Bounnhang, 78, was selected for the top position of party secretary-general, state media reported on Friday, replacing 79-year-old Choummaly Sayasone, who stepped down after a decade in power.
Bounnhang, whose promotion to secretary-general of the Communist Party was anticipated by analysts, is expected to maintain the government's repressive status quo.
Laos political leaders have tightly controlled the impoverished Southeast Asian nation since 1975, when communist revolutionaries overthrew the monarchy several decades after the end of French colonial rule.
The internal operations of the powerful party are largely kept secret under a regime that bars a free press and severely restricts freedom of expression.
The new leaders will oversee Laos's chairmanship of the 10-member Association of Southeast Asian Nations regional bloc, which will involve a cascade of diplomatic meetings and could open the hermitic nation up to greater scrutiny.
But Bounnhang is unlikely to make any moves towards greater democracy or respect for human rights, said Martin Stuart-Fox, a Laos historian and retired Australian professor.
Though Vietnam has historically had the most influence over Laos, China has poured money into the country in recent years, becoming its largest foreign investor in 2014.
Yet Stuart-Fox said the new politburo was unlikely to lean too heavily towards either communist neighbor.
"Laos will continue to balance its relations with China and Vietnam, and try to avoid taking sides," he said.
Washington is also increasingly courting the isolated state as part of President Barack Obama's so-called "pivot" to Asia.
Obama will be the first US president to visit Laos when he attends an ASEAN summit in the capital this summer. US Secretary of State John Kerry is also scheduled to stop in Vientiane to meet with the country's leaders next week.
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