* Landmark straw polls held to choose top leaders-sources
* Meddling by influential retirees ousts reformers-sources
By Benjamin Kang Lim
BEIJING, Nov 21 (Reuters) - Retired leaders in China's Communist Party used a last-minute straw poll to block two pro-reform candidates from joining the policymaking standing committee, including one who had alienated party elders, sources with ties to the leadership said.
Two sources said the influential retirees flexed their muscles in landmark informal polls taken before last week's 18th party congress, where the seven--member standing committee, the apex of China's power structure, was unveiled.
The clout of the elder statesmen, who include former party chief Jiang Zemin and ex-parliament head Li Peng, underscores the obstacles to even limited reform within senior levels of the party, which has held continuous power since 1949.
The informal polls are the first time the party has flirted with "intra-party democracy" to settle factional fighting over the line-up of the standing committee. It held informal polls in 2007 to decide the larger Politburo.
Two of the candidates voted out of the standing committee were widely viewed as reformers: Wang Yang, the party chief of export powerhouse Guangdong province in the south, and Li Yuanchao, minister of the party's organisation or personnel department.
Neither Wang nor Li could be reached for comment. The party spokesman's office declined immediate comment.
Shedding light on the opaque backroom process, the two sources said votes on the new standing committee were taken among the outgoing 24 members of the Politburo and more than 10 party elders, who had retired from senior posts.
The group held more than 10 rounds of deliberations, including at least two informal polls, over several months at the military-run Jingxi hotel in Beijing and other venues, said the sources, who spoke on condition of anonymity because of the sensitivity of the subject.
Elders wielded considerable influence over the process and forced a second poll in October to push out Li Yuanchao, the sources said.
Eight people were in the running for the five slots on the standing committee beneath Xi Jinping, named party chief, and Li Keqiang, who will be the next premier.
Wang, 57, lost out because of the scandal over ousted Chongqing party boss Bo Xilai earlier this year. Bo was known for promoting "red" culture inspired by Mao Zedong's era, and many private businessmen in Chongqing came to see him as hostile to their interests.
The two sources said party seniors decided to drop Wang, who has favoured private enterprise in Guangdong and was seen as a rival of Bo, to avoid further upsetting pro-Mao factions in the party, government and military.
"Wang Yang was ousted to avoid Bo supporters creating trouble," one of the two sources said.
Bo, in the running to join the standing committee until his downfall earlier this year, was expelled from the party in September and faces possible charges of corruption and abusing power in China's worst political scandal in more than three decades. His wife was jailed for the murder of a British businessman.
Li Yuanchao, 62, was selected in the initial polls in May but party elders forced another vote just weeks before the congress to replace him, the sources said. Liu Yandong, the lone woman candidate, was also denied a promotion.
The sources said Li was dumped because he alienated some elders by promoting too many of outgoing President Hu Jintao's allies in his capacity as head of the party's personnel department and by ignoring recommendations by retirees keen to elevate their own men.
Reuters reported on Oct. 19 that Xi, Hu, and Hu's immediate predecessor, Jiang Zemin, agreed on a "preferred list" of standing committee members that included Li.
But party elders were unhappy and forced another vote in their group in late October, about two weeks before the congress, the sources told Reuters.
The result: Li was dropped in favour of Shanghai party boss Yu Zhengsheng.
"Li was voted out in a multi-candidate election in late October. He was out because he did not respect party elders enough," the second source told Reuters.
There was broad consensus on Xi taking over from Hu as party and military chief in the once-in-a-decade generational leadership change. Xi is likely to succeed Hu as state president in March.
Li is now tipped to become either a vice chairman of parliament or vice president in March, while Wang is a shoo-in to become a vice premier, the sources said. Both men, as well as Liu, the sole woman candidate, retained their seats in the new 25-member Politburo, from which standing committee members are drawn.
Yu, the Shanghai party chief who made it to the standing committee, is the oldest at 67.
Before his promotion, Yu's chances were believed to be dim because his brother defected to the United States in the 1980s while working as an intelligence official. Yu is expected to head an advisory body to parliament.
"Priority was given to seniority," the second source added. Five of the seven standing committee members can only serve one five-year term due to the compulsory retirement age of 68.
Liu, also 67, did not make it because the standing committee had never had a woman member since 1949, and the party elders were unwilling to change that, the sources said. She is tipped now to become a vice premier.
State news agency Xinhua said last week that senior party cadres met in Beijing in May and "democratically recommended" standing committee and Politburo members. It did not reveal the results.
Leadership changes in China are thrashed out in advance through horse-trading between party elders and retiring leaders anxious to preserve clout and protect family interests, but must also go through a choreographed selection process at the congress.
In previous congresses, held every five years, there was no competitive voting: the number of candidates on the ballot matched the number of seats available in the Politburo and on the standing committee.
The straw polls hardly signal a desire for democratic political reform. But they did provide a vehicle through which some of the infighting between factions could be resolved.
Reuters reported last week that Hu and Xi were pushing for a more democratic process to choose top leaders. Both have said the party is under threat from corruption and abuse of power and that reforms are needed. (Editing by Raju Gopalakrishnan)