Hu Sacks 5 Ministers

August 30, 2007

BEIJING: China appointed a new finance minister on Thursday amid reports that the outgoing minister was involved in a sex scandal and ahead of a Communist Party congress that will renew President Hu Jintao’s mandate and set policy for the next five years.

The chief of secret police and other top officials were also replaced as part of a political house cleaning that marked a departure from previous practice, in which top government portfolios changed hands after the once-every-five-years party congress.

This year’s congress, to be held in October, will see Hu further put his stamp on the party’s lineup and national priorities.

Jin Renqing, the finance minister since 2003, was resigning “for personal reasons,” a Cabinet spokeswoman said without elaborating, fueling speculation that Jin had run afoul of the party leadership.

Rumors that Jin, 63, was being ousted as finance chief had circulated for days, raising concerns in global financial circles.

There was no immediate word on what factors had caused his resignation, but similar cases in the past have been attributed to marital infidelity, or health or family problems. Jin is still two years from the official retirement age for officials at the central government level.

Hong Kong’s South China Morning Post newspaper reported Wednesday that Jin was said to have a mistress who was also romantically linked to another official currently under investigation for corruption. That report, which cited unnamed sources, could not be confirmed.

Hong Kong’s Mingpao newspaper on Thursday quoted unidentified sources in Beijing as saying that Jin had introduced Chen Tonghai, the chairman of China Petroleum and Chemical Corp., or Sinopec, to a woman who became Chen’s mistress.

The same woman later became the mistress of Du Shicheng, a former deputy party secretary in the eastern province of Shandong who is under investigation for corruption, it said. It did not give the woman’s name and said it was unclear what Jin’s relationship with her was.

“It’s a little hard to know what really drove this (Jin’s resignation) but I’ve certainly heard rumors that a sex scandal was involved and this is something that has brought down others,” said Kenneth Lieberthal, a scholar of Chinese politics at the University of Michigan.

Legislative spokesman He Shaoren declined to say whether Jin’s resignation implied he had been involved in misconduct.

“We’ve already said that it was for personal reasons,” He told a news conference.

He said Jin was being replaced as finance minister by Xie Xuren, who runs the tax administration.

Jin’s successor is not expected to make any major changes. Such policy decisions are made behind closed doors by the Communist leadership.

“I don’t think it has any policy implications at all,” said Stephen Green, senior economist at Standard Chartered Bank in Shanghai.

“Fiscal policy is not in play at all,” Green said.

The Finance Ministry’s role within China’s planned economy is significantly weaker than that of its international counterparts but is growing more important as Beijing reforms the economy to make it more market-driven.

“This is not the equivalent of a change at the helm of the Japanese Finance Ministry or the U.S. Treasury,” Lieberthal said.

As finance minister, Jin modernized his ministry to keep pace with capitalist-style economic reforms as Beijing increasingly turned to revenues from private business to fund development.

Jin oversaw a highly publicized crackdown on tax evasion by the rich as part of efforts to ease public anger at the growing gap between rich and poor. A film star was arrested, and others targeted included entrepreneurs and professionals.

Jin’s time in office saw rapid economic growth along with concerns about overheating and inflation that the government says will likely exceed the official 3 percent target for the year.

Xu Yongyue, head of the State Security Ministry, China’s version of the former Soviet Union’s infamous KGB, would be replaced by his vice minister, Geng Huichang, legislative spokesman He said.

He called the new appointments “perfectly normal.”

“Different departments have certain requirements and you need to make new appointments from time to time,” He said.

The others replaced were the ministers in charge of supervision, personnel and a defense technology commission, He said.

Little public information was available about Geng, 55. A vice minister of state security since 1998, Geng has been involved in security preparations for the 2008 Beijing Summer Olympics, taking part in briefings from Greek police officials on how they handled security for the 2004 Athens Games.

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