China names economic officials amid slowdown, Trump threats

BEIJING — China's government has named a trade specialist as its new commerce minister and appointed a new head of its top economic planning body as part of a Cabinet reshuffle that comes amid a slowing economy and the threat of increased trade friction with President Donald Trump's administration.

Top trade representative Zhong Shan will become minister of commerce, while He Lifeng will take over the powerful National Development and Reform Commission, the official Xinhua News Agency reported Friday. The appointments are expected to be ratified next month during the national legislature's annual two-week session.

The two new appointees — both of whom have worked in the past with President Xi Jinping — will step into crucial roles guiding the world's second-largest economy at a time of serious challenges. The ruling Communist Party is grappling with an economic growth rate that fell last year to 6.7 percent, its weakest pace since 1990, while exports shrank by 7.7 percent.

Trump, meanwhile, has promised to take a tougher line toward Beijing on trade, raising fears of a slump in commerce between the two key trading partners.

Chinese policymakers are entering an "uneasy" moment and are seeking to expand trade agreements with countries other than the United States, said Louis Kuijs, head of Asia economics at Oxford Economics and a former China specialist at the World Bank.

"China is quite vulnerable vis-a-vis U.S. measures and they realize they may face attacks out of D.C. that they have to prepare themselves for," Kuijs said.

Trump continued his feisty rhetoric on Thursday, calling Beijing the "grand champions" of currency manipulation for allegedly seeking an unfair export advantage by keeping the yuan undervalued. That drew a rebuttal from Chinese foreign ministry spokesman Geng Shuang.

"China has no intention to gain trade advantages by devaluing its currency on a competitive basis," Geng said. "We hope that relevant parties can view the (Chinese currency) exchange rate issue in an objective light and do more that contributes to mutual trust and cooperation."

Despite his tough talk, Trump made no indication that he would make good on his campaign promise to formally declare China a currency manipulator. China in recent months has been spending heavily from its stock pile of foreign currency to shore up the yuan's value amid slowing growth.

Trump's gospel of economic nationalism has also raised concerns in China, particularly his threat to slap tariffs as high as 45 percent on Chinese imports that would likely spark a trade war if carried out.

China's annual legislative session opens March 5 with a focus on keeping the economy moving ahead and creating jobs for laid off workers and recent graduates. It will be followed in the autumn by the Communist Party congress, an event held once every five years at which top party leaders will be named. Xi is expected to stay on for at least one more five-year term as party boss and president.

The lead-up to the congress typically sees reshuffles within the government as internal party factions jockey for influence. While Xi has worked to consolidate his authority within the party by appointing a raft of loyalists, he has also taken to the world stage to declare himself a steadfast champion of globalization.

The appointment of Zhong, a trade specialist who used to work in a trading company himself, reflects Beijing's emphasis on maintaining its competitive position in trade, said Hu Xingdou, a political science professor at Beijing Institute of Technology.

"Appointing him as minister indicates that China will soon engage in more bilateral and multilateral negotiations," Hu said. "China intends to push forward trade globalization and freedom and is determined to be the leader in this respect."

The reshuffle, Hu added, was seen as a chance to put new officials in charge who could push through needed reforms. Leaders in Beijing have talked up moving the economy away from debt-fueled building to a model based on middle class consumption.

And yet, in the selection of He as top economic planner, some political observers saw a throwback to a retrograde model of wasteful spending and runaway borrowing that many policymakers in the party blame for dragging down China's economy.

As the No. 2 party official, He oversaw a building spree in the coastal city of Tianjin that was envisioned to be a new financial hub to rival Manhattan but now sits unoccupied, said Victor Shih, a political scientist at the University of California, San Diego.

"He Lifeng presided over the largest ghost city in China and built even more empty office towers in it," Shih said. "His reform credentials are questionable to say the least."

Other new appointments in Friday's reshuffle included Zhang Jun, a high-level official in the Communist Party's anti-corruption agency, as justice minister. The party also announced that Shandong Province Governor Guo Shuqing had resigned from his position amid widespread speculation that he would take up a crucial post overseeing China's banking system.