China replaces finance minister after reports of sex scandal

BEIJING -- China replaced its finance minister Thursday amid reports he was involved in a sex scandal and also named a new chief of secret police. The reshuffle appeared aimed at putting President Hu Jintao's allies in key positions before a Communist Party meeting that will set policies for the next five years.

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

Rumors that the 63-year-old Jin was on his way out as finance chief had circulated for days, raising concerns in global financial circles.

There was no official explanation for why he resigned. But similar cases in the past have been attributed to marital infidelity or health or family problems. Jin is two years short of the official retirement age; he was transferred to the post of deputy director of a think tank, the Development Research Center of the State Council.

"It's a little hard to know what really drove this, 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.

The South China Morning Post, citing unidentified sources, reported Wednesday that Jin was said to have a mistress who also had been romantically linked to another official now under investigation for corruption.

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

The paper did not name the woman and said her relationship to Jin was unclear. The reports could not immediately be confirmed.

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 described the replacements of four other officials as routine.

The changes were part of a political house-cleaning that marked a departure from previous practice where top government portfolios changed hands after party congresses held once in every five years.

This year's congress in October will see Hu put his stamp more firmly on the party's lineup and national priorities. The reshuffle appeared to be an attempt to make the promotion of Hu's allies during the congress less jarring.

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 Party 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."

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

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

As China's top tax collector, Jin modernized his agency to keep pace with capitalist-style economic reform 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.

His tenure 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.

In other top-level changes, Geng Huichang, a vice minister for state security, would succeed his boss Xu Yongyue as head of the State Security Ministry, China's version of the former Soviet Union's infamous KGB.

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.

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