Negotiating with China – some practical considerations

In this analytical piece on "Negotiating with China" Charles Parton offers practical advice for Westerners based on his own experience of diplomatic encounters with Chinese counterparts. It is the result of a workshop held at MERICS in Spring 2023. Another piece resulting from the conference by Vijay Gokhale can be found here. 

Western negotiators usually expect to solve a problem through give and take, while their Chinese counterparts approach negotiations as a battle to be won. This more confrontational attitude may be  due to cultural differences, but it is also a conscious and contrived device aimed at controlling the atmosphere and putting foreign negotiators on the back foot. It is important to be aware of this, but not to be surprised or alarmed.

Chinese negotiators work from a brief, decided and handed down from a high level. Ground-level officials may know the subject better, but their input is minimal. They have very little, if any, leeway to take initiative. If this directive blocks progress, they must seek a revised brief or authorization from higher levels to proceed.

First moves and “principles”

Often Chinese counterparts will make certain demands or announce a set of “principles” in advance. Indeed, they may refuse to enter into detailed discussions until these are accepted. The aim is to set the agenda on their own terms, to circumscribe negotiations before they begin. These principles are often represented as unshakeable. Sometimes they are, but often they may serve as a concession to be made later in exchange for a real concession from the other side. It is important to scrutinize such “principles” carefully, push back, and possibly refuse to come to the table until they are redefined, so that they cannot limit outcomes before negotiations have even started.

When at home, Chinese negotiators usually ask the foreign party to speak first and reveal its hand. Never start with an honest statement of your position: the Chinese will assume it is not. Whatever you advance, they will criticize and reject it as “unacceptable.” At best, any credit is bestowed grudgingly. Because the Chinese often dissemble about their own position and build in valueless concessions, foreigners must do the same. It is wise to adopt an artificially negative attitude to some element of Chinese requirements, especially one that is of little value to you. You can then use it as a concession.

Because the Chinese officials’ brief has been set at a high level, it may be unrealistic and contain few detailed ideas of what can be implemented in practice. The Chinese may rely on the other side to make suggestions. Great care must be taken not to make concessions too early.

The middle game

Chinese negotiators are often reluctant to make concessions or to reveal their hand. Talks may fall into a period of doldrums because the Chinese do not want their superiors to accuse them of giving way too early. They will use a number of techniques to undermine the opposition:

• Exaggerate their own magnanimity
• Become abusive and accuse them of not showing respect
• Hint at, but not make, concessions
• Apply time pressure
• Use leaks and publicity to intimidate (the Chinese press are at their beck and call)
• Question the foreigners' good faith (especially if there are leaks on the other side)
• Unabashedly ignore logic, relevant facts or what the other side is saying
• Reiterate bad arguments
• Use intermediaries to communicate (to explain constraints or explore concessions)

Negotiators must not take such ploys personally or retaliate. Attacking Chinese sincerity risks them losing face and responding emotionally. It is better to make them uncomfortable, for example by suggesting that they are not serious or by implying (never saying) their behavior is inappropriate.

Making progress – concessions

At some point, all negotiations involve concessions – on both sides. The Chinese will pocket them and give little in return. Do not expect your Chinese counterparts to describe these as concessions or to give ground. They will describe them as a “return to reason” not deserving of a reciprocal move.

In addition, be sure you can take concessions off the table if the Chinese do not also give ground. It is better to hint at concessions, preferably in informal conversations (e.g., over dinner or in breaks). During negotiations of the Sino-British Joint Liaison Group in anticipation of the 1997 Hong Kong handover, the British usually made progress when delegation heads met for a chat outside the formal setting. Negotiators made clear to the Chinese that they would only advance ideas at the negotiating table if the Chinese spelled out their reaction informally in advance. Also, if the Chinese side reneged on these informal arrangements, the British would pull their offer.

During these negotiations, trusted intermediaries helped resolve serious sticking points by exploring ideas with leaders in Beijing that would not be tabled formally unless progress was promised. Such intermediaries were not given access to British positions, and there were also many who offered their services but could not be trusted. The use of intermediaries may not work for business negotiations.

The end game

This can come quickly – either under time pressure or once the Chinese feel they fully know the foreigners' position. Then they may abandon their “unshakable principles” without blushing.

Time pressures need careful management. The Chinese can be very patient (they have no electoral cycle or press to assuage) and winning through a war of attrition – even with some costs – may be more important. But time can also be used against them, for example, if a Chinese leader is about to visit the foreigners’ country and negotiations must be successfully concluded beforehand.

Almost invariably at the 11th hour and 59th minute, the Chinese will introduce an unacceptable demand.  This is a try-on (this tactic was used during negotiations for the EU-China Comprehensive Agreement on Investment (CAI). At the last moment, China inserted a demand that the agreement would not apply to countries that excluded Huawei from its 5G). Tired, hungry, and thinking of the home journey, foreigners may be tempted to give ground. Don’t.

It's not over when it’s over

Anyone who has dealt with the Chinese Communist Party knows that negotiation only truly begins after everyone has signed on the dotted line. Almost invariably the CCP seeks to reinterpret the negotiation after the agreement is inked. Prepare for this psychologically and in substance.

And finally…

It is vital to maintain security when negotiating inside China. The contents of unattended briefcases and computers will be copied; conversations in break-out rooms will be monitored. No one should go to China with their usual electronic media. Always take a “burner” phone and computer with minimal information, unconnected to systems back home.

And an obvious point: before you start, be clear on your goals and where you can and cannot compromise. Every negotiator should arrive with clear instructions from back home on when to walk away without a conclusion. Preparing for failure is as important as for success.

A longer version of this paper can be read on the website of the Council on Geostrategy.