Cabinet reshuffle
By Yuan Yuan  ·  2023-03-17  ·   Source: NO.12 MARCH 23, 2023
The plan for reforming the institutions of the State Council is approved at the third plenary meeting of the First Session of the 14th National People's Congress in Beijing on March 10 (XINHUA)

A restructured ministry, a new national financial regulatory administration and a new bureau are some of the major changes in the latest institutional reform plan for the State Council, China's cabinet.

Passed at the third plenary meeting of the First Session of the 14th National People's Congress (NPC) on March 10, the reform plan is the ninth round of reorganization of State Council institutions since the reform and opening-up policy was first introduced in 1978 and the largest one since 2018.

Self-reliance in sci-tech

A highlight of the reform is the restructuring of the Ministry of Science and Technology (MOST). Established in 1998, the MOST used to deal with almost everything related to science and technology.

Under the reform plan, some departments of the MOST will be merged into other ministries. The function of organizing and formulating plans for promoting scientific and technological development in agriculture and rural areas, for example, will be transferred to the Ministry of Agriculture and Rural Affairs.

The responsibilities of formulating policies for the growth and industrialization of hi-tech industries will be taken by the Ministry of Industry and Information Technology. The duty of managing foreign experts will be undertaken by the Ministry of Human Resources and Social Security.

"The restructuring of MOST will place increased importance on basic research and mobilize more national resources to make breakthroughs in key research, especially in some bottleneck technologies," Li Zhi, a member of the 14th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the country's top political advisory body, and an academician with the Chinese Academy of Sciences, said during a group discussion at the First Session of the CPPCC National Committee, which took place in Beijing from March 4 to 11.

Li said this move will help ease China's reliance on foreign technologies. "Tackling key bottleneck issues will be the priority of the restructured MOST," he said.

Xu Nanping, a member of the CPPCC National Committee and an academician with the Chinese Academy of Engineering, said the streamlined MOST will strengthen the top-level planning of science and technology development and allow scientists working in basic sciences to enjoy a more favorable environment.

"One of the critical duties of the reformed MOST is to build systems for technology transfer and commercializing scientific findings," Xu said. "It is conducive to further adjusting the structure of investment in research and development, and strengthening the management of intellectual property rights."

The reform also prioritized the intellectual property system. Based on the plan, the China National Intellectual Property Administration will be elevated to an agency directly affiliated to the State Council. "It is a significant step to enhance the status of intellectual property in China's strategy and will help to build up a friendlier environment for business and innovation," Xu said.

Optimizing financial supervision

Another major reform under the plan is the proposed establishment of a national financial regulatory administration. The new administration, directly under the State Council, will replace the China Banking and Insurance Regulatory Commission (CBIRC).

The new administration will be in charge of regulating the financial industry except for the securities sector. It will also take on certain functions of the People's Bank of China (PBC), China's central bank. The duties of the China Securities Regulatory Commission regarding investor protection will also be transferred to the new body.

"The new institution will be a significant step in modernizing China's financial regulatory system, improving supervision efficiency and defusing financial risks," Zhu Shumin, a member of CPPCC National Committee and former Vice Chairman of CBIRC, said.

He added the institutional reform of the financial sector is expected to fill the vacuum in market supervision caused by different regulatory standards and blurred supervisory responsibilities.

A local-level financial regulatory mechanism based on agencies administered directly by central regulators will also take shape, according to the plan. The institutional structure and resources of these agencies will be optimized according to local conditions across regions.

Tian Xuan, an NPC deputy and Associate Dean of the Tsinghua University PBC School of Finance, gave analysis on the necessity of this move during an interview with China Youth Daily. "Although China's financial regulatory system has been improved in recent years, it has been difficult for central financial regulators to directly regulate local financial sectors," he said. "Some local governments, in reckless pursuit of economic development, have intervened in local financial sector work. Some have even conducted illegal fundraising, leading to higher financial risks in these regions."

The new move will optimize the financial supervision system, and standardize the relationship between central and local authorities in financial supervision, Tian said. "It is conducive to breaking the institutional barriers to financial development," he said.

A new bureau

A notable move in the reform plan is to establish a national data bureau. Administered by the National Development and Reform Commission (NDRC), the new bureau will be responsible for coordinating the sharing and development of the country's data resources.

It will take on certain functions of the Office of the Central Cyberspace Affairs Commission and the NDRC.

"Data have become a new production factor in modern society, facilitating resource allocation and business transactions," said Yang Decai, a member of the 14th CPPCC National Committee and a professor at Nanjing University in Jiangsu Province. "But problems have emerged in data management."

Yang listed a lack of transparency, the absence of unified standards and the possibility of data monopolies as potential problems facing the industry.

"Now, duties related to data management are scattered among different departments," he said. "The new bureau is expected to strengthen the overall coordination of data management and enhance data security."

Other aspects of the institutional reform plan include rural revitalization and elderly care. Hao Dong, Deputy Director of the Department of Strategic Philosophy at the Party School of the Communist Party of China Central Committee, concluded during an interview with China Daily that each round of institutional reform has aimed at "streamlining," resulting in the number of State Council departments decreasing from 100 in 1982 to 26 now.

This latest reform plan did not reduce the number of departments. However, it noted an upcoming 5-percent reduction of bianzhi, or employment quota, across central government agencies. "This will help China use institutional advantages to improve national governance," he said, hailing the reform as an important step in enhancing the capacity and efficiency of governance amid China's modernization drive.

Copyedited by G.P. Wilson 

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