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China replaces finance minister amid debt, stimulus efforts

This file photo taken on Oct. 7, 2016, shows China's Finance Minister Lou Jiwei speaking during a G20 press conference in Washington, D.C. On Nov. 7, China replaced Lou, state media reported.

ZACH GIBSON/AFP/Getty Images

China's government replaced its finance minister Monday with a veteran of its tax bureau, prompting expectations communist leaders plan changes in the tax system.

A government announcement that Lou Jiwei, one of China's most prominent figures in global finance, will step down gave no reason, but Lou is 65, an age at which Cabinet ministers traditionally retire. He will be succeeded by one of his deputies, Xiao Jie.

The choice of Xiao, who headed China's tax bureau in 2007-2013, prompted speculation the leadership is preparing to roll out tax changes, possibly including China's first nationwide property tax.

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The ruling party has been gradually expanding its narrow tax base, which relies on corporate income tax and sales taxes on real estate. That has forced local governments to rely on land sales for revenue, encouraging urban sprawl.

Xiao earlier oversaw two trials of property taxes in Shanghai and the western city of Chongqing.

China's government has indicated a property tax will be implemented starting in 2018, according to Brian Jackson of IHS Markit.

Xiao's background suggests his ministry will "leverage his experience in formulating and implementing new tax policies that will help put China on a more sustainable fiscal revenue path," Jackson said in a report.

Lou became the finance minister in 2013 after serving as chairman of China's sovereign wealth fund, the China Investment Corp.

Xiao is lower-profile but has been a member of the ruling party's Central Committee since 2007, while Lou became a full member in 2012.

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