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Change in negotiators shakes up U.S.-China trade policy


LAST UPDATED: 7:02 a.m. HST, Nov 19, 2012

BEIJING >> The rare congruence of the U.S. and Chinese political calendars this month, with both countries choosing leaders for the coming years, is about to produce an equally rare replacement of most of each side’s senior trade negotiators, with unpredictable results for bilateral economic relations.

One of the few surprises in the carefully scripted party congress that ended Wednesday was that Commerce Minister Chen Deming lost his seat when delegates chose the members of the Communist Party’s Central Committee for the next five years.

Under party rules, that means he will have to step down as minister at the National People’s Congress next spring. His loss of membership in the Central Committee also meant that he was ineligible to join the Politburo last Thursday and become one of the four vice prime ministers, as some analysts had expected.

Some Chinese analysts say that the broad direction of the country’s international economic policy is clear and consistent and that changes of individuals will not make much of a difference.

“The fundamental policy on international trade is adherence to opening and reform,” said He Weiwen, co-director of the China-U.S.-EU Study Center at the China Association of International Trade in Beijing. “It will certainly continue and develop to a new height, including China’s trade policy on the U.S.”

But the significance of Chen’s departure from the Central Committee has produced a divided reaction among Western experts on China’s policymaking process on international economics. He had a reputation within China for being a gentlemanly figure who chooses his words with care and has not indulged in outspoken denunciations of the West during trade disputes, even as the tone of social media in China has become increasingly nationalistic on economic policy.

Chen’s failure to win broad support from the delegates “does not bode well for future trade relations, and shows that China is pushed by populism,” warned one Western expert who insisted on anonymity because of sensitivity in China about discussions of personnel changes.

But other experts cautioned that Chen had been quick to retaliate for U.S. and European trade actions instead of seeking to negotiate solutions, so his presence at the Commerce Ministry may not have acted as much of a brake at all on China’s growing willingness to confront other trading partners.

Most recently, Chen has started a series of trade actions against imports of the main raw material for solar panels, polysilicon, to retaliate for the recent U.S. imposition of stiff import tariffs on Chinese solar panels and a European decision to start investigating whether to impose similar tariffs.

Chen had been criticized within China’s bureaucracy for falling short on all three of China’s top trade priorities with the European Union: ending the European embargo on arms exports to China, winning “market economy” status from the EU so as to discourage further anti-dumping cases against Chinese exports and persuading European officials not to start a trade case against solar panels.

According to the state news media, there were only 9.3 percent more candidates for the Central Committee than seats available on the committee. So delegates did not so much vote for most candidates as against a handful of candidates.

The Chinese government did not release the names of the losing candidates, and it is possible that Chen’s name was not on the final ballot, particularly as he is 63 and approaching retirement. But several people said that they were under the impression that Chen had been on the ballot and failed to win.

There are two leading candidates to become the next commerce minister, a job with responsibilities that roughly combine those held separately in the United States by the U.S. trade representative and the undersecretary of commerce for international trade. One is Gao Hucheng, Chen’s deputy at the Commerce Ministry, and the other is Huang Xingguo, the mayor of Tianjin. Little is known about the trade policy views of either man.

While Gao has been seen for years as an eventual successor to Chen, Huang may benefit from the recent promotion of his boss, Zhang Gaoli, who holds the top job in Tianjin as party secretary. Zhang became one of the seven members of the ruling Politburo Standing Committee on Thursday and is expected to become the executive vice premier overseeing day-to-day economic policy at the National People’s Congress next spring.

Two other prominent Chinese officials involved in bilateral relations are leaving their posts. Wang Qishan, the vice prime minister who has led Chinese economic policy negotiating teams for nearly five years, was another of the seven members of the Standing Committee announced Thursday but has also been named to head the Central Commission for Discipline Inspection, which means that he will focus on corruption investigations in the years ahead.

Zhou Xiaochuan, the governor of China’s central bank for the past decade, is retiring and was not re-elected to the Central Committee. His successor is not yet clear.

In the United States, Secretary of State Hillary Rodham Clinton, Treasury Secretary Timothy F. Geithner and U.S. Trade Representative Ron Kirk are all expected to leave in the coming months with the end of President Barack Obama’s first term.

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