China to overhaul government institutions

China announced a sweeping restructuring of its government institutions at the ‘Two Sessions’ meetings – the annual meetings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) – in Beijing in March.

The changes, which are mainly aimed at streamlining bureaucracy and centralising power, amounted to China’s most significant institutional reform in years. It will cut the total number of ministerial-level entities by eight and vice-ministerial-level entities by seven, while creating seven new ministries and a number of new agencies.

Several of the new bodies will be responsible for implementing Chinese President Xi Jinping’s key policy goals, which include controlling financial risks, combating pollution, revitalising rural areas and reducing poverty, promoting the ‘Belt and Road’ Initiative and reducing corruption.

Key changes include:

  • The Market Supervision Administration – a new market regulator with wide-ranging competition and safety responsibilities that will play a large role for foreign businesses operating in China. These include business registration, pricing supervision, quality control, standard setting, drug approval, food safety, intellectual property protection, and anti-monopoly issues. Anti-monopoly responsibilities were previously handled by the National Development and Reform Commission (NDRC), the Ministry of Commerce, and the State Administration for Industry and Commerce. Safety responsibilities were previously handled by the Administration of Quality Supervision, Inspection and Quarantine and the China Food and Drug Administration.
  •  The China Banking and Insurance Regulatory Commission (CBIRC) – will be responsible for supervising and regulating the financial sector through the merger of the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC) into a new single super-regulator. People’s Bank of China – China’s central bank – will take over responsibility for the lawmaking functions of the banking and insurance sectors, which were previously held by the CBRC and the CIRC.
  • The State Immigration Administration – a new body in charge of creating and enforcing China’s immigration laws. Operating under the supervision of the Ministry of Public Security, it will assume a variety of functions previously held by the Entry-Exit Bureau and will supervise foreigners in China more broadly.
  • International Development Cooperation Agency – a new body that will take over responsibilities of the Ministry of Commerce and the Ministry of Foreign Affairs in coordinating the distribution of foreign aid, a key instrument of Chinese foreign policy and Xi’s signature Belt and Road Initiative.
  • The State Intellectual Property Office (SIPO) – will take on additional responsibilities for trademark management and the administration of geographical indications of origin functions that were previously held by the State Administration for Industry and Commerce and the State Administration of Quality Supervision, Inspection and Quarantine, respectively. SIPO will also be moved from under the jurisdiction of the State Council to the newly created Market Supervision Administration.
  • The State Administration of Taxation (SAT) – will take on additional responsibility to regulate China’s national and local tax bureaus. Tax bureaus at and below the provincial level will integrate their offices with the national tax bureau, thereby centralising oversight and administration of local taxation.
  • The National Supervisory Commission (NSC) – a new body that will take over responsibilities of the Central Commission for Discipline Inspection (CCDI), the supervisory powers of the State Council and other anti-corruption departments to form China’s new state-level anti-corruption body.
  • The National Audit Office – will be granted the authority to audit government investments and evaluate executives of state-owned enterprises (SOEs).

In addition, a number of existing ministries are to be consolidated into new single-body ministries. The key changes include:

  •  A Ministry of Natural Resources will combine the supervision of all different types of natural resources.
  • A Ministry of Ecological Environment will combine all pollution-related oversight.
  • A Ministry of Emergency Management will prepare for and respond to all natural and man-made disasters.
  • A Ministry of Agriculture and Rural Affairs will merge supervision of agriculture with rural development issues.
  • A Ministry of Culture and Tourism will coordinate and manage China’s cultural and tourism industries.
  •  A National Health Commission will be responsible for national health policy, population management, tobacco use and other health-related issues.

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