By Dominique Patton and Steve Holland
BEIJING/NEW YORK (Reuters) - President-elect Donald Trump will nominate Iowa Governor Terry Branstad as the next U.S. ambassador to China, a transition official said on Wednesday, choosing a longstanding friend of Beijing after rattling the world's second-largest economy by speaking to Taiwan's president.
The appointment of Branstad may help to ease trade tensions between the two countries, the world's two biggest agricultural producers, diplomats and trade experts said. It also suggests that Trump may be ready to take a less combative stance towards China than many expected, the experts said.
The New York real estate developer, who defeated Hillary Clinton in last month's election, 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.
Trump's unusual call with Taiwan President Tsai Ing-wen last week prompted a diplomatic protest on Saturday from Beijing, which considers Taiwan a renegade province. Trump's transition team played down the exchange as a courtesy call, but the White House had to reassure China that its decades-old "one China" policy was intact.
The Trump transition official confirmed the choice of Branstad, first reported by Bloomberg, which said he has accepted the job.
Earlier in Beijing, Foreign Ministry spokesman Lu Kang called Branstad an "old friend" of China when asked about a report on the appointment, although he 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.
Branstad called Chinese President Xi Jinping a "longtime friend" when Xi visited Iowa in February 2012, only nine months before he became the Chinese leader.
Xi visited Iowa in 1985 on an agricultural research trip when he led a delegation from Hebei Province. He returned 27 years later and reunited with some of the people he had met.
Trump's stance on China has been in particular focus since Friday's call with Tsai, the first such top-level 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.
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.
As Trump puts together the top people in his administration, the process of announcing his choices has not always been smooth. A Branstad spokesman, Ben Hammes, said early on Wednesday that the reports of the governor's nomination were "premature and not accurate."
Trump transition official David Bossie told Fox News Branstad may join Trump at an appearance on Thursday in the Iowa capital, Des Moines.