Locke would be the first Chinese American to serve as Washington's envoy to China and he would be the Obama administration's second appointment of a high-profile politician to the increasingly important and tricky post.
Locke will replace Jon Huntsman, who has set himself publicly against the ruling Chinese Communist Party's efforts to stamp out dissent three times in three weeks.
He steps down on April 30 and is considering a run for president in which he'd join a field of Republicans vying to challenge Obama in the 2012 election.
Locke, whose appointment must be confirmed by the U.S. Senate, has served as Commerce Secretary and was previously governor of Washington State, which has close economic ties with China thanks to big corporate residents such as Boeing and Microsoft.
"He has served as a state governor, he is a seasoned politician, he is familiar with the players here in China," said Sun Zhe, the director of the Center for U.S.-China Relations at Tsinghua University in Beijing.
"So an American ambassador's duties toward human rights and Taiwan won't be a difficult transition for him to make."
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Locke's grandfather emigrated from China to Washington State, and his father, who was also born in China, ran a grocery store in the United States. Locke made many trip to China as governor of Washington and has remained active on that front as Commerce secretary.
In his current job, Locke has at times taken up the cudgel on behalf of U.S. businesses. In February he criticized China for not honoring promises to open its market.
"This type of behaviour simply has to change," he said in a speech in New York.
Locke said U.S. companies have a variety of concerns about China's trade practices but "the fundamental problem often boils down to the distance between the promises of China's government and its actions".
As ambassador, Locke would be in charge of day-to-day management of a vast and complicated relationship that extends well beyond often strained commercial ties.
The world's two biggest economies have sought to steady relations after tensions throughout 2010 over human rights, Taiwan, Tibet and the value of the yuan.
While none of the disputes that dogged ties last year has gone away, Chinese President Hu Jintao visited the White House in January, a summit that both sides called a success in nurturing more mutual trust.
Last year, Locke led a group of nearly two dozen corporate executives on a mission to explore opportunities in China's fast-growing clean energy sector. He has warned that the United States risks being left behind as China plows billions of dollars into solar, wind and other "green" technologies.
"If he is actually nominated by the president, I think it is an extremely good choice," said Christian Murck, president of the American Chamber of Commerce in China. "He has lots of experience here as Commerce Secretary, as a governor and as a lawyer in his private practice.
"That a cabinet secretary would leave his position indicates the importance of the relationship and shows what Huntsman brought to the role ," Murck said.
Huntsman, a former Republican governor of Utah, raised eyebrows in the White House when he sent signals several weeks ago he was considering entering the 2012 presidential race.
Huntsman has sparred with Chinese officials in recent weeks over human rights issues, including his condemnation of the harassment of foreign reporters seeking to cover protests.
He is expected to make a decision on whether he will run for president when he returns from China at the end of April. (Reuters)
