Trump picks Iowa Governor Branstad as US ambassador to China: transition official

President-elect Donald Trump will nominate Iowa Governor Terry Branstad as the next U.S. ambassador to China, the world's second-largest economy, a transition official said on Wednesday.

The transition official confirmed the choice, first reported by Bloomberg, which said Branstad has accepted the job.

His appointment may help to ease trade tensions between the two countries, the world's two biggest agricultural producers, diplomats and trade experts said.

In China, Foreign Ministry spokesman Lu Kang called Branstad an "old friend" of China when asked about the Bloomberg report but said Beijing would work with any U.S. ambassador.

"We welcome him to play a greater role in advancing the development of China-U.S. relations," he told a daily news briefing.

Earlier, in the Iowa capital of Des Moines, a Branstad spokesman, Ben Hammes, said the reports of his nomination were "premature and not accurate."

His nomination suggests that Trump may be ready to take a less combative stance towards China than many expected, trade experts and diplomats said.

Branstad called Chinese President Xi Jinping a "long-time friend" when Xi visited Iowa in February 2012, only nine months before he became the Chinese leader.

Tensions between the countries have been worsening since Trump defeated Hillary Clinton in last month's U.S. election. The New York real estate developer has said he intends to declare China a currency manipulator when he takes office on Jan. 20 and has threatened to impose punitive tariffs on Chinese goods coming into the United States.

DUMPING ALLEGATIONS

Specific U.S. trade concerns include allegations that China is dumping steel and aluminum in global markets below the cost of production, hurting American producers. In the agricultural sector, the U.S. has been unable to get Beijing to lift anti-dumping measures on U.S. broiler chicken products and an animal feed ingredient known as distillers' dried grains (DDGS).

China is one of Iowa's biggest export markets, so Branstad is well-placed to deal with China-U.S. trade issues, said Professor Huang Jing, an expert on Chinese politics at the National University of Singapore.

"This really sends a message that Donald Trump wants to handle China at the bilateral relationship level," he said.

Branstad's personal ties with Xi could also help to ease U.S. access to Beijing's leadership, the diplomats and trade experts said.

Still, they said his many years running Iowa, the top U.S. state for production of corn, soybeans and pigs, may not have prepared him for the more delicate tasks of diplomacy with Beijing.

During Xi's 2012 trip, Chinese soybean buyers announced they would buy more than $4 billion in U.S. soybeans that year.

Since then, the United States has grown more reliant on China's voracious appetite for commodities to spur demand for everything from oil to corn as global oversupply has hurt prices. Volumes of U.S. agricultural exports to China hit record levels in 2015.

"It's natural that they should continue this good relationship with China," said Pan Chenjun, senior analyst at Rabobank in China.

Trump's dealings with China have been in particular focus since Taiwan President Tsai Ing-wen called him last week to congratulate him on winning the election.

The call caused consternation in Beijing, which sees the self-ruled island as a renegade province and objects to other governments dealing with it.

Trump's conversation with Tsai was the first such contact with Taiwan by a U.S. president-elect or president since President Jimmy Carter adopted a "one-China" policy in 1979, recognizing only the Beijing government.

(Reporting by Sangameswaran S in BENGALURU, Christian Shepherd in BEIJING, John Ruwitch in SHANGHAI; Additional reporting by Doina Chiacu in Washington and Kay Henderson in Des Moines; Editing by Robert Birsel, Martin Howell and Frances Kerry)