Liu He, China’s trade war chief, takes on new job retooling state industrial giants

Liu He, China’s point man on trade negotiations with the US, has taken on a new role spearheading state-owned enterprise reform, expanding his domestic economic portfolio despite failing to talk Washington out of a trade war.

Chinese President Xi Jinping handpicked Liu, a vice-premier and Harvard-educated economist, to lead trade negotiations with the US over the past few months. But after two unsuccessful trips to Washington and a trade war under way, Liu’s abilities had come under public scrutiny.

But his additional role overseeing change at the country’s state-owned behemoths may mean he still has the top leadership’s trust. There has also been no official announcement of him being replaced by other senior officials in the talks.

“I think Liu He is very important to Xi ... and China’s trade problem is not over,” Natixis senior economist Xu Jianwei said.

Xu said Liu’s new role, which was previously held by former vice-premier Ma Kai, might also reflect a desire in Beijing to focus more on domestic structural problems in the absence of any immediate prospect of the world’s two biggest economies returning to the negotiating table.

As head of the SOE reform leadership group under the State Council, Liu will lead 15 senior officials across ministries, including the central bank and China’s securities, banking and insurance watchdogs.

The central government has already started changing domestic economic policies to cope with possible fallout from an escalated and prolonged trade war with the US.