What is China's plan to reshuffle its government institutions?
Full-text plan, official notes, infographics, and a review of the previous reforms of the Party and state institutions
China's State Council, the cabinet, on Tuesday submitted a plan on the reform of its institutions [full-text plan] to the first session of the 14th National People's Congress (NPC) for deliberation. State Councilor and Secretary-General of the State Council Xiao Jie explained the plan to national lawmakers.
The plan is part of the draft plan on the reform of Party and state institutions which focuses on resolving challenging issues that are of great significance and of great concern to society and will have an important impact on the economic and social development.
A communique issued by the 20th Communist Party of China (CPC) Central Committee at the end of its second plenary session on Feb. 28 noted that important arrangements for deepening the reform of Party and state institutions have been made at the 20th CPC National Congress. The session underscored efforts to coordinate the institutions of the CPC Central Committee, the NPC, the State Council, and the CPPCC National Committee, and coordinate the central and local authorities.
It stressed that efforts are needed to deepen institutional reform in key areas and ensure that the Party's leadership over socialist modernization becomes more refined in institutional setup, more optimized in the division of functions, more improved in institutions and mechanisms, and more efficient in operation and management.
In today's piece, Ginger River Review (GRR) presents you with a near-full translation of the plan, along with highlights of the official notes by State Councilor Xiao Jie, and infographics GRR created to help you better understand the reforms. At the end of this newsletter, GRR presents a quick overview of the previous eight Party and state institution reforms from the start of reform and opening up.
Please be aware that the plan must be legally adopted by the NPC in this year's "Two Sessions" before it can be implemented.
In case you’ve missed it, GRR has published a piece about Xi Jinping's first speech in this year’s “Two Sessions” on March 6 and a piece including the highlights of Li Keqiang's government work report on March 5.
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Plan on the reform of the State Council institutions
1. Restructure Ministry of Science and Technology
The restructured ministry will play a bigger role in improving a new system for mobilizing the nation to make technological breakthroughs, optimizing sci-tech innovation, facilitating application of sci-tech advances, and coordinating science and technology with economic and social development.
Its macro management functions in science and technology-related strategic planning, institutional reforms, allocation of resources, comprehensive coordination, formulating policies and regulations, and supervision and inspection will also be strengthened, according to the plan.
Official note: Explaining the reform plan to national lawmakers, State Councilor Xiao Jie said that facing international sci-tech competition and external containment and suppression, China needs to further smooth its leadership and management system for science and technology-related work. It will help China better allocate resources to overcome challenges in key and core technologies, and move faster toward greater self-reliance in science and technology.
To that end, a central science and technology commission will be established as part of the latest reform of the Communist Party of China and state institutions, to beef up the Party Central Committee's centralized and unified leadership over science and technology-related work. The restructured ministry will assume responsibilities as the working body of the new commission, Xiao said.
2. Set up a national financial regulatory administration
Directly under the State Council, the proposed administration will be in charge of regulating the financial industry except the securities sector. It will be established on the basis of the China Banking and Insurance Regulatory Commission, which will not be retained, the plan said, noting that certain functions of the People's Bank of China and the China Securities Regulatory Commission will be transferred to the new administration.
Official note: It is an effort to ensure that all types of financial activities will be brought under supervision in accordance with the law and solve the long-standing and serious contradictions and problems in the financial sector.
3. Deepen the reform of local financial regulatory mechanism
China will develop a local financial regulatory mechanism with agencies dispatched by central financial regulators as the mainstay. The institutional structure and resources of these dispatched agencies will be optimized in a coordinated manner, the plan noted.
Official note: The aim is to strengthen the central authority in financial management to address issues such as the lack of regulatory tools and professional talents in local financial regulatory agencies.
4. China Securities Regulatory Commission to be a government agency directly under the State Council
The China Securities Regulatory Commission will become a government agency, rather than a public institution.
Official note: It is an effort to strengthen regulatory responsibilities for the capital market.
5. Advance reform of the branches of the People's Bank of China
China will advance reform of the branches of the People's Bank of China, the central bank. The regional branches and business management departments of the People's Bank of China, as well as the business management departments directly under the headquarters and the central branches in provincial capitals will be revoked.
Instead, the central bank will establish provincial-level branches in 31 provinces, autonomous regions, and municipalities, in addition to branches in cities specially designated in the state plan, including Shenzhen, Dalian, Ningbo, Qingdao, and Xiamen. The People's Bank of China Beijing Branch will retain the brand of the People's Bank of China Business Management Department, while the People's Bank of China Shanghai Branch will share an office with the People's Bank of China Shanghai Headquarters.
