* Tipped to replace incumbent Xie Xuren
* Part of broad leadership reshuffle
* Has experience managing foreign reserves
* Lou was formerly a vice finance minister
(Adds analyst comment, background)
By Benjamin Kang Lim and Don Durfee
BEIJING, Jan 10 The head of China's $410
billion sovereign wealth fund is the front-runner to become the
country's next finance minister, two independent sources said, a
move in the country's broad leadership reshuffle that will
culminate in 2013.
Lou Jiwei, 61, currently chairman of China Investment Corp
(CIC), is tipped to replace Xie Xuren as finance minister, the
sources said. They requested anonymity to avoid political
"Lou will step down (as CIC chairman). He will go to the
Finance Ministry," one source with ties to China's top
leadership said. This was confirmed by a second source close to
The change would come as part of the Communist Party's
leadership transition, under which President Hu Jintao and
Premier Wen Jiabao will hand over power to a younger generation.
CIC declined to comment when reached by telephone, and the
ministry was not immediately available for comment.
In October, China appointed new bosses for its top banking,
securities and insurance regulators. [ID:nL4E7LT077]
If elevated, Lou will lead a Finance Ministry that has been
at the forefront of China's efforts to tackle 10.7 trillion yuan
($1.7 trillion) of debt that local governments piled up as a
result of China's stimulus programme during the global financial
The appointment of Lou as the next finance minister could
bolster Beijing's efforts to diversify its $3.2 trillion foreign
exchange reserves, said Li Jie, the director at the Reserves
Research Institute at the Central University of Finance and
Economics in Beijing.
"Lou's past years in CIC must tell him how difficult it is
to manage a stockpile of foreign exchange assets," said Li.
When Lou will become finance minister was unknown. But it
could be as early as October, when Xie reaches the mandatory
retirement age of 65 for cabinet ministers, or in March 2013
when the State Council, China's cabinet, undergoes a shake-up.
Historically, China's finance minister hasn't been the
top-ranked official in charge of finance -- that job is reserved
for the Politburo Standing Committee member in charge of
finance, currently Vice Premier Wang Qishan.
But the post is becoming more important as China confronts
challenges ranging from staggering local government debt levels
to pressure to cut taxes on businesses and individuals.
Last year, Lou wrote an article for the reform-minded
journal Comparative Studies, laying out his views of the
pressing financial and economic changes needed in China.
They included reform of personal income taxes, the fiscal
relationship between the central and local governments, and
capital account convertibility for the tightly controlled yuan
currency. (For FACTBOX [ID:nL3E8CA3O7])
CIC President Gao Xiqing, 58, a Duke University-trained
lawyer, is likely to succeed Lou as chairman, barring any
last-minute change, said a senior financial industry source who
also asked not to be identified.
Lou initially had been tipped to head a new
ministerial-level body that would manage the country's
state-owned banks and non-bank financial enterprises, including
brokerages, insurers, trust firms and funds.
Century Weekly, a magazine published by Caixin media, said
last December that the proposal to create a financial
State-owned Assets Supervision and Administration Commission, or
SASAC, had been shelved.
A computer programmer turned economist, Lou was a vice
finance minister before being promoted to manage the sovereign
He has not worked in the central bank but, according to
official biographies, the avid golfer has co-authored several
books and papers on economic reform with central bank governor
Born on Dec 24, 1950, Lou's schooling was cut short by the
1966-76 Cultural Revolution when he was a teenager. After five
years in the army, when he taught himself mathematics, he went
to work in 1973 as a computer programmer at a big Beijing
He won a place at the prestigious Tsinghua University, where
he majored in computing, and then took a master's degree in
economics from the Chinese Academy of Social Sciences, a top
(Additional reporting by Zhou Xin and Beijing newsroom; Editing
by Brian Rhoads and Neil Fullick)
Keywords: CHINA FINANCE/MINISTER
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