A reshuffle is looming in the State Council's Taiwan Affairs Office with the likely appointment of Deputy Foreign Minister Zhang Zhijun as its new head.
He would replace Wang Yi, who is expected to be transferred to head the Foreign Ministry at this week's National People's Congress.
Zhang, who is also the Foreign Ministry's party secretary, is said to be Beijing's choice because it wanted to continue appointing senior diplomats to head Taiwan affairs, which often involves complex international relations.
Taiwan's United Evening News said Zhang was "reluctant" to take the job because his ambitions were not in Taiwan affairs.
Beijing traditionally appoints diplomats with experience in American affairs to head the Foreign Ministry. The current minister, Yang Jiechi , was US ambassador from 2001-2005.
Zhang was earlier tipped to become the next foreign minister or the head of the Communist Party's international department, and stands a chance to become a State Councillor in future. Before taking up his current post in 2009, he spent many years in the international department dealing mainly with US affairs.
But sources said the rising tension between Beijing and Tokyo over the Diaoyu Islands, which Japan calls the Senkakus, had made Wang, China's envoy to Tokyo from 2004 to 2007, the front runner for foreign minister.
Sources said the naming of Zhang to replace Wang also indicated a lack of politicians well versed in Taiwan affairs.
A reshuffle in the Foreign Ministry is already under way. Zhang Yesui , ambassador to Washington, returned to Beijing last week and is expected to replace Zhang Zhijun. Deputy Foreign Minister Cui Tiankai is expected to become the new envoy to the US.
Japan's Asahi newspaper reported last week that Wang had been sent back to the Foreign Ministry after more than four years in the Taiwan office because of his strong connections with Japanese politicians.
Diplomatic sources said appointing Wang as foreign minister did not mean Sino-Japanese ties had overtaken the US relationship in importance, but indicated the trust the leadership had in him to defuse the crisis.
Additional reporting by Minnie Chan and Choi Chi-yuk in Beijing