China’s cabinet reshuffle to boost opening-up

By Li Hong Source:Global Times Published: 2018/3/21 21:53:40

Illustration: Luo Xuan/GT

 

The proposals approved by the 13th National People's Congress (NPC) to revamp the central government organizational lineup are substantive and systematic, which will significantly reshape the decades-old rules of central governance in China.

Most experts say the plans for the reshuffle of the State Council, China's cabinet, will serve two objectives - to make all cabinet departments more efficient and highly responsive to their duties and be ready for impending reform and opening-up measures, and end personnel redundancy and eliminate the overlapping functions now scattered among different departments.

It's the country's "biggest government reshuffle in years, in which the State Council would have 15 fewer entities at the ministerial or vice-ministerial levels," according to the Xinhua News Agency.

The purpose of the much-noted government structural reform is to create administrative conditions to facilitate "steadier and high-quality" economic growth till 2035, and help the second-largest economy in the world keep sailing in both calm and stormy weather.

It is also intended to avoid the so-called "middle income trap" and make China a fairly developed and environmentally friendly country by that year, Chinese experts say.

Observers say the new government lineup has some clear hallmarks of the developed economies, including new cabinet ministries and agencies in charge of veterans' affairs, emergency response, immigration management, antitrust market supervision and international development cooperation. Developed countries have built up expertise in overseeing their administrative affairs and modern economies for hundreds of years.

Others see the Chinese government restructuring as a clear validation of the top leadership's intent to resolve three hot-button issues that have cropped up following years of reform and opening-up: eliminating rural poverty, curbing widespread pollution and nipping any systemic financial risk in the bud.

Chinese policymakers have pinned high hopes on the governmental shake-up to foster conditions for implementing a new wave of opening-up to be announced later in 2018, and working for a closer integration of China's economy with the global one so that more foreign countries could benefit from China's boom, Chinese experts say.

In November 2017, China announced that it will further open its financial services sector to foreign corporations. This will be achieved by increasing and eventually removing limits on foreign shareholdings in securities, fund management and futures companies. The cap on shareholdings will be increased from 49 percent to 51 percent, with a total removal within three years.

China will also lift the current limits on foreign investors' shareholdings in domestic banks and asset management companies. It will similarly increase the cap on foreign shareholdings in life insurance joint ventures set up by single or multiple foreign investors, which will move up to 51 percent. All restrictions will be removed within five years.

The Chinese central government, as always, seems to put sound economic management, and the safety of the financial system in particular, high on the agenda to boost public confidence in its governance. The National Development and Reform Commission, the Ministry of Finance and the Ministry of Commerce will retain the prime task of shepherding the economy, experts say.

The People's Bank of China, the central bank, will take on more responsibility for drafting laws and regulations, and guarding against excessive borrowing and rising debt levels, especially thwarting local governments' penchant for taking on debt to launch infrastructure projects.

The merger of the banking and insurance industry regulators will heighten supervision and help reduce the systemic risk in the crucial financial sector. The China Banking Regulatory Commission will be combined with the China Insurance Regulatory Commission to form a super-regulator overseeing all of China's banking and insurance activities. The combination will help abolish inefficiencies in the two agencies.

The author is an editor with the Global Times. bizopinion@globaltimes.com.cn



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