China's top trade negotiator and Vice Premier Liu He, a Harvard-educated economist, is putting his reformer credentials to the test in months of fraught negotiations with American officials.

President Xi Jinping's right-hand man on economic issues has managed months of tricky negotiations with US officials in an attempt to hammer out a pact.

On his current trip, Beijing described him as the "leader in charge of the China-US comprehensive economic dialogue" -- a change from his title of Xi's "special envoy" on his last trip to Washington.

The omission could allow Xi to avoid having his name tied to any failure in the talks.

His task was made harder Friday when the US once again raised tariffs on a large portion of the goods China ships across the Pacific, reigniting tensions that Liu had worked hard to dampen.

Liu admitted he was "under pressure" as he arrived for the talks in Washington on Thursday.

"Under the current circumstances, raising tariffs is not a good way to resolve the problems, it is harmful to China, harmful to the US, and harmful to the world," Liu said.

The long-winded negotiations have been rocky from the start.

Last spring Treasury Secretary Steven Mnuchin and Liu thought they had struck a deal, with Liu saying they had reached a "consensus" and there would not be a trade war or new tariffs.

Weeks later US President Donald Trump moved ahead with new tariffs -- eventually hitting $250 billion worth of imports from China -- leading many observers to say it damaged Liu's political standing.

Beijing fired back with tariffs on most US imports.

Liu is "intelligent and diligent and throws himself into his work," said He Liping of Beijing Normal University, who collaborated with Liu for nearly 20 years as a member of the Chinese Economists 50 Forum, a think tank of liberal economists.

The negotiations have carried on for 11 rounds of high-level face-to-face talks, with the 67-year-old Liu and his American counterparts following up on video calls.

Chinese Commerce Minister Zhong Shan described the talks as "very difficult and taxing" with both sides working "day and night".

But this week Trump accused Beijing of backtracking on already-agreed commitments.

Washington wants far-reaching changes to the Chinese economy, such as subjecting state-owned enterprises (SOEs) to market principles and reducing their massive subsidies.

While Liu has indicated he favours such reforms, he likely faces deep resistance from entrenched interests in Beijing.

"Executives at state-owned enterprises are officials. Today you're manager of a central SOE, next year you're vice governor of Shandong province," explained economist Sheng Hong.

"SOEs are their interests, they can move to one and make lots of money. Why would they want reform?"

- Keynes admirer -

He Liping described Liu as a "liberal economist".

"I've heard him bring up Joseph Alois Schumpeter, Walt Whitman Rostow, John Maynard Keynes many times and I believe he admires them," said He.

Schumpeter is best known for his theory of "creative destruction" and defence of capitalism for fostering entrepreneurship and innovation, Rostow for developing a model of economic growth, and Keynes for ideas about a proactive role of government in supporting the economy.

In the 1990s Liu was a visiting scholar at Seton Hall University in the US and subsequently earned a master's degree from Harvard's Kennedy School.

A former Harvard classmate remembered Liu as "a fairly quiet, self-contained, hard-working student".

"Clearly, he enjoys the trust of General Secretary Xi," China expert Tony Saich of Harvard's Kennedy School said last year.

"Personal relations and trust are very important in Chinese politics," he said.

- Pushing reforms -

In May last year, after he thought he had a deal to avoid tariff hikes, Liu said "using opening up to push reform and development is a very important strategy for us".

Sheng Hong, a fellow member of the Chinese Economists 50 Forum, said Liu meant that external forces like the trade war can be used to push domestic reforms.

"He is a liberal economist, but he's in the government so he is not outspoken like us," Sheng said.

US Trade Representative Lighthizer initially agreed.

"I think you have to start with the proposition that there are people in China who believe that reform is a good idea. And you have to believe that those people are at a very senior level," Lighthizer said to National Public Radio this spring, in an apparent reference to Liu.

He Liping said Liu would be able to get a deal, noting "he has always been politically minded".

