Communist Party raises alarm over commerce ministry brain drain as China faces trade war

Wendy Wu
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Communist Party raises alarm over commerce ministry brain drain as China faces trade war

The Chinese Communist Party has ordered the Ministry of Commerce to stem an “exodus” of cadres as the country goes into battle in a trade war with the United States.

The party’s disciplinary watchdog issued the order late last month after a three-month inspection of the ministry.

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A retired trade official told the South China Morning Post that a shortage of veterans in the ministry, especially those experienced in trade negotiations and macroeconomic management, could affect the quality of advice given to those making decisions in the trade war.

He said the ministry was less powerful than before, with the top leadership making decisions in the trade war, but the ministry still had a big role to play in offering policy suggestions.

“The Ministry of Commerce offers policy advice and recommendations. That advice should be precise and valuable. But the ministry lacks enough expertise and that’s why some retired or former trade officials still have influence,” he said.

The official added that the US side was led by lawyers with a wealth of experience in trade deals.

China and the United States launched tit-for-tat tariffs in July after months of trade talks ended in deadlock, and fears are growing that an escalation in the conflict could dismantle the global trade order.

In a statement published in late July, the party inspectors said the ministry’s brain drain was “prominent”.

The watchdog, the Central Commission for Discipline Inspection, told the ministry to “set up high-quality and professional cadre teams, reinforce management of cadres sent overseas, [and] seriously analyse and address the brain drain problem”.

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China Economic Weekly, a magazine affiliated with party mouthpiece People’s Daily, said 152 staff resigned from the ministry between 2008 and 2017. The peak resignation period seemed to be from 2014 to 2016 when 80 cadres quit their positions, 40 per cent of them at the management level. Eight staff left last year, the report said.

The peak period coincided with the party’s sweeping campaign to crack down on corruption.

The report said it was the first time the CCDI had identified a cadre exodus since the party launched a new round of discipline inspections this year.

Some of the staff have taken up senior positions in technology and internet companies, including e-commerce firms JD.com and Alibaba, which owns the South China Morning Post.

Sources said a major problem at the ministry was the need to toe the party line rather than explore policy options.

“[Rather than the lack of experience], the bigger problem is that Chinese trade officials are constrained in their ability to discuss matters in a flexible manner … They lack flexibility more than experience,” a Beijing-based lawyer who consults foreign firms said.

A US business adviser said the CCDI’s assessment was “an indirect attack” on how the ministry had addressed the trade war and was “not necessarily a complaint about the loss of qualified people”.

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“If the party wants to encourage talented people to pursue careers in the civil service, they need to exercise more independence and let folks just do their jobs without the political monkey on their backs,” the adviser said.

In July, Beijing and Washington slapped 25 per cent tariffs on US$50 billion of products. The Office of the US Trade Representative is finalising a list to levy duties on an additional US$200 billion of Chinese products.

China has said it will consider tariffs on US$60 billion of American products, and US companies are concerned that Beijing could take other measures to hamper their operations in China.

This article Communist Party raises alarm over commerce ministry brain drain as China faces trade war first appeared on South China Morning Post

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