BEIJING - THE mayor of Shanghai is to stay put despite earlier suggestions he would be replaced after a financial scandal in China's commercial capital which cost the city's Communist Party boss his job.

Two sources with close ties to the government and with direct knowledge of the situation said that the central government had confidence in Han Zheng, and that removing him would only unsettle civil servants and the business community.

Beijing believes that Han is 'a good comrade' and 'can continue to do a good job in Shanghai', one of the sources paraphrased new Shanghai Party chief Yu Zhengsheng as telling a recent meeting of senior city officials.

'But now I can tell you and confirm with you that Han Zheng will not leave Shanghai and he will continue to work with me and us as Shanghai Mayor.'

Mr Yu's predecessor, Mr Chen Liangyu, was dramatically fired in September 2006 and now faces criminal investigation for his part in a case centring on misuse of Shanghai's social security fund.

He has been expelled from the Party and dozens of other officials and executives have been jailed or probed in connection with the case.

Mr Yu also told the editor-in-chief of the Shanghai Party mouthpiece, the Jiefang Daily, that getting rid of Han would have given a poor impression of the city, which fancies itself an Asian financial hub on a par with Hong Kong, Singapore and Tokyo.

'It would not be that good if Han left Shanghai so soon when I have just arrived in the city to start this job, which may leave not too good an impression on outsiders', Mr Yu said, according to the source, who was present at the meeting.

According to another source with leadership ties, both Mr Yu and Xi Jinping, who took Mr Chen's job briefly before being raised to the upper echelons of power in Beijing in October, recommended Han stay on to assure civil servants there would not be a witchhunt.

'It's to stabilise the public mood,' said the source who requested anonymity to avoid political repercussions. -- REUTERS