Five Major Points Concerning State Council Restructuring

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Last updated at: (Beijing Time) Friday, March 07, 2003

Five Major Points Concerning State Council Restructuring

Structural reform of the State Council consists of five major points: deepening the reform of the State-owned assets management system; bettering the macro-control system; strengthening the financial supervision and management system; continuing to push forward the reform of the circulation management system; and strengthening the construction of food security and safety production supervision and management system.

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Entrusted by the State Council, Wang Zhongyu, state councilor and concurrently secretary-general of the State Council, made explanations on the plan for the structural reform of the State Council on March 6.

He said, structural reform of the State Council consists of five major points: deepening the reform of the State-owned assets management system; bettering the macro-control system; strengthening the financial supervision and management system; continuing to push forward the reform of the circulation management system; and strengthening the construction of food security and safety production supervision and management system.

--In order to deepen the reform of the State property management system. In a bid to implement the requirement of the 16th National Congress of the Communist Party of China (CPC), further successfully run State-owned enterprises (SOEs), propel the strategic adjustment of the layout and structure of the State-owned economy, develop and expand the State-owned economy, persist in the separation of government administration from enterprise management in a better way, implement the separation of ownership from management, really ensure that the enterprise engages in independent management and assumes responsibility for its own profits and losses and realizes the preservation and increment of the value of State-owned assets, the functions of the State Economic and Trade Commission in guiding the reform and management of SOEs, the functions of the Central Enterprise Working Commission, as well as part of the Finance Ministry's functions in the management of State-owned assets will be integrated, and a State