The billionaire private-equity guru Stephen Schwarzman in a new book offered fresh details about his role as a key figure in US trade discussions with China, depicting himself as a central figure who often carried messages between President Donald Trump and China’s leadership.
“I try to be right in the middle of it,” the CEO of Blackstone told Business Insider in an interview earlier this month in advance of the release of his book “What It Takes.” He supports the US’s goal of having China change its practices, but he is doing what he can to keep the relationship on as good of terms as possible.
Schwarzman chronicles his dual relationship with the Chinese government and Trump, devoting more than two dozen pages to his activities in China. This included establishing in 2016 the Schwarzman Scholars initiative for Tsinghua University in Beijing, essentially a Rhodes Scholars program for China. Schwarzman began his relationship with the Chinese government in 2007, when it acquired through its sovereign wealth fund a $3 billion stake in Blackstone ahead of the firm’s initial public offering.
Trump’s trade war with China thrust Schwarzman into a role as the private sector’s point person for dialogue between countries. Schwarzman had known Trump for many years and formerly served as the head of his Strategic and Policy Forum. He’d also developed a personal relationship with Chinese President Xi Jinping and several of his deputies through Blackstone.
“I sort of view it as an accident that I know all these people,” Schwarzman told Business Insider. “I don’t know them because there’s a trade war. I know them because I’ve dealt with them all independently, in some cases for decades. And so when I see something that is going wrong … I like to get involved and try to fix things to the extent that I can.”
In his book, Schwarzman traces his involvement in the trade talks back to January 2017, when he met with Xi at Davos, the widely attended a business conference held by the World Economic Forum.
At a lunch in Davos attended by nearly three dozen people, Xi asked Schwarzman to talk about Trump and his views on China. Schwarzman, in turn, told him about the state of the American economy and how many working-class Americans were dislocated by globalization.
A Federal Reserve study had shown that nearly half the US was living paycheck to paycheck, and Schwarzman expected criticism of China’s trade position — where US exports to China were charged three times as much in tariffs and taxes as Chinese imports to the US — would only escalate.
Xi told Schwarzman that if that were the case, he would be prepared to do “a major economic reset with the United States” and asked Schwarzman to pass along the word to Trump.
From there, Schwarzman called Trump and briefed him on the conversation. Trump asked him to invite Xi to Mar-a-Lago in Palm Beach, Florida. Jared Kushner and China’s ambassador to Washington, Cui Tiankai, set up a meeting in April, which opened “a period of intense dialogue” between the two countries, Schwarzman wrote.
By Schwarzman’s account, he made eight trips to China in 2018 alone on behalf of the US administration.
He tried to assure China’s most senior officials that the president was not looking for a trade war, he wrote. Rather than constrain the country’s growth, the US wanted what Schwarzman characterized as an “update” to reflect a fair-trade agreement, given China’s growth.
The tariff arrangements with China were drafted decades ago, when the US was the clear global economic superpower. But now that China had grown into the second-largest economy, and the largest by population, the rules needed to be rewritten, Schwarzman told us.
“It’s important that China recognizes that,” Schwarzman said. “The West wants them to change. The developed world wants them to change.”
Schwarzman stressed that his interests lie with the US but added that he was trusted by the Chinese “because I understand how they think.”
“You never make a deal by not understanding how the other side thinks,” he said. “If you don’t, you can’t convince them to do something that you think is in their interest.”
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