| BEIJING, March 7
BEIJING, March 7 China will likely appoint savvy
international dealmakers to run its giant sovereign wealth fund
and Commerce Ministry in a soft power push to soothe fears over
a planned spending spree to boost Beijing's ownership of
strategic global assets.
Securities regulator Guo Shuqing is tipped to take the helm
at the $482 billion state investment vehicle, China Investment
Corp (CIC), and China's chief trade representative, Gao
Hucheng, is seen running the Commerce Ministry, two sources with
leadership ties told Reuters.
The appointment of seasoned, English-speaking financial
negotiators to run the two agencies is a sign that China's new
leaders would make commercial logic a major thrust of the push
for market access Beijing needs for planned acquisitions of $560
billion of overseas assets in the five years to end-2015.
"The next government will pay more attention to trade policy
and investment policy and the direction will be more open," said
Tu Xinquan, associate director at the China Institute of WTO
Studies at the University of International Business and
Economics in Beijing.
Sources with ties to the leadership and officials at China's
top ministerial think-tanks say the change of personnel reflects
the focus President-in-waiting Xi Jinping and Premier-designate
Li Keqiang have on furthering China's ambitions in the global
economy. Academics said such appointments fit with the overall
external thrust of China's new leadership.
"Here you have people who know the global system, and this
is about China becoming much more active in it," said Scott
Kennedy, director of the Research Center for Chinese Politics &
Business at Indiana University.
Guo has climbed to the top of China's financial ranks by
sticking to a formula combining a balanced approach to risk with
gradual reform. His favourite proverb - "Listen to both extremes
and take the middle course" - speaks volumes about the approach
the former chairman of China Construction Bank (CCB)
took to managing the world's second-most valuable
"Don't take too much risk. But not too little either. If you
don't take any risk how can you make any money," the 56-year old
quipped in an interview with Reuters in 2010.
The philosophy major and Oxford-educated scholar, who speaks
English fluently, has moved easily between academia, government
and a rapidly growing commercial sector that has helped China
become the world's second-biggest economy.
He joined CCB as chairman in 2005 after a $22.5 billion
bailout left the State Administration of Foreign Exchange, which
Guo headed, as the bank's largest shareholder. Seven months
after Guo took over, CCB sold shares publicly for the first time
in Hong Kong and two years later in Shanghai - China's first
state-owned lender to float shares in both bourses.
"The financial markets are generally quite positive on Guo,
because he's got a track record of delivering on his promises,"
said Stanley Li, an analyst at Mirae Asset Securities in Hong
Kong who has met Guo a number of times. "A reformer who is able
to deliver is actually rare in China, as you tend to get people
who talk a lot but can't deliver, or you get those who just
don't want to rock the boat."
Gao has been in charge of China's global trade negotiations
since 2010, and his years of experience as a trade negotiator
could elevate the Commerce Ministry's role in policy battles,
The 61-year old, who didn't join the Communist Party until
his late 30s, worked at the ministry's predecessor - the
Ministry of Foreign Trade and Economic Cooperation - beginning
in the early 1990s. Currently the longest serving of the
Commerce Ministry's vice ministers, Gao studied abroad, worked
in Africa, and earned his doctorate in sociology in Paris,
according to his official biography.
The likely appointments are part of a sweeping
redistribution of top financial posts that will take place
during the annual 2-week full session of parliament that began
If Guo takes the CIC job, he would replace Lou Jiwei, 62,
who is tipped to become finance minister, the sources said,
adding that insurance regulator Xiang Junbo, 56, is the
front-runner to succeed Guo as securities regulator.
Lou will succeed Xie Xuren, who is the front-runner to
become chairman of the National Social Security Fund, which
manages the national pension fund that stood at 18.3 trillion
yuan ($2.94 trillion) as of mid-June 2012. Xie is tipped to
replace Dai Xianglong, 68, who will retire.
Xie has reached the compulsory retirement age of 65 for
cabinet ministers and was left out of the Communist Party's
elite 205-member Central Committee during a once-in-a-decade
handover of party power last November because he offended many
powerful interest groups.
"Xie Xuren (as finance minister) rarely dined out. And when
he did, he would pay his own way, embarrassing his host and
fellow guests," said one financial industry source with direct
knowledge of Xie's style.
The securities regulatory body, the sovereign wealth fund,
the Finance Ministry and the social security fund declined
immediate comment on the planned personnel changes. Guo, Lou and
Xie could not be reached.
Reuters reported last week that central bank governor Zhou
Xiaochuan is set to keep his job for an unspecified period,
despite being aged 65, as the country's leaders seek to maintain
the momentum of financial reform. He would be
made a vice chairman of parliament's advisory body, giving him
"national-level leader" rank that would exempt him from
compulsory retirement, sources have said.
Like Zhou, Chen Yuan, 68, is likely to be appointed a vice
chairman of the advisory body, the sources said, adding that
Chen would stay on as chairman of China Development Bank
, the sources said. In its role as a policy bank,
state-owned CDB lends to China's largest infrastructure projects
and offers financial aid for the country's industrial giants to
The Commerce Ministry is seen as one of the Chinese agencies
most amenable to broader reforms, which could give Gao's
appointment broader implications, said Tu, the professor.
That is significant given Beijing's growing interest in
owning physical assets in the economies where China has a steady
income from trade which could be used to fund purchases. That
approach achieves twin goals of balancing capital flows and
reducing exposure to paper assets from the United States and
Europe, which analysts say China's top policymakers have tired
Beijing has watched for three years as Europe's crisis has
choked growth and demand in China's biggest export market and
stoked default risks on the near $800 billion of euro zone
government bonds China is estimated to own as part of its $3.3
trillion of foreign exchange reserves.
Meanwhile, record low yields on U.S. Treasuries and a
depreciating dollar have seen the value of China's dollar
holdings fall by a third in the last 10 years, adding weight to
Beijing's view that the time is ripe to change investment tack.
If China can engineer a rise in cross-border corporate
merger and acquisition activity, it could take some of the
political sting out of the rebalancing flows. But the reluctance
of foreign governments to accept the acquisition of stakes in
strategic assets by entities ultimately controlled by China's
Communist Party, and a patchy track record in dealmaking, have
led to frustrations.
The long delays to approving the record $15.1 billion
takeover of Canadian oil and gas company Nexen by Chinese
state-owned oil major CNOOC Ltd - the deal finally
closed in February after seven months - offer a typical example.
Outbound China deals ran into trouble everywhere from
Iceland to Myanmar in 2011, including a $5.4 billion PetroChina
deal in Canada, a $7 billion CNOOC
transaction in Argentina and Bright Food Group's
$2.5 billion bid to buy French yoghurt maker Yoplait. The United
States regularly objects to Chinese takeovers on the grounds of
($1 = 6.2181 Chinese yuan)
(Additional reporting by Victoria Bi, Lucy Hornby, Huang Yan
and Aileen Wang; Writing by Nick Edwards; Editing by Ian