China Economic Post To Be Filled by Ally Of Zhao Ziyang

IN a new sign of the power struggle in China's leadership, hard-line Premier Li Peng has been replaced in a key ministerial post by a man who Chinese sources say has links to Zhao Ziyang, the ousted moderate Communist Party leader. Mr. Li's withdrawal from the Cabinet post follows months of speculation by Chinese and foreign observers that the Soviet-trained technocrat is slotted for replacement as premier, possibly within a year.

A staunch conservative, Li is highly unpopular for his role in supporting the June 4, 1989, massacre of pro-democracy protesters in Beijing. Nevertheless, he retains considerable power as the prot'eg'e of veteran party conservatives like Marxist economist Chen Yun, say Western diplomats and Chinese sources.

Li was ``relieved from his duties'' as concurrent minister of the influential State Economic Restructuring Commission Friday by the executive body of China's parliament, the official People's Daily reported.

The commission formulated many of China's critical market-oriented economic reforms under Mr. Zhao's guidance in the 1980s, and remains active in drafting new reforms.

The parliament appointed Chen Jinhua, president of the China National Petrochemical Corporation (CNPC), to head the commission, upon Li's nomination. The Constitution stipulates that the premier nominate ministers of the State Council, China's Cabinet.

Little detail is known about the political affiliations of Mr. Chen. But Chinese sources within the CNPC say Chen enjoyed close ties to Zhao, the moderate party leader ousted in June 1989 for allegedly supporting the democracy movement.

When the CNPC was established upon Zhao's request in 1983, Chen was named as its head, the sources say. Zhao, then premier, later defended the corporation against attacks by provincial leaders angered by CNPC's monopoly over China's petrochemical industry revenues.

In 1988, after Zhao became party general secretary, Chen was considered as a candidate for the powerful post of party chief of Shanghai, the sources say.

If reports of Chen's link to Zhao are accurate, it signals that moderate party forces are regaining control of the economic commission. Zhao himself had established a strong power base in the commission, which he headed while premier from 1982 until 1987. In 1988, Li took over the premiership and the economic commission, which remained dominated by Zhao supporters.

In the wake of the Tiananmen Square crackdown, Li and other hard-liners purged moderates from within the commission and criticized Zhao followers there for conspiring to back protesting workers and students. One of those attacked was Chen Yizi, a Zhao adviser and head of the commissions' research institute, who took refuge abroad last year.

Chen Jinhua's appointment coincides with recent signals that Zhao's political career may not be over yet. The party is expected to announce the results of a 14-month ``investigation'' of Zhao at a key plenum this fall. Chinese sources say Zhao will retain his party membership and will not face criminal charges.

In a related development, Shanghai Mayor Zhu Rongji, the man most frequently mentioned as a replacement for Premier Li appeared unexpectedly to attend a meeting yesterday between Communist Party chief Jiang Zemin and former United States Secretary of State Henry Kissinger in Beijing.

Mr. Zhu's presence as the only other top Chinese leader at the meeting signals his rising political prominence. In July, Zhu, a strong advocate of reform, led the highest-ranking Chinese delegation to visit the US since the June 1989 crackdown.

Meanwhile, Li has remained active diplomatically, meeting on Friday with Iraqi First Deputy Prime Minister Taha Yassin Ramadan to urge Baghdad to withdraw its force from Kuwait. A day earlier, however, Beijing indicated that it may send ``humanitarian'' shipments of food and other supplies to Iraq, saying doing so would not violate United Nations sanctions.