China is setting up a new agency to help streamline its trade negotiating bureaucracy as the world's third-largest economy faces a growing number of commercial disputes.

The new China Trade Representative office (CTR) will absorb a tangle of offices that have overlapping influence on trade matters, and it will have functions similar to the United States Trade Representative (USTR). But the CTR will remain under the Ministry of Commerce, three ministry sources who requested anonymity told Reuters.

A ministry spokesman, reached by telephone, declined to comment on the reorganization.

The establishment of the CTR has been approved by the State Council, China's cabinet, and is being carried out by Commerce Minister Chen Deming, one source said.

The government is keen to have a more efficient and focused way to deal with situations like trade disputes, and that's why it has been approved to set up the CTR, the source said.

Once launched, the CTR will also work closely with China's permanent mission to the World Trade Organisation (WTO) in Geneva, the source added.

At present, the commerce ministry has a number of overlapping departments such as the bureau of fair trade for imports and exports, and the office for trade negotiators that handles bilateral trade disputes as well as participation in multilateral bodies, including representing China in WTO negotiations and disputes.

The CTR will be headed by a vice-minister, said the sources.

China is facing rapidly growing trade disputes in sectors ranging widely from shoes to tires, in particular with major trading partners such as the United States and Europe.

Rising disquiet about Chinese trade policy in the United States could be magnified by broader tensions over Tibet and Taiwan and by U.S. Congressional elections later this year, political analysts say.

Washington is also likely to press more anti-dumping complaints against goods made in China in 2010.

The USTR is part of the U.S. executive branch and U.S. Trade Representative Ron Kirk reports directly to President Barack Obama and is a member of his cabinet.

The USTR is tasked with negotiating trade agreements and resolving trade disputes, including if necessary by filing cases at the WTO.

China's commerce minister is keen to keep the CTR in his ministry, at least in the initial phase, said the sources.

However, other senior officials who are now competing for the top job in the CTR are lobbying top Chinese leaders to grant more power and make it a ministerial level appointment, they said.

(Additional reporting by Aileen Wang and Lucy Hornby in Beijing and Douglas Palmer in Washington; Editing by Benjamin Kang Lim and Ken Wills)

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