The Chinese government will form a new regulator to oversee many areas of the country’s financial system, as well as the use of data and related digital technologies, according to a proposal submitted for consideration by the National People’s Congress on Tuesday. Several other government agencies, including the Ministry of Science and Technology, will either be restructured or part of their management responsibilities will be transferred to other departments. The staffing of various departments of the central state organs will be uniformly reduced at a rate of 5%.
China’s State Councilor and Secretary-General of the State Council Xiao Jie said that the State Council’s institutional reform focuses on strengthening the optimization and adjustment of institutional responsibilities in key areas such as science and technology, financial supervision, data management, and rural revitalization.
Xiao Jie explained the State Council’s institutional reform plan to deputies at the National People’s Congress on Tuesday. He said that in the implementation of institutional reform, we must resolutely safeguard the authority of the Party Central Committee and centralized and unified leadership.
The National People’s Congress is expected to pass the plan procedurally on Friday.
The institutional reform plan is part of a broader overhaul of the Chinese Communist Party and state institutions approved by senior party officials last week. Insiders and analysts say the reforms will continue Mr. Xi’s overall strategy to bolster himself and the Communist Party, which has nearly 97 million members, at the center of Chinese society.
Xiao Jie’s speech focused on reforms of state institutions that would centralize and streamline key parts of China’s sprawling bureaucracy with an eye toward making policy more swift and efficient.
He did not specify how the party would reform its own bureaucracy. The plans are likely to be announced following the National People’s Congress, China’s legislature, concludes its annual session on March 13.
Overall, the institutional overhaul marks a further departure from efforts begun more than 40 years ago by Deng Xiaoping, chief architect of reform and opening up, to draw a clearer line between party and government The radical movement undermined the professionalization of the civil service and improved governance.
In this way, it often appears on the surface that the party and government agencies operate in parallel, and that the power to design and implement policies is delegated to the government agencies to a certain extent. However, Xi Jinping has reversed that trajectory, emphasizing the party’s overall leadership over state governance, a shift he is expected to accelerate during his third five-year term.
Analysts saw Tuesday’s reform plan as a sign that Mr. Xi, despite an undercurrent of dissatisfaction with his overbearing style, still stuck to his core philosophy of strengthening the Communist Party’s centralized, unified leadership. Xi often blames a slow-moving bureaucracy among grassroots officials for getting in the way of his agenda.
The latest overhaul builds on reforms to party and government institutions in 2018, when China undertook its most comprehensive institutional overhaul in more than a decade. The reform measures at that time were also directed by Xi Jinping. Through the reforms, the CCP was more directly responsible for policy formulation in the financial, economic and diplomatic fields.
This latest round of reforms continues that approach, strengthening party control while making some operations more transparent, such as the establishment of a national data agency.
The proposed National Data Bureau would centralize the management of China’s vast amount of data, reversing the current arrangement of joint oversight by multiple government departments. The Wall Street Journal previously reported on the Chinese government’s plans to form the National Data Bureau.
Qiheng Chen, a non-resident researcher at the Asia Society’s Center for China Analysis, said the establishment of the NDB was a challenge to the existing cybersecurity watchdog, the Cyberspace Administration of China. A reform with expanded functions, the Cyberspace Administration of China has little expertise outside of censorship work. He said the agency would get more resources, manpower and a larger budget to enforce the regulations.
The State Council’s institutional reform plan also includes changes to the way the Chinese government manages the technology industry. The Ministry of Science and Technology will be streamlined, some of its management responsibilities will be transferred to other agencies, and the department will be adjusted to focus more on promoting China’s science and technology development.
The new financial regulator, to be named the State Administration of Financial Supervision and Administration, will build on the China Banking and Insurance Regulatory Commission. Some functions of other government agencies will also be assigned to the State Financial Regulatory Administration, such as: the People’s Bank of China’s day-to-day supervision of financial groups such as financial holding companies, and the China Securities Regulatory Commission’s investor protection duties.
According to the plan, following these adjustments are completed, the China Banking and Insurance Regulatory Commission will no longer be retained, and the China Securities Regulatory Commission will become an institution directly under the State Council.
The formation of the State Administration of Financial Supervision will lay the groundwork for a more fundamental shift in the direction of the CCP-led financial affairs.
In a parallel adjustment, China also plans to revive its Central Financial Work Commission, a policy-making body that existed between 1998 and 2003, The Wall Street Journal reported. According to people familiar with related issues, the Central Financial Work Committee will be an equivalent organization within the party and the State Administration of Financial Supervision and Administration. Basically, it will be composed of the same personnel and will perform both party and government duties.
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