BEIJING (Reuters) - China is set to name Liu He, a Harvard-trained economist who advises President Xi Jinping, as a vice premier overseeing the economy and financial sector, five sources familiar with the development said.

Liu He, Member of a Political Bureau of CPC Central Committee, smiles during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 24, 2018. REUTERS/Denis Balibouse

Liu’s promotion would be part of a wider government reshuffle following the 19th Communist Party Congress in October last year, during which Xi laid out his vision for China’s long-term development, and elevated his key allies.

At the congress, 66-year old Liu - a trusted confidant of Xi and his top adviser on economic policies - was elected into the 25-member Politburo, the second-highest tier in Beijing’s political power structure after the seven-member Politburo Standing Committee.

Xi has vowed to fend off “major risks” in the world’s second-largest economy over the next three years as he seeks to cement the country’s position as a leading global power.

“He (Liu) is likely to take overall control of China’s economic policies and financial issues,” said a source, declining to be named due to the sensitivity of the matter.

Liu, who heads the General Office of the ruling Communist Party’s Central Leading Group for Financial and Economic Affairs, is likely to succeed Ma Kai, one of China’s four vice premiers, the sources said.

Ma has been in charge of macroeconomic policies and the financial sector. The 71-year-old Ma was left out of the Politburo in October, suggesting he is likely to step down soon.

Liu is also set to replace Ma as head of the cabinet-level Financial Stability and Development Committee (FSDC), three of the sources said.

The committee was set up in November to improve supervision coordination among regulators to fend off financial risks.

The State Council Information Office, the government’s public relations arm, did not immediately respond to a faxed request for comment.

WELL QUALIFIED

Sources said Liu is well qualified for the new job given his deep understanding of China’s economic issues, and his role in communications between China and U.S. leaders.

Liu, who gained a master’s degree in public administration at Harvard’s Kennedy School of Government in 1995, is widely seen masterminding Xi’s supply-side reform drive to cut excess factory capacity and upgrade the economy.

Liu, who speaks fluent English, won a top Chinese economics study award in 2015 for his research on the global financial crisis.

He was also widely seen by political analysts as being behind the voice of an unnamed “authoritative person” who wrote in the People’s Daily, the party’s mouthpiece, in May 2016 warning about risks from the country’s debt-driven growth model.

Liu, who is also vice minister of the cabinet’s National Development and Reform Commission (NDRC) - China’s top economic planner - has played a behind-the-scenes role in drafting economic policies and reform plans.

In a speech at the World Economic Forum in Davos on Wednesday, Liu said China will roll out fresh market-opening measures this year and added such measures will exceed outside expectations.

Liu, like Zhou Xiaochuan, China’s central bank head, stands out among Chinese bureaucrats because of his grey hair. Many top officials dye their hair jet-black.

Zhou, the longest-serving central bank chief since the establishment of the People’s Republic of China in 1949, is expected to retire soon. Zhou, who has been running the central bank since 2002, will turn 70 this year.

Liu has been closely following Xi on regional tours and meetings with foreign leaders. When then-U.S. National Security Adviser Tom Donilon visited Beijing in 2013, Xi introduced Liu as “very important to me”, according to the Wall Street Journal.

Liu and Xi have similar backgrounds - both their families were purged during the 1966-76 Cultural Revolution, and both their fathers were senior officials.

“Without the reflection on the catastrophe of the Cultural Revolution, it is impossible for China to have today’s economic growth,” Liu said in an article published in 2017.

A source with ties to the leadership said Xi and Liu knew each other during their teens, and have kept in touch over the years.

Liu got a master’s degree in industrial economy from Beijing’s Renmin University in 1986 and later joined the State Planning Commission - the predecessor of NDRC.