China installs Cabinet of party vets, technocrats

[March 16, 2013]  BEIJING (AP) -- China's new leaders turned Saturday to veteran technocrats, many with strong international experience, to staff a Cabinet charged with overhauling a slowing economy and pursuing a higher global profile for the country without triggering opposition.

The ceremonial legislature approved nearly three dozen trusted politicians, experienced officials and career diplomats who make up the State Council under Premier Li Keqiang, who was named Friday. Their appointment largely completes a once-a-decade transfer of power to a new generation of communist leaders.

The new team takes charge at a time of difficult transitions. With the economic model that brought decades of high growth sputtering, the government is looking to transform the world's second-largest economy by nurturing self-sustaining growth based on domestic consumption and technology industries instead of labor-intensive exports and investment.

A more assertive foreign policy, cyber-hacking and years of scouring the world for resources have touched off nervousness among China's neighbors and the U.S. and set off a small but potentially threatening backlash against Chinese investment in Africa and Latin America.

The officials installed Saturday embarked on their careers as China was re-entering world trade and politics after decades of isolation. They are representative of how far China's reach extends, having more international exposure than their predecessors.

"They will have a more rational and objective view of China and the relationship between China and the rest of the world," said Zhu Feng, a professor of international relations at Peking University. "It means they are more cognizant of how the world reacts to China and that they will be more active in seeking changes. That's a good thing."

Trade envoy Gao Hucheng, who has a Ph.D. in sociology from the University of Paris and has worked in Europe and Africa, was named commerce minister. Appointed finance minister was Lou Jiwei, chairman of China's multibillion-dollar sovereign wealth fund and a fixture in international financial circles. Their appointment is likely to reassure trading partners and financial markets about policy continuity.

Central bank governor Zhou Xiaochuan, another prominent figure, was also kept on.

Similarly, Wang Yi, a career diplomat with experience working on some of China's knottiest diplomatic issues, was named foreign minister. A former ambassador to Japan, Wang worked with the United States in nuclear disarmament talks with North Korea and has charted Beijing's successful outreach to Taiwan, healing an estrangement from their separation in the Chinese civil war.

For defense minister, leaders chose Gen. Chang Wanquan, a soldier from a poor farming family who has commanded the manned space program.

At home, the new leaders are expected to emphasize social spending and other measures to spread prosperity more evenly and narrow a politically volatile gap between China's wealthy elite and poor majority.

The economy is limping out of its deepest slump since the 2008 global crisis, but a dip in February consumer sales and factory output has spurred fears that the rebound might be faltering. Economic growth fell to 7.8 percent last year, China's weakest performance since the 1990s.

Weaker consumer spending has set back rebalancing plans by forcing the government to support the recovery with spending on building subways and other public works.

"We think China made some progress on rebalancing in 2012; the real work will fall to new Premier Li," Standard Chartered economist Stephen Green said in a report.

A test for the new government will be if, as reformers advocate, it curbs the dominance of state industry and encourages private companies that generate the new jobs and wealth needed to keep incomes rising.

That is likely to provoke resistance from politically powerful companies, some of which in energy, telecommunications and other industries are so large that their bosses rank higher in the government hierarchy than the regulators who oversee them.

The transfer of power to new leaders has been in the works for years and saw divisive bargaining among party power brokers and their factions. The sudden cashiering of a powerful and popular politician, Bo Xilai, over a seamy scandal of corruption and murder last year exposed fault lines that the party leadership prefers to keep hidden behind a mask of unity.

President Xi Jinping and the other party leaders installed in November must heal the rifts if they are to govern. The composition of the Cabinet is more inclusive, reaching beyond the party's inner circle, which is dominated by officials and politicians with ties to Xi and one of his political mentors.

Named vice premier in charge of economic affairs was Wang Yang, an ally of now-retired President Hu Jintao. Wang earned a reputation as a liberal reformer by encouraging compromises over workers' strikes and a revolt by a fishing village when he ran the wealthy coastal province of Guangdong.

China has relied on technocratic managers also steeped in Communist Party politics to steer the country in recent decades, and many in the new Cabinet were in line for promotions and had strong political backing.

Some are associated with support for state industry and extensive government involvement in the economy -- elements that might complicate possible reforms. Miao Wei was reappointed to head the Ministry of Industry and Information Technology, which plays a key role in industrial planning that has frustrated foreign and private sector companies.

Also Saturday, in a sign of displeasure with severe pollution, the normally compliant National People's Congress deputies cast an unusually high number of "no" votes for members of its environmental protection committee: 1,969 in favor to 850 opposed, with another 140 who either abstained or did not vote.

[Associated Press; By JOE McDONALD]

Associated Press writer Didi Tang contributed to this report.

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