Today, the National People’s Congress (NPC) discussed the plan by the State Council, China’s cabinet, to undertake a profound overhaul of the central government’s bureaucracy, including the creation of seven new ministries and a series of new state agencies. The restructuring is intended to streamline and improve the efficiency of governance by providing a clearer delegation of roles and responsibilities, reducing overlap, improving coordination, and curbing turf wars among various entities. In addition, the revamp will also significantly consolidate the Party’s control over state institutions.
The proposed changes are expected to be formally approved by the national legislature on Saturday, March 17th. H+K Strategies has prepared below a brief overview of the government’s new arrangements. We will provide further insights and analysis as details continue to unfold about China’s huge shake-up of state institutions.
Merger of the banking and insurance regulators
According to the plan, China will merge the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC) into a single entity overseeing both sectors. As part of the retooling, some of the functions of the current CBRC and CIRC will be transferred to the central bank, the People’s Bank of China (PBOC), including drafting key regulations and prudential oversight.
The amalgamation of the financial watchdogs marks the Xi administration’s latest effort to tighten and improve oversight of China’s financial system and keep its riskiest vulnerabilities in check. And the PBOC has clearly emerged from the government overhaul in a greatly strengthened position, having been empowered beyond its traditional mandate as the advisor on monetary policy to now also have lawmaking authority for the financial sector. In the future, the PBOC looks set to increasingly call the shots as the chief policymaker for China’s US$43 trillion banking and insurance industries, while the two newly combined watchdogs will be tasked with implementing its directives.
A new national market regulatory administration
The creation of a new national market regulatory administration was another one of the government make-over’s biggest announcements. The new body will be in charge of pricing supervision and antimonopoly enforcement, replacing the functions currently held by China’s three national antitrust regulators, the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), and the State Administration for Industry and Commerce (SAIC). Furthermore, it will also take over roles from the General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) and the China Food and Drug Administration (CFDA), holding responsibility for overseeing issues such as quality control and food and drug safety.
Two new super-ministries for the environment and natural resources
The reshuffle will also include the debut of two new super-ministries covering the environment and natural resources. The existing environmental protection ministry will be enlarged into the new Ministry of Ecological Environment. Under the new framework, the new entity will absorb responsibility for climate change issues and greenhouse emissions policies from the NDRC, water pollution from the Ministry of Land and Resources, and agricultural-related pollution from the Ministry of Agriculture. And the proposed new Ministry of Natural Resources will bring together under one roof functions previously held by a number of different bodies, including the Ministry of Land and Resources, the State Oceanic Administration (SOA), and the national surveying and mapping bureau.
Further reorganization of state institutions
For the remaining new ministries, China will establish bodies governing culture and tourism, agriculture and rural affairs, veterans affairs, and emergency management as well as a new national health commission. Examples of other new government entities will include a special bureau to oversee immigration issues and an international development cooperation agency tasked with formulating and implementing policies related to overseas aid efforts, supporting China’s increasingly dynamic and assertive approach to foreign affairs, particularly the Belt and Road Initiative.