By Chun Han Wong and Lingling Wei 

BEIJING--Cleared to stay in power indefinitely, Chinese President Xi Jinping has discarded the leadership structure he inherited and is kicking off his second term with a handpicked team of trusted lieutenants.

For the next five years, Mr. Xi will look to his inner circle to shore up a sluggish economy, eradicate poverty and enhance China's global standing--while shielding his ambitious agenda from being derailed by rocky relations with the U.S.

Two men in particular have emerged in key roles: Wang Qishan, the former anticorruption chief who took office as deputy head of state on Saturday, and Liu He, the architect of Mr. Xi's economic policies, who is due for promotion on Monday.

In recent weeks, Mr. Xi and his two deputies met directly with U.S. officials, people familiar with the matter say--a sign of the president's heightened concerns about China-U.S. ties.

Mr. Xi hosted the U.S. ambassador to Beijing, Terry Branstad, at an informal gathering of both men's families in early February, according to people with knowledge of the event. The two have known each other since Mr. Xi visited the U.S. in 1985.

The president also dispatched Messrs. Wang and Liu to meet with the U.S. ambassador separately, those people said. And right before the start of the legislative session, Mr. Liu went to Washington, holding at times contentious talks with senior U.S. officials including Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer. A hoped-for meeting with President Donald Trump didn't materialize.

The Trump administration's threats of trade and investment penalties loom over China as it faces significant challenges at home and abroad, including possible conflict next door on the Korean Peninsula. And while the Chinese economy roared ahead last year, boosted by government and state-sector spending, it was also stoked by global demand for Chinese exports--a trend that could quickly fade in the event of a trade war.

The National People's Congress, which closes Tuesday, marks the culmination of Mr. Xi's efforts over his first five-year term to shake up the political landscape and install himself and his Communist Party at the center of Chinese society.

With relentless crackdowns on corruption and disloyalty, Mr. Xi swept aside rivals installed under his predecessors and paved the way for a sweeping overhaul of government bureaucracy.

The congress removed constitutional term limits on the presidency, enabling Mr. Xi to rule indefinitely. On Sunday, the congress appointed a leading party-discipline official as the director of a new national supervisory commission that expands Mr. Xi's antigraft sweep to cover all public-sector workers.

"What we are witnessing now is [Mr. Xi] putting the structures in place that help to advance his political agenda," said Matthias Stepan, who studies Chinese public policy at the Mercator Institute for China Studies, in Berlin.

Over the past two weeks, delegates to the congress have hailed Mr. Xi as a sagacious leader, while the party's flagship newspaper, People's Daily, labeled him "the nation's helmsman" and "the people's guide," echoing titles associated with Chairman Mao Zedong.

Mr. Xi's dominance doesn't guarantee bold decision-making or breakthroughs on policy impasses, analysts say.

For instance, Beijing has postponed a proposal to raise the retirement age, a vital but unpopular measure for coping with a rapidly aging population that was originally due to be unveiled in 2017. And a property tax that officials have floated for years as a curb on property prices faces further delays, even as many new housing projects sit empty.

It remains to be seen whether Mr. Xi is willing to spend his political capital on large-scale overhauls to put the Chinese economy on a sounder footing and assuage Washington's concerns over trade imbalances.

Despite his official pledges to give market forces a decisive role in China's economy, Mr. Xi has spent the past five years strengthening state control.

"Even with this power, will he be able to make the drastic changes?" asked June Teufel Dreyer, a political-science professor at the University of Miami.

"There are rational arguments against tough measures. Millions may be thrown out of work," she said.

A big wild card for Mr. Xi is the Trump White House, which in recent weeks has given Beijing nearly-daily headaches, such as by upgrading ties with Taiwan, a self-ruled island that Beijing considers Chinese territory.

On Friday, Mr. Trump signed a law allowing U.S. representatives to meet Taiwanese officials, quickly drawing a rebuke from China's Foreign Ministry.

"We're being tormented to death by Trump," said one Chinese official involved in policy-making.

So far, Beijing has been responding cautiously to Mr. Trump's trade offensives, trying to balance tit-for-tat measures against its desire to avoid a full-blown trade war with the U.S. Adding to Beijing's anxiety is the lack of a point person in the White House to work with.

Mr. Wang has stressed to Mr. Branstad the importance of continued dialogue, saying external pressure often helps Beijing push through reforms. The ambassador, in turn, indicated the Trump administration intends to deal only with those in Mr. Xi's inner circle.

With Mr. Liu, Mr. Branstad urged Beijing to immediately address its enormous trade surplus with the U.S. A couple of weeks later in Washington, Mr. Liu was asked to come up with a plan to slash the bilateral trade gap by $100 billion.

In Beijing's view, that's a tall order.

Beijing blames the imbalance in part on U.S. restrictions on high-tech exports to China. Commerce Minister Zhong Shan says Washington could narrow its trade gap by 35% if it allowed Beijing to buy more products, such as supercomputers and advanced materials.

U.S. officials have said such sales would make up only a fraction of the deficit while potentially threatening national security.

Even without the prospects of a trade war, Mr. Xi faces a formidable challenge. He has to rein in crippling debt, ensure stable growth in household incomes, reduce inequality and pollution as well as deliver solutions to pressing social issues like access to affordable health care, Mr. Stepan, the Berlin-based researcher, said.

"Xi Jinping's power and political capital ultimately rest on delivering on policy goals and satisfying people's needs," he said.

Write to Chun Han Wong at chunhan.wong@wsj.com and Lingling Wei at lingling.wei@wsj.com

(END) Dow Jones Newswires

March 18, 2018 05:44 ET (09:44 GMT)