China unexpectedly appointed a new trade negotiator on Wednesday in the midst of its tariff fight with the US.
The government said Li Chenggang is replacing Wang Shouwen, who participated in negotiations for the 2020 trade deal between China and the US.
The world’s two largest economies have been steadily increasing tariffs on each other’s goods. China faces 145% duties on exports to the US, while dozens of other countries were given a 90-day reprieve for so-called "reciprocal" levies.
Earlier on Wednesday, China announced its economy expanded 5.4% year-on-year from January to March, supported by strong exports. Analysts are forecasting that the world’s second-largest economy will slow significantly in coming months, however, as tariffs on US imports from China take effect.
Exports were a strong factor contributing to China’s 5% annual growth rate in 2024, and the official target for this year is also about 5%.
Surviving without US consumers
Beijing has hit back at the US with 125% tariffs on American exports, while also stressing its determination to keep its own markets open to trade and investment.
As a response to US tariffs, China has also imposed more export controls on rare earths, which include materials used in high-tech products, aerospace manufacturing and the defence sector.
In the near term, the tariffs will put pressure on China’s economy, but they won’t derail long-term growth, Sheng Laiyun, a spokesperson for the National Bureau of Statistics, told reporters earlier.
China didn't specify why it was changing negotiators, but the move comes at a time when Beijing is looking for ways to survive without the US market. One option is to rely more on its own vast market of 1.4 billion consumers, as well as on Europe and countries in the global south.
As China’s domestic consumption continues to languish, it will nonetheless be difficult to replace the US consumer base. Many Chinese citizens have invested savings in buying houses, meaning the country's property crisis — triggered by the collapse of Evergrande in 2021 — has dampened spending appetites.
Experience with the WTO
Prior to his new appointment, Li spent about four and a half years as China's ambassador to the World Trade Organization, the body that governs global commerce and to which Beijing has appealed in its tariff dispute with the US.
He was also deputy permanent representative to the Chinese delegation to the UN office in Geneva and other international organisations in Switzerland.
Perhaps more so than his predecessor Wang, Li's experience at the Commerce Ministry and his participation in negotiating China's accession to the WTO more than 20 years ago stand him in good stead for the challenges ahead. China continues to refuse to cave in to US demands, said Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics.
"There might be another style of negotiations. Li Chenggang is an open-minded person and supports free trade,” Tu said.
Xi Jinping's Southeast Asia tour
China's leader Xi Jinping, meanwhile, has been making the case for China as a source of “stability and certainty” in global free trade as he tours Southeast Asia this week — implying that China is a more reliable trade partner than the US.
After first visiting Vietnam, he arrived in Kuala Lumpur, Malaysia’s capital, later on Tuesday, for a three-day visit and will end his tour with a stop in Cambodia. In Malaysia, Xi is expected to discuss a free trade agreement between China and the 10-member Association of Southeast Asian Nations.
Asked about the possibility of talks with the US, Chinese Foreign Ministry spokesperson Lin Jian said the US had begun the tariff spat and China was only “taking necessary countermeasures to defend its legitimate rights and interests and international fairness and justice”.
“If the US truly wants to resolve the issue through dialogue and negotiation, it should stop using maximum pressure and stop threats and blackmail. For any dialogue to happen, it must be based on equality, respect and mutual benefit," Lin said at a daily briefing.
