too much into who's on a call,” said Green, a senior adviser at McLarty Associates. “All Chinese negotiators are on an incredibly short leash.”

Clete Willems of the law firm Akin Gump, who worked on trade talks in the White House until April, said Zhong's inclusion on the Chinese delegation could reflect internal Chinese bureaucratic politics.

Just as the U.S. team includes Lighthizer, who is intent on striking an ironclad accord, and Mnuchin, who is more sensitive to the effects of trade tensions on financial markets, Beijing has its own hawks and doves.

“If Xi wants a deal, he needs to have both sides bought in,” said Willems.

Though China's Commerce Ministry is generally regarded as supportive of trade links, Zhong is likely to fight fiercely to protect the country's commercial interests, according to Scott Kennedy, a senior adviser on China at the Center for Strategic and International Studies.

Chinese officials may be delaying any trade concessions until they see how Trump's G-20 change on Huawei's purchases from U.S. companies is implemented and how the administration reacts to continuing protests in Hong Kong, according to one Trump supporter who has been briefed by administration officials and spoke on the condition of anonymity because the person was not authorized to speak publicly.

The president in May signed an executive order that bars Huawei from supplying equipment for next-generation 5G communications networks in the United States, while the Commerce Department prohibited American companies from selling parts to the Chinese company without a government license, effectively blacklisting one of China's most prominent global corporations.

China may be prepared to wait Trump out because its economy, which slowed sharply last year, has stabilized thanks to government stimulus measures. The president's on-again, off-again tariff threats also have eroded the Chinese government’s faith in his ability to stick with any deal.

“The reality is that this likely means no deal for the foreseeable future,” said Kennedy. “China is no longer interested in reaching a big deal with Trump.”

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• Robert Costa is a national political reporter for The Washington Post. He covers the White House, Congress, and campaigns. He joined The Post in January 2014. He is also the moderator of PBS's “Washington Week” and a political analyst for NBC News and MSNBC.

• David J. Lynch joined The Washington Post in November 2017 from the Financial Times, where he covered white-collar crime. He was previously the cybersecurity editor at Politico and a senior writer with Bloomberg News, focusing on the intersection of politics and economics. Earlier, he followed the global economy for USA Today, where he was the founding bureau chief in both London and Beijing. He covered the wars in Kosovo and Iraq, the latter as an embedded reporter with the U.S. Marines, and was the paper's first recipient of a Nieman fellowship at Harvard University. He has reported from more than 60 countries.

https://www.washingtonpost.com/business/economy/trump-team-fears-new-face-on-china-trade-team-signals-tougher-stance/2019/07/10/5b6c24d2-a349-11e9-b732-41a79c2551bf_story.html