A Revealing Incident Sheds Light on China's Government and Global Economic Attitude

The one-day-only visit to Washington seems to indicate that the Chinese are lukewarm to a trade deal.
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The 50th anniversary of the founding of the People's Republic of China, which occurs today, has produced volumes of ruminations on the changes in China since 1949. Rather than joining in the chin scratching, I thought I'd take a look at a bizarre incident this week that reveals quite a bit about the state of China's government, and its conflicted attitudes toward the global economy.

On Monday, Chinese officials arrived at the Winder Building, the stately federal era building that houses the offices of the

U.S. Trade Representative

in Washington near the

White House

. The delegation was there to continue the negotiations on China's accession to the

World Trade Organization

. China hopes to join the WTO before the November meeting of the group when a new round of global trade negotiations will be launched and the terms on China's accession will be stricter. President

Bill Clinton

rejected a deal in April and negotiations fell apart until they were revived a couple of weeks ago. There was some hope that the talks in Washington could result in an agreement, or at least get the two sides a lot closer.

However, U.S. trade officials had learned a couple of days earlier that the lead Chinese WTO negotiator,

Long Yongtu

, was not scheduled to be in the delegation. Instead, the delegation would be led by Minister of Foreign Trade and Economic Cooperation

Shi Guangsheng

, a senior official, to be sure, but not one who could close a deal. The rest of the Chinese delegation was comprised of lower-level officials from a variety of ministries, the people who are responsible for the technical details of an agreement.

U.S. Trade Representative

Charlene Barshefsky

met with Shi for a couple of hours in the morning. Then, in the afternoon, the rest of the delegation met with their U.S. counterparts for several hours. In the evening, they had dinner at a restaurant around the corner from the Winder Building for a friendly get together, but not more negotiations.

The next morning, the Chinese delegation returned to Beijing. Their visit to our nation's capital was all of one day. It's a long day trip from Beijing.

Barshefsky, who was undoubtedly disappointed, described the session as "useful." The two sides did agree to meet again, but neither a time nor a place was decided.

The mini-negotiations set off a flurry of confusion and speculation. The incident seems to indicate that the Chinese are now lukewarm for an agreement. Yet it was the Chinese -- not the U.S. -- who initiated the revival of the talks in September.

Behind the puzzle is an apparent internecine war among the various ministries in the Chinese government. While the Ministry of Foreign Trade and Economic Cooperation sees the value of China joining the WTO, agencies that represent manufacturers and farmers are balking, fearing the global competition such a move will make -- and the threat to their own power.

Moreover, the negotiations have been complicated by the fact that following the breakdown in talks in April, Barshefsky released a list of the Chinese commitments. She made this highly unusual move (the details of an agreement are typically released after it has been reached, not before) to galvanize support in the business community, which had been showing only tepid interest in the agreement. Once they saw what they had lost, they became much more energized, and the chances are better now than in April that an agreement could get through

Congress

.

But the price for Barshefsky's action was to galvanize opposition in China among the various anti-WTO ministries in the government. The anti-WTO forces in the Chinese government were reportedly outraged at the level of openness in the Chinese economy to outside competition that was promised in April. The pro- and anti-WTO sides are now in a constant tug of war.

The conventional wisdom right now is that China's WTO accession is going nowhere. Not only do both sides have to reach an agreement by November, but Congress -- not exactly friendly towards China

or

the Clinton administration these days -- has to agree to grant permanent normal trade status with China.

But I'm not so sure all is lost. Long said this week that the two sides were "very close" and merely have to correct 10 or 15 "mistakes" in the list of commitments released by Barshefsky in April. That's a lot, but it is doable. And the business community is a lot more engaged now. Yes, it's a long shot, but it could happen.

OK, so maybe I couldn't resist a little chin scratching after all.

David Kurapka wrote speeches for Treasury Secretary Robert Rubin from 1996 until 1999. Before that, he was U.S. Trade Representative Mickey Kantor's speechwriter from 1993 to 1996. Kurapka writes from Oakland, Calif.