US-China trade talks end with no deal but will continue
Washington (AFP) May 10, 2019 - Two days of talks to resolve a worrisome US-China trade battle ended Friday with no deal, but no breakdown either, offering a glimmer of hope that Washington and Beijing could find a way to avert damage to the global economy.

But the status remains tense after the United States followed through on a threat to ramp up tariffs, and China vowed to retaliate, angering many US businesses and farmers that are feeling the brunt of the impact from the trade war.

President Donald Trump said Friday the talks will continue and a decision on whether to pull back the punitive import duties will depend on what progress is made.

"Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries," Trump tweeted.

"The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue."

The tariffs on China "may or may not be removed depending on what happens with respect to future negotiations!"

Chinese Vice Premier Liu He told reporters that the talks had gone "fairly well," according to Bloomberg.

Just after midnight, Washington pulled the trigger on an increase in punitive duties on $200 billion in Chinese imports, raising them to 25 percent from 10 percent. Beijing responded vowing to take the "necessary countermeasures."

The renewed hope cheered Wall Street, which had been under pressure all week, and the benchmark Dow Jones Industrial Average recovered from a loss of nearly 350 points to close with a gain of 117 points.

US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer met for about two hours with Liu on Friday and then headed for the White House to brief Trump, who had said he was in no hurry to reach a deal, arguing the United States was negotiating from a position of strength.

- From anger to hope -

Trump began the standoff because of complaints about unfair Chinese trade practices. The United States is pressing China to change its policies on protections for intellectual property, as well as massive subsidies for state-owned firms, and to reduce the yawning trade deficit.

After weeks of rising optimism about the chances for an agreement, the tone out of the White House has veered from anger to nonchalance.

On May 5, Trump erupted on Twitter, saying the talks were progressing "too slowly," accusing the Chinese of backing out of commitments and announcing the tariff increase.

But in a series of early morning tweets Friday, he said there was "absolutely no need to rush."

Bloomberg quoted two sources saying Washington gave Beijing three to four weeks more to reach an agreement before the Trump administration moves to carry out a threat to impose tariffs on all Chinese imports.

The US leader continues to argue that tariffs could in some ways be preferable to reaching a trade deal.

"Tariffs will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind," Trump wrote.

Economists stress that duties are paid by US companies and consumers and result in higher prices, while farmers and manufacturers complain about the loss of markets for their exports due to retaliation from China and other targets of Trump's trade wrath.

- 'No one wins' -

"NO ONE WINS A TRADE WAR," trade analyst Chad Bown of the Peterson Institute for International Economics said on Twitter.

Since last year, the United States and China have exchanged tariffs on more than $360 billion in two-way trade, gutting US agricultural exports to China and weighing on both countries' manufacturing sectors.

The higher duty rates imposed on Friday will hit a vast array of Chinese-made electrical equipment, machinery, auto parts and furniture, and will apply to goods that left port after midnight Washington time (0400 GMT).

"While we are disappointed that the stakes have been raised, we nevertheless support the ongoing effort by both sides to reach agreement on a strong, enforceable deal that resolves the fundamental, structural issues our members have long faced in China," said business lobby the American Chamber of Commerce in China.

Oxford Economics estimates the "tariff punch" from all existing duties will cut 0.3 percentage points off US growth and warns recession risks are on the rise. Economists in China estimate a similar impact.

The International Monetary Fund has sounded the alarm that the conflict and the loss of confidence it creates will have a wider impact on the global economy and is a major risk to growth.

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It's everyday Americans who pay Trump's tariffs
Washington (AFP) May 9, 2019
President Donald Trump has repeatedly boasted that the tariffs he has imposed on trading partners are a financial windfall for the US treasury, but research shows it is Americans that bear the brunt of the impact. Trump plans to ratchet up tariffs on $200 billion worth of Chinese goods to 25 percent on Friday, and said the US will be fine without a trade deal since it is raking in the proceed from the tariffs. But that announcement worries businesses and farmers, and has shaken up investors worl ... read more