In addition to pledges to buy more American products from soybeans to natural gas, China is expected to offer compromises on a number of structural issues that could curtail the government’s involvement in China’s domestic economy.

An agreement to end the trade war will be a major feather in Liu’s cap, but more important to his reputation, and to the future of his country, will be his ability to shepherd through the changes in the economy required by the deal.

Liu, 67, spent most of his career as an economic adviser working behind the scenes, but in recent months has become one of the most closely watched figures by global investors and policymakers alike.

The stakes in his negotiations with the US are high, not only the future relations between the world’s two largest economies, but also China’s ability to reinvent itself through further economic liberalisation.

Li Weisen, an economics professor at Fudan University in Shanghai, said that a trade deal with the US would help China to push ahead much-needed market-oriented changes.

“A deal with the US will be helpful for China’s domestic reforms,” Li said.

This process was initiated by former paramount leader Deng Xiaoping four decades ago, but which has gradually lost momentum in the last decade as China gained confidence in its state-led growth model after the global financial crisis of 2008.

Many of the reported US demands for structural change to how the Chinese economy operates – including better protection of intellectual property and equal treatment for foreign investors – echo the long-standing views of Liu, who maintains ties to the country’s liberal economic thinkers through the China 50 Economists Forum, a club he co-founded.

With Liu seemingly on the brink of bringing home a trade agreement with US, hopes are on the rise that the deal will create the chance for China to rethink its economic policies and seek to rely more on the market than on the state for future growth.

A trade deal with US would also start a new mission for Liu in China of taking on the government apparatus and tweaking policies and rules to align with the new agreement in the same way China changed hundreds, if not thousands, of domestic regulations in the process of its effort to qualify for entry into World Trade Organisation in 2001.

But this mission will not be easy as the pain involved in making the necessary changes will be acute in light of China’s current economic slowdown, and the process could still be frustrated by resistance from the massive vested interests in the Chinese system.

Liu’s vision for the Chinese economy has been made public before as in early 2012, when he was the head of the Development Research Centre (DRC), a think tank under the State Council; it and the World Bank jointly published a report that recommended China conduct a series of “structural reforms” to help grow a vibrant private economy.

Then in late 2013, when Liu was a top adviser to Xi helping to draft economic policies, the Chinese Communist Party published a grand policy statement vowing to give the market “a decisive role” in allocating resources and outlining 363 specific reform items to accomplish that goal, although many of them remain unrealised.

“His importance will even increase after the many rounds of China-US trade talks, as he has apparently received political backing from the Chinese president,” said Iris Pang, chief Greater China economist for ING Bank.

Still, Liu’s performance in the trade talks has not been flawless. While he speaks fluent English, he and Trump misunderstood each other over the timing of US soybean purchases, which required the White House to walk back a statement on the issue.

The tit-for-tat retaliation that plunged relations between the countries to their lowest level in decades delivered a body blow to investor confidence in China, resulting in a greater than expected economic slowdown and a sharp drop in stock prices.

While the government’s official position on the trade war did not waver, criticism of its strategy did emerge, although none targeted Liu personally.

Li Ruogu, former president of the Export-Import Bank of China, warned in September that a head-on confrontation with the US on trade was not a good strategy.

“A concession is not a surrender, it is intended to win advantages [down the road]. I don’t think a tit-for-tat approach is workable,” he said.

There was even speculation that Vice-President Wang Qishan, who had deep experience in dealing with US investors, might be drafted to help in the trade talks.

But sources told the South China Morning Post that Liu’s role as the man in charge of trade talks was never questioned.

“From the beginning to the end, Liu is the man in charge of trade talks for China,” one source said. “There’s no second choice.”

Robert Rogowsky, a professor of trade and economic diplomacy at Middlebury Institute of International Studies, said there was “no better candidate” than Liu to handle Trump’s harsh demands and complex negotiating style.

“I am impressed with him: strong record, exceedingly bright and well-trained, trusted by President Xi, responsible for a great deal of the Chinese economy – and especially those areas high on the list of negotiation topics,” said Rogowsky, a former director of operations at the US International Trade Commission.

Rogowsky added that Liu faced “perhaps an even more difficult challenge in Beijing” than Washington as he needs to bring all the stakeholders there into line with a single negotiating position for China.

Liu has also stepped up to soothe the domestic market, telling investors in October that they should not panic.

“China-US trade friction has led to some impact on the market. To be honest, its psychological impact is larger than the real impact. We still maintain contacts [with US side],” he said.

Watch: ‘Biggest trade war in economic history’ begins between US and China (July 2018)

A source in Beijing said that June to October last year, especially after the US announced that it would impose tariffs on US$200 billion worth of China products in September, was probably “the darkest moment” for Liu, as economic and financial risks grew and prospects for a trade deal dimmed.

Hopes for a settlement emerged as both Beijing and Washington began to realise the economic and political risks of a prolonged battle.

This re-evaluation crystallised in the summit between Xi and Trump on the sidelines of the G20 summit on December 1 in Argentina and created a 90-day ceasefire during which negotiators would step up their efforts to find common ground.

Trump, citing “substantial progress” in the negotiations, announced on Sunday that he was postponing the deadline indefinitely to give negotiators a chance to finalise a deal.

Still, even with a deal, few expect the bilateral relationship to be the same as it was a year ago, and many question how long the agreement will last and whether Trump, as he did a year ago, will reverse his decision and decide to escalate the trade war again.

Derek Scissors of the American Enterprise Institute warned that any deal signed by negotiators cannot be expected to survive more than a year and that China should expect a harder US policy stance after the 2020 presidential election, unless it makes the policy changes it promises.

“The Chinese side clearly hopes President Trump will return to the policies of presidents [Barack] Obama and [George W.] Bush, where China pretends to make a few changes and the US claims a victory,” Scissors said.

“The central government has declined to undertake pro-market reform for at least a decade. What the US is doing now means little in comparison to internal Chinese decision-making [on necessary structural changes].”