The Chinese commerce minister is a tough bastard and though you could have said the same about Wilbur Ross in his prime, the U.S. Secretary of Commerce may have lost a half-step in the acuity department, meaning more pressure on Lighthizer who will have to inform strategy as well as negotiate.
Two from the South China Morning Post:
July 11
Beijing plays down Commerce Minister Zhong Shan’s inclusion in latest US-China trade war talks
- He did not directly participate in first 11 rounds of trade negotiations, but took part in a phone call alongside top negotiator Liu He this week
- Some see his inclusion as a step to toughen China’s negotiating position as he is viewed by many as a hardliner who always toes the party line
The participation of China’s Commerce Minister in the latest trade discussion with the United States was “normal”, China’s Ministry of Commerce said on Thursday, playing down the eye-catching change in Beijing’s negotiating team.
Zhong, 64, joined Vice-Premier Liu He’s phone conversation with US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin on Tuesday – the first phone call between top negotiators since President Xi Jinping and US counterpart Donald Trump agreed to resume discussions during their summit in Osaka on June 29.While Zhong had previously accompanied Xi at meetings with Trump in both Buenos Aires and Osaka, this was the first time that he had joined in direct conversations with US trade negotiators, a move that put him front and centre in the talks.At a press conference in Beijing, asked why Zhong was on board, Gao Feng, the ministry’s spokesman, said it was “quite normal” as “the [Commerce] Ministry is in charge of trade negotiations”. Gao did not explain why Zhong had not directly taken part in the previous 11 rounds of meetings between US and Chinese trade negotiators.Wang Shouwen, a vice-commerce minister, was a key aide to Liu in previous rounds of talks before the negotiations collapsed in early May.
Zhong’s emergence on the front line could bring a subtle change in the dynamic, since his presence would effectively double the number of key figures on China’s side, to balance the two-person leadership on the US negotiating team of Lighthizer and Mnuchin....
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And more bellicose four days later:
July 15
China’s hawkish new face in US talks Zhong Shan ‘shows Beijing is not close to a trade deal’
- Commerce minister tells People’s Daily ‘US started this economic and trade dispute’ and that ‘we must make the best of the spirit of struggle’
- Beijing is in no hurry to reach a deal, analyst says: ‘It looks like China is waiting to see what happens after the 2020 election’
China must uphold “the spirit of struggle” in defending national interests in its current trade war with the US, the country’s commerce minister, who recently joined the negotiations, said.
Zhong Shan, who took part in a telephone conversation with the leaders of the US negotiation team last week, made clear that the US side should be held solely accountable for the trade conflict that has become a drag on the global economy.The remarks were made as officials from the two nations prepared for further talks. US Treasury Secretary Steven Mnuchin said that he and US Trade Representative Robert Lighthizer may travel to Beijing for trade negotiations if talks by telephone this week are productive.
“We expect to have another principal-level call this week, and to the extent we make significant progress, I think there’s a good chance we’ll go there later,” Mnuchin said on Monday at a briefing for reporters at the White House.....
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Just to be clear, the ‘US started this economic and trade
dispute’ line is straight-up B.S. with China having chumped the U.S. and other Western trading partners since the WTO accession and arguably for a decade before that, what with the theft of intellectual property and the tariff and non-tariff barriers to entering its home market and the mercantilist export policies.
The U.S. should never have allowed the situation to get where it is but that's a story for another post.
Related to the headline stories, May 11's "China's Vice-Premier, Liu He, May End Up As Xi's Fall Guy":
It's just a small thing but CNBC caught it a few days ago:
May 9, 2019
China’s top negotiator may have diminished role in trade talks ahead of dinner with US officials
...MORE
- China’s top trade negotiator, Liu He, will meet with President Donald Trump’s trade team on Thursday without the title “special envoy” for President Xi Jinping, a role he has held in previous talks.
- The demotion suggests the vice premiere may have diminished authority to make concessions that could be key to striking a deal.
I'd take it a step further and say the fact Liu He wasn't allowed to bind Xi as his former title previously allowed means that the (non) result of the talks was preordained last week in Beijing and that Xi's hard line may win out over his top negotiator's more flexible approach. Meaning Mr. Liu could become dispensable.
That would have a negative effect on equities.
Lending a bit of credence to the idea the trade talks decision was made earlier, the Central Government had begun a national inventory of grain stocks, quality and amount, in March. This is only the third such inventory this century, following similar efforts in 2001 and 2009.
Here's one example from Fujian Province via Google Translate (no humans to help me at the moment): ....