Official note: The People's Bank of China will no longer maintain its county-level branches and will instead transfer their functions to the central branches at the city level. For areas that have a large amount of foreign trade or border settlements, the central branches can dispatch institutions to fulfill their management and service functions according to situations.
6. Improve the regulatory mechanism on state-owned financial capital
Market-oriented institutions managed by central financial regulatory departments shall be removed out of their control in accordance with relevant management regulations for state-owned financial capital contributors. Relevant state-owned financial assets will be transferred to management institutions entrusted with state-owned financial capital, which shall perform investor responsibilities in a unified manner based on authorization from the State Council.
Official note: The decision was made to clarify the rights and responsibilities of financial regulatory authorities, institutions responsible for investing state-owned financial capital, and state-owned financial institutions, promote the separation of regulatory from operational functions and the separation of government from enterprises, and promote the sustainable and healthy development of state-owned financial institutions.
7. Unify and standardize the management of the staff of financial regulators
The People's Bank of China, the State Financial Regulatory Administration, the China Securities Regulatory Commission, the State Administration of Foreign Exchange and its branches and dispatching agencies will be all in administrative establishments. The staff members are under the unified and standardized management of the state civil service and are treated according to the salary standard for state civil servants.
Official note: It is an effort to promote financial regulators to perform their duties in accordance with the law and to solve the problems of unification and standardization in the financial system team management.
8. Establish a national data bureau
The proposed bureau, to be administered by the National Development and Reform Commission (NDRC), will be responsible for advancing the development of data-related fundamental institutions, coordinating the integration, sharing, development and application of data resources, and pushing forward the planning and building of a Digital China, the digital economy and a digital society, among others.
Certain functions of the Office of the Central Cyberspace Affairs Commission and the NDRC will be transferred to the new bureau, said the plan.
Official note: Digital resources and the digital economy play a fundamental role in the economic and social development of modern society. They are of significant importance for constructing new development patterns, building modern economic systems, and establishing new competitive advantages for the country.
It is necessary to strengthen the management, development, and utilization of data. While maintaining the overall stability of the current work patterns such as data security, industry data supervision, information technology development, and digital government construction, the responsibilities for integrating, sharing, developing, and utilizing data resources should be relatively centralized.
9. Improve the functions of the Ministry of Agriculture and Rural Affairs
To comprehensively promote issues relating to agriculture, rural areas and farmers with a focus on rural revitalization and accelerate the construction of an agricultural powerhouse, the Ministry of Agriculture and Rural Affairs will take over the responsibilities that formerly fell under the National Rural Revitalization Bureau: carrying out monitoring and assistance to prevent poverty relapse, formulate key support policies for revitalizing priority counties and key areas, organize east-west region cooperation, pair-up support, and social assistance, research and propose a central fiscal plan for promoting rural revitalization-related fund allocation, and guide and supervise the use of funds to promote the development of rural support industries, rural social undertakings, and public services.
The Ministry of Agriculture and Rural Affairs will add the brand of the National Rural Revitalization Administration.
During the transitional period after the completion of the national poverty alleviation task, relevant support policies, financial support, and project arrangements will remain generally stable, and the operation and management of funds and projects will be relatively independent.
The National Rural Revitalization Administration will no longer exist as a separate agency.
10. Improve the elderly-care work mechanism
The National Health Commission's responsibilities of organizing, formulating and coordinating the policies and measures to cope with the aging population and undertaking the detailed tasks of the China National Committee on Ageing will be transferred to the Ministry of Civil Affairs. The office of the China National Committee on Ageing will be located at the Ministry of Civil Affairs to strengthen its responsibilities of coordinating, guiding, and promoting the development of the cause for the aged.
Official note: It is an effort to implement the proactive national strategy in response to population aging and to expand the basic elderly-care services to cover all senior citizens.
11. Improve the management mechanism for intellectual property rights (IPR)
China will improve the management mechanism for intellectual property rights (IPR) to upgrade IPR creation, application, protection and management. The China National Intellectual Property Administration, currently administered by the State Administration for Market Regulation, will be adjusted into an institution directly under the State Council.
Official note: The move is aimed at adapting to the goal of building a country of innovation, promoting high-quality development and expanding high-standard opening up, accelerating the development of intellectual property rights (IPR) power and comprehensively improving the capacity of intellectual property creation, application, protection, management and services.
12. The National Public Complaints and Proposals Administration to be an institution directly under the State Council
The National Public Complaints and Proposals Administration will become an institution directly under the State Council from one under the general office of the State Council.
Official note: The move is made to strengthen and improve the handling of public petitions and better safeguard the interests of the people.
