TAIPEI, Jan 24 (AP) -- Su Tseng-chang on Tuesday prepared to take over the office of Taiwanese premier, faced with resurrecting his party's flagging fortunes amid a stalled economy and rising tensions with rival China.

Su was selected last week by President Chen Shui-bian following the resignation of Frank Hsieh, who said he was leaving his post over disagreements with Chen's hardline policy toward the mainland, from which Taiwan split amid civil war in 1949.

The new premier and his Cabinet will take office Wednesday.

Hsieh's departure came less than two months after the ruling Democratic Progressive Party was soundly beaten by the rival Nationalists in municipal elections, raising serious questions about the DPP's chances in the next presidential elections, scheduled for 2008.

Once celebrated for its commitment to clean government, the party has been hit by a series of high profile corruption scandals, including one involving a former Chen adviser.

It has also suffered through poor economic results and rising tensions with China, which has boycotted Chen over his policy of strengthening Taiwan's status as a self-governing entity, with a culture and history distinct from those of China.

In a hard hitting New Year's Day speech, Chen proposed tightening controls over technology exports to the mainland, irritating the island's powerful business community and further alienating the Chinese leadership.

In contrast to Chen and the DPP, the Nationalists favor eventual unification with the mainland, though they offer no specific timetable.

They also want a resumption of direct transportation links, broken off in 1949, and an expansion of trade ties across the Taiwan Strait.

Su has emerged a front-runner as the ruling party's presidential candidate in 2008, though his background in provincial government has obscured his views on China.

His Cabinet team is a mixture of the old and the new.

DPP lawmaker Tsai Ing-wen, a former head of the Mainland Affairs Council -- the body in charge of relations with China -- will be his vice premier.

Tsai, a legal expert by training, can be expected to fill in some major gaps for Su, who has keen political skills but little experience in international affairs or China policies.

MAC chairman Joseph Wu and Defense Minister Lee Jye are staying in place.

For his economic team, Su has recruited top managers from state-run enterprises. Bank of Taiwan Chairman Joseph Lyu has been tapped to take over the Finance Ministry.

The Foreign Affairs portfolio will be handed to James Huang, Chen's deputy chief-of-staff. The Foreign Ministry is less important than many other posts on the island because Taiwan only has 25 diplomatic allies -- mostly small or impoverished nations in Africa, Latin America and the Pacific.

With his swearing in, Su will be the fifth person to hold Taiwan's No. 3 post since Chen was elected in 2000.