China to retire powerful VP, usher in new generation

BEIJING, Oct 13 (Reuters) The man waiting in the wings to take over should Chinese President Hu Jintao falter is set to retire at a Communist Party meeting next week, while two younger regional leaders will rise as potential next-generation leaders.

The imminent retirement of Vice President Zeng Qinghong presents a boon to Hu, who is seeking to consolidate his power at the five-yearly Congress, the Party's 17th since its founding in 1921 and the most important political event in China this year.

Zeng is expected to give up his seat in the top echelon of power, the Party's Politburo Standing Committee, at the week-long Congress opening on Monday, three independent sources with ties to the leadership said, requesting anonymity.

A stronger grip on power could allow Hu to speed up his drive to balance breakneck but uneven economic growth, improve the lives of poor farmers, build a social safety net, halt rampant environmental degradation and promote ''fair and just'' policies.

Hu has trumpeted his policy of ''scientific development'' to try to correct China's path from that set by the previous administration of Jiang Zemin, which featured rapid growth at the expense of the environment.

The sources also said that two provincial leaders in their early 50s -- Xi Jinping and Li Keqiang -- are near certain to emerge as successors-in-waiting to Hu and Premier Wen Jiabao.

The final line-up will be made public at a one-day post-Congress meeting of the new elite Central Committee.

Zeng, who is ranked fifth in the Party hierarchy but punches above his political weight, had offered to step down because of age limits, the sources said. He is 68.

He would also step down as president of the Central Party School, which trains up-and-coming cadres, and from the Secretariat, which handles day-to-day Party affairs, the sources said. He would relinquish the state vice presidency at the annual session of parliament next March.

But Zeng, a top ally of Hu's immediate predecessor Jiang, would continue to wield some influence through two of his men who are tipped to join the Standing Committee, they said.

The two are the country's top cop, Zhou Yongkang, and He Guoqiang, head of the Party's organisation department which is in charge of personnel changes, according to a new leadership line-up approved by the Party at a pre-Congress meeting.

RIVALRY EXAGGERATED ''Speculation by the outside world about the rivalry between Hu and the 'Shanghai Gang' is exaggerated,'' one source told Reuters, referring to Jiang's faction, of which Zeng is standard-bearer.

At a recent meeting with a source who spoke to Reuters, Zeng was quoted as saying the party had ''treated me well''.

Xi, 54, will soon step down as Party boss of Shanghai after just six months in the job and take over Zeng's portfolio overseeing Party affairs, said the sources, who were briefed about the new line-up.

But Xi is not necessarily Hu's heir.

Li, 52, who will soon resign as Party boss of the northeastern province of Liaoning, is still Hu's preferred candidate, the sources said.

Both Xi and Li would be promoted to the nine-seat Standing Committee during the Congress, giving them ''an opportunity to compete fairly'', a second source said.

Hu is the first among equals in the Standing Committee, but does not have the revolutionary credentials of Mao Zedong and Deng Xiaoping and cannot unilaterally decide his successor.

Hu needs to accommodate the Jiang camp and other interest groups in the Party, including the military, elders and ''princelings'' -- the children of the country's political elite.

Xi is a princeling who is acceptable to both Hu and Jiang.

During the Congress, Hu will be given a second five-year mandate as general secretary of the Party and chairman of the Central Military Commission.

Hu and Premier Wen will retain their Standing Committee seats, according to the line-up.

Barring last-minute changes, Jiang allies in the Standing Committee -- parliament head Wu Bangguo, Jia Qinglin, head of an advisory body to parliament, and ideology tsar Li Changchun -- will also hold on to their Standing Committee seats.

REUTERS SKB AS1351