13. Downsize the staff of China's state institutions at the central level
China's state institutions at the central level will downsize their staff by 5 percent. The State Council will still consist of 26 departments besides its general office after the reform plan is implemented.
In accordance with the provisions of the Organization Law of the State Council of the People’s Republic of China, the National People's Congress is will deliberate the adjustment and arrangement of the constituent departments of the State Council, such as the Ministry of Science and Technology and the Ministry of Agriculture and Rural Affairs.
The adjustment and arrangement of subordinate agencies of the State Council other than the constituent departments of the State Council, such as the State Administration for Market Regulation, the national financial regulatory administration, China Securities Regulatory Commission, the State Bureau of Letters and Calls, China National Intellectual Property Administration, the national data bureau, and the National Rural Revitalization Administration, will be reviewed and approved by the newly constituted State Council.
Gao Yuan, a contributor to Pekingnology, a newsletter that is part of the Center for China and Globalization (CCG)’s portfolio, also contributed to today's piece.
A review of the past eight reforms of Party and state institutions
[Please note that this review was written by GRR, a personal newsletter, using information from public sources, and that it does not represent anybody else. Errors could happen. Feel free to let me know if you spot any: firstname.lastname@example.org.]
1. 1982-1984: Streamlining institutions
In order to effectively address the problems of bloated government institutions, unclear departmental responsibilities, redundant personnel, high administrative costs, and low institutional efficiency brought about by a highly centralized planned economic system, China launched its first institutional reform in 1982, after reform and opening-up.
Through this institutional reform, the government institutions have undergone significant streamlining, with the number of departments, affiliated institutions, and offices directly under the State Council reduced from 100 to 61.
This round of institutional reform has made great breakthroughs in streamlining organizations and personnel, abolishing the system of life tenure for leading posts, speeding up to reduce the average age of the cadre team, and solving the problem of the transition between old and new leadership.
2. Start in 1988: Transformation of government functions
With the development of socialist market economy, the state began to attach importance to the transformation of government functions. The institutional reform launched in 1988 emphasized serving the development of productive forces, improving economic efficiency, and revitalizing enterprises. The key focus of the reform was to transform government functions, streamline organizations, reduce personnel, and separate government from enterprise, thereby transferring the rights of production and operation to enterprises.
In this round of reform, the idea of transforming government functions was put forward for the first time and attention was paid to straightening out the relationship between the Party and the government, as well as the relationship between the government and enterprises.
After the reform, the number of departments under the State Council was reduced from 45 to 41, the number of directly affiliated agencies was reduced from 22 to 19, and the number of non-permanent agencies was reduced from 75 to 44. The staffing of these organizations declined by more than 9,700 people compared to before.
3. 1993-1995: Adapting to the development of socialist market economy
After China had set the goal of reforming the socialist market economy system and in order to eliminate many aspects of the state administrative management system that are not compatible with the socialist market economy system, the first session of the 8th National People's Congress passed the "Decision on the Plan for the Reform of the State Council Institutions" on March 22, 1993.
After this institutional reform, the number of directly affiliated and service agencies of the State Council was reduced by 27, leaving a total of 59.
The administrative staffing was reduced by 20 percent after the institutional reform, leaving 29,200 positions.
This institutional reform has provided a clearer definition of the government's role, which means to "separate government from enterprises, exercise macro control, and let the market play a decisive role in micro-level economic activities."
4. 1998-2002: Preliminary exploration of building a service-oriented government
To meet the needs of the development of the socialist market economy and effectively transform the functions of the government, on Mar. 10, 1998, the first session of the 9th National People's Congress deliberated and passed the "Plan on the Reform of the State Council Institutions", which marked the largest government institutional reform since the founding of PRC.
The plan clearly stated that the goal of this reform was to "establish a government administrative management system that is efficient, coordinated, and operates in accordance with norms, improve the national civil service system, build a high-quality professional administrative team, and gradually establish a government administrative system with Chinese characteristics adapted to the socialist market economic system."
Subsequently, organizational reforms were launched one after another among various departments of the CPC Central Committee, as well as other state organs and mass organizations.
Through this reform, the number of departments under the State Council has been reduced by 11, leaving 29; the staffing and cadre of government agencies have decreased by nearly half, leaving 16,700.
5. 2003: Adapting to the development of socialist market economy
As reforms deepened after China joined the World Trade Organization (WTO), the socialist market economy was faced with new situations. In order to adapt government agencies and administrative systems to the new stage, the second plenary session of the 16th Central Committee of the CPC approved the "Proposal on Deepening Reform of Administrative and Institutional Restructuring" in November 2002.
On Mar. 10, 2003, the third plenary session of the 10th National People's Congress passed a reform plan for the State Council's institutions. The plan focused on deepening the reform of the state-owned asset management system, improving the macro-control system, improving the financial regulatory system, promoting the reform of the circulation management system, and strengthening the food safety and safety production supervision system. This plan embodied the concept of a service-oriented government that stipulates "separate government from enterprises, exercise macro control, and let the market play a decisive role in micro-level economic activities.", which was in line with the need to develop the socialist market economy.
6. 2008: Launching a "super-department" reform (SDR) with a service-oriented government at its core
To further adapt to the needs of economic and social development, the 17th National Congress of the CPC articulated the plan to accelerate the reform of the administrative management system and to build a service-oriented government. In early 2008, the State Council formulated a new institutional reform plan. On Mar. 15, the First Session of the 7th National People's Congress approved the "Decision on the Reform of Government Institutions." According to this plan, the overall goal of this institutional reform was to "establish a sound system of administrative management with Chinese characteristics by 2020."
The main task of the reform was to explore a "super-department" system via transforming government functions and straightening out the relations of responsibilities of different departments, in order to appropriately allocate macro-control department functions. This institutional reform involved 15 institutions. After the reform, the State Council had 27 departments, except for the State Council General Office, and local government institutions at all levels also underwent corresponding adjustments.
The 2008 reform put forward the concept of a "super-department system" for the first time, integrated many departments with overlapping functions, and made significant explorations in improving the efficiency of administrative institutions. It upheld the "people-oriented" principle and led the reform of government institutions closer to the goal of a service-oriented government.
7. 2013: Steadily establishing larger government departments that integrate the functions smaller ones have performed
The 18th National Congress of the CPC articulated a deeper reform of the administrative system, which was to build a well-structured, clean, efficient and service-oriented government that has scientifically defined functions and that the people are satisfied with. The goal was to ensure that the government was functionally capable of "allowing the market to play a decisive role in resource allocation".
In 2013, the second plenary session of the 18th CPC Central Committee approved the "State Council Plan for Institutional Reform and Functional Transformation", which aimed to 1) steadily promote the "super-department" reform, with the transformation of government functions as the core; 2) resolve issues such as overlapping agencies and functions; 3) reduce and standardize administrative approval procedures, simplify procedures, and improve administrative efficiency; 4) improve the institutional base for "super-departments". After the 2013 reform, the number of State Council departments was reduced to 25, and departments such as the Ministry of Railways and the Ministry of Health ceased to exist.
The 2013 institutional reform rationalized the relationship between the government and the market, effectively contributed to the transformation from a "management-oriented government" to a "service-oriented government", and laid an organizational foundation for deepening reforms in various fields.
8. 2018: Improving the comprehensive leadership of the CPC, and coordinating the reform of the party and government institutions
In the face of new situations and tasks in the new era, on Feb. 28, 2018, the Third Plenary Session of the 19th CPC Central Committee approved the "Decision of the CPC Central Committee on Deepening the Reform of Party and State Institutions" and the "Plan for Deepening the Reform of Party and State Institutions". Compared with past institutional reforms focused on the administrative system, the 2018 reform based itself on the general economic and social picture, coordinated the reform of party, government, military and public institutions, and highlighted the core leadership of the CPC.
The Third Plenary Session of the 19th CPC Central Committee articulated that "the primary task of deepening reform of the Party and state institutions is to improve the system for upholding overall Party leadership in a bid to strengthen the CPC’s leadership in every sector, ensure its all-encompassing coverage and make it more forceful."
To ensure that the CPC's organizations can uphold the core leadership of the Party, the "Decision of the CPC Central Committee on Deepening the Reform of Party and State Institutions" proposed to establish and improve the institutions and mechanisms by which the Party exercises leadership over major tasks, enhance the status of leadership of Party organizations among organizations of the same level, give better play to the role of the Party's functionary departments, set up Party and government institutions with integrated plans (It is advisable to merge Party and government institutions with similar functions and close ties, or make them work in one office, in order to integrate and optimize resources and efficiency), and advance reform of the Party's disciplinary inspection and the country's supervisory systems.
On Mar. 13, 2018, the State Council announced the institutional reform plan, launching a new round of "super-department" reform. According to the plan, after the reform, the number of the State Council's departments would be reduced by 8 at the ministerial level and 7 at the deputy ministerial level. In addition to the General Office of the State Council, there were to be 26 departments, 1 directly affiliated special institution, 10 directly affiliated institutions, and 2 administrative agencies.
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NPC Observer has also made a good guide on State Council Restructuring.