China announces largest government reshuffle in years

Politics & Current Affairs

A “major cabinet reshuffle” was announced at the second week of China’s annual Two Sessions political gathering, Xinhua reports. The state news agency says it is expected to be “the eighth such move in more than three decades,” and the largest in years.

Many of the changes address long-standing “turf wars” between agencies, or establish new state organs to deal with issues such as veterans’ affairs, the South China Morning Post reports. The New York Times writes (paywall) that “broadly, the proposals are part of a plan that President Xi Jinping laid out last month aimed at strengthening the top-down control of the Communist Party.”

A few of the most important changes are:

  • The merger of the China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC). Bloomberg reports, “Some of their functions, including drafting key regulations and prudential oversight, will move to the People’s Bank of China,” in “the biggest industry overhaul since 2003.”
  • This move was first reported by Bloomberg to be under consideration in January, and rumors of restructuring of the regulatory structure for China’s $43 trillion banking and insurance industry have been passed around for a while. The Times notes, however, that this proposal “falls short of widely discussed plans over the past few years of the possible creation of a financial super-regulator that would also include China’s central bank and the China Securities Regulatory Commission.”
  • A “powerful new competition and food safety regulator” is also being created, Reuters reports, centralizing the antimonopoly decision making that had previously been made by three bodies, “the National Development and Reform Commission (NDRC), the Ministry of Commerce and the State Administration for Industry and Commerce (SAIC).”
  • The new Ministry of Ecological Environment will be founded, as an expanded and significantly more streamlined version of the old Ministry of Environmental Protection. Leading Chinese environmentalist Ma Jun told (paywall) the New York Times that it was a “major, major change” that addressed “so many overlapping and duplicative responsibilities, for example, in areas like water management.”
  • A Ministry of Natural Resources will be created, which SCMP reports will have broad oversight powers on how water and land can be used, and which will absorb some responsibilities of the National Development and Reform Commission. However, SCMP notes, the plan “fell short of establishing an all-powerful energy ministry to oversee the country’s vast coal, oil and power sectors despite intense speculation this would be the case.”
  • A new anti-corruption agency, called the National Supervision Commission, was proposed in a final draft of legislation on the same day that the other government overhauls were announced. The Times notes (paywall) that it would “expand some of the investigatory powers of the current main anti-graft agency, the party’s Central Commission for Discipline Inspection,” but unlike CCDI, would have “the power to investigate other holders of public posts, especially administrators and managers who are not party members.”

Other notable changes: the establishment of a Ministry of Veterans Affairs, which Reuters points out comes in the wake of “February of last year, [when] Chinese military veterans staged two days of demonstrations in central Beijing, demanding unpaid retirement benefits”; and a new foreign-aid-coordinating International Development Cooperation Agency, which the State Council says will “better serve the country’s global strategy and to build the ‘Belt and Road Initiative,’” SCMP reports. We think it is important to note, however, that China gives a fifth as much foreign aid as the U.S., and there is no evidence of a “master plan” for it.

Read more about the government restructuring from Trivium, Bloomberg, the Diplomat (paywall), or from a basic factbox at Reuters. Also read the Reuters report on the CBRC-CIRC merger, and an SCMP report on the veterans affairs reform.