Chinese Government Reorganization

Chinese Government Reorganization

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Attention during China's annual lianghui (the Two Sessions: the advisory Chinese People's Political Consultative Conference followed by the largely rubber stamp National People's Congress) focused on adoption of the constitutional amendment to eliminate term limits on the offices of President and Vice President, allowing President Xi Jinping to remain in office indefinitely.

Of critical importance also, however, was adoption of a host of major government reorganizations. Ministry-level organizations and different functions were merged into a smaller number of departments and the number of officials with ministerial rank will be reduced. After the reorganization, the number of ministerial-level organizations under the State Council will be reduced by eight, the number of vice ministerial-level organizations will be reduced by seven, and the State Council will consist altogether of 26 ministries and commissions (excluding the General Office of the State Council).

The changes are particularly intended to increase efficiency and to improve regulation in critical sectors like environmental protection and financial services.  The powerful National Development and Reform Commission will lose some of its functions, but the State Council will also lose some of its capacity to review actions of ministries.

The Party's power over government will become more comprehensive. This will be reflected in part in the new National Supervision Commission which will formally unify the Party's Central Commission on Discipline Inspection (CCDI) with the Ministry of Supervision, bringing the CCDI's investigative methods into the government in only modestly softened ways. Meanwhile, as the State Council loses some of its capacity to review the ministries, the Party Leading Small Groups, many personally chaired by Xi Jinping will continue to set policy for implementation by the government. As leading theoretician and member of the Standing Committee of the Politburo Liu He stated: “The Party, the army, the government, the people, the schools, north, south, east, west and center, the Party leads them all.”

Much will depend on how smoothly the reorganizations proceed. In some instances, particularly the National Markets Supervision Administration, there is a risk that the combination of so many functions will actually hamper policy formation and implementation. Moreover, in some sectors like competition law where different agencies are merged, much will depend upon which of the old agencies dominates the new agency and its culture. Regardless, Party policy will be determinative where it exists.  

The changes are as follows:

(1) Establishment of a Ministry of Natural Resources combining the functions of the Ministry of Land and Resources, State Oceanographic Administration and China State Bureau of Geology, Survey and Mapping;

(2) Rebranding and expanding the mission of the Ministry of Environmental Protection into the Ministry of Ecological Environment, and this new ministry will also assume certain responsibilities previously assigned to the National Development and Reform Commission, Ministry of Land and Resources and Ministry of Water Resources;1

(3) Renaming and expanding the mission of the Ministry of Agriculture into the Ministry of Agriculture and Rural Affairs, reflecting the need for a broader approach to rural development to provide comprehensive solutions to the problems of the sannong (agriculture, farmers and rural areas);

(4) Merger of the Ministry of Culture and Chinese National Tourism Administration into the Ministry of Culture and Tourism, reflecting China's effort to grow its soft power;

(5) Merger of the National Health and Family Planning Commission and State Council Leading Small Group's Office on Deepening Reform of the Medical and Health System into the National Health Commission, reflecting the deemphasis on family planning and advancement of medical and health system reform;

(6) Establishment of a Ministry of Veterans Affairs, reflecting long-delayed recognition of the need to reverse years of neglect for military veterans which has been a potential source of instability, while also making enlistment in the military more attractive, especially among educated and qualified recruits, to raise the military's warfighting capability;

(7) Establishment of a Ministry of Emergency Management, abolishing the State Administration of Workplace Safety and elevating responses to emergencies of different kinds to ministerial status;

(8) Reorganization of the Ministry of Science and Technology, reflecting the government's focus on innovation as the key to prosperity and national security;

(9) Reorganization and expansion of the Ministry of Justice by incorporating the State Council Legislative Affairs Office, thereby reducing the oversight and review role of the State Council over constituent ministries and likely reflecting the reduced stature of the office of Premier;

(10) Making the Ministry of Water Resources more efficient by eliminating the State Council's autonomous Three Gorges Project Construction Committee and South-North Water Diversion Project Construction Committee and their respective offices;

(11) Making the National Audit Office more efficient by eliminating the Board of Supervisors for Key Large-Sized State-owned Enterprises; and

(12) Merging the Ministry of Supervision and the Party's Central Commission for Discipline Inspection (CCDI) into a new National Supervision Commission with constitutional status ahead of the Supreme People's Court and Supreme People's Procuratorate, bringing the CCDI's harsh detention-based investigative methods within the Party into the government in only slightly moderated reform, and reflecting the influence of Wang Qishan, newly retired from the Party Politburo but expected to be elected Vice President by the NPC.

In addition to these ministerial-level measures, the following additional reorganizations were instituted at the bureau-level:

(1) Establishment of a National Markets Supervision Administration, merging the State Administration for Industry and Commerce (SAIC), General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), and China Food and Drug Administration. The National Markets Supervision Administration will be (among other things) a new, unified competition law enforcement agency, taking over the former anti-monopoly regulatory functions of SAIC, the Ministry of Commerce (MOFCOM), and the National Development and Reform Commission (NDRC). These changes are intended to make market and industry regulation more efficient;

(2) Establishment of an International Development Cooperation Agency to coordinate China's expanding foreign aid polices, including focusing on supporting the Belt and Road Initiative, by unifying functions previously housed in MOFCOM and the Ministry of Foreign Affairs;

(3) Resimplifying the State Administration of Press, Publication, Radio, Film and Television as the State Administration of Radio, Film and Television;

(4) Merging the China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC) into the new China Banking and Insurance Regulatory Commission (CBIRC) which, together with the transfer of their major legislative and regulatory drafting functions to the People's Bank of China (PBOC), furthers the centralization of financial regulation (which is expected to be led by Politburo Standing Committee member Liu He), but does not go so far as to abolish the China Securities Regulatory Commission or actually bring the functions of the commissions into the PBOC;

(5) Reorganizing NDRC, in part by transferring some of its regulatory functions to the new National Markets Supervision Administration referenced above;

(6) Reorganization of the State Medical Security Administration;

(7) Merging the State Grain Administration into an enlarged State Grain and Materials Reserves Administration;

(8) Establishment of the State Immigration Administration to handle exit and entry matters in a consolidated manner;

(9) Merging the State Forestry Administration into an enlarged State Forestry and Grasslands Administration;

(10) Expanding the State Intellectual Property Office (SIPO) by incorporating the trademark responsibilities of SAIC and the geographic indicators responsibilities of AQSIQ with SIPO's patent responsibilities to form the new SIPO which will be managed under the new National Markets Supervision Administration, although responsibility for copyrights will apparently remain with the National Copyright Administration of China;

(11) Elevating the role of the National Council for Social Security Fund; and

(12) Reforming the state and local taxation structures by merging them at the provincial and local levels to eliminate duplication.

 (1) and (2) reflect China's increased focused on environmental protection which is now embedded in the Constitution as a responsibility of the state