A political ally of former Chinese President Jiang Zemin has been named Shanghai's top official, in a sign of the retired leader's lingering influence. The appointment of Xi Jinping as Shanghai Communist Party secretary, announced by the official Xinhua news agency, is good news for the financial hub as Xi is considered a reformer and pro-business.
But it is also a sign of Jiang's unfading political clout. "Xi Jinping is close to Jiang Zemin and the Shanghai Gang," a source with ties to the leadership said. An ally of current President Hu Jintao, Guo Jinlong, is expected to become Shanghai's mayor, another source with knowledge of the planned appointment said.
The appointments are part of a reshuffle of provincial leaders ahead of the 17th Party Congress in the autumn. The two would replace Han Zheng, the city's mayor who has also been Shanghai's acting party secretary since September when Chen Liangyu was implicated in a social security fund scandal and sacked as the city's party boss, said the sources, who requested anonymity.
One source with ties to the leadership said Xi, 53, currently party boss of the booming coastal province of Zhejiang and a rising star, was likely to take Chen's seat in the party's decision-making Politburo at the Congress.
Xi is a son of former vice premier and parliament vice-chairman Xi Zhongxun, making him a "princeling" - among the sons and daughters of China's incumbent, retired or late leaders. Xi is also regarded as a friend by US Treasury Secretary Henry Paulson, who met him in Hangzhou in September. Shanghai boasts the world's busiest port, the country's main banking centre and China's largest unofficial municipal population of 18 million.
Chen's downfall had fuelled fears the city might no longer take the lead as China pushes economic reforms and develops huge infrastructure projects. "This is going to be positive for the development of Shanghai as a future international financial centre," Xu Yinhui, asset manager at Guotai Junan Securities, one of China's largest securities companies, said of Xi's appointment.
Shanghai's spectacular economic success in the 1990s and through the early part of this decade, symbolised by its futuristic skyscrapers, was partly based on politics. Jiang was previously a party boss of Shanghai, and when he was promoted to national party chief in 1989 he took many Shanghai officials to Beijing with him. But the influence of Jiang has been fading since President Hu Jintao became national party boss in 2002.
Hong Kong's South China Morning Post broke news of Xi's appointment and said it was a signal that the central government would soon wrap up its anti-graft investigation in Shanghai. The scandal has implicated more than a dozen senior city officials and businessmen. Chen was the most senior Communist Party official to be sacked since 1995.
The reshuffle is expected to fuel speculation that more leadership changes are pending in several other key provinces and municipalities, including Beijing, Guangdong and Jiangsu, the newspaper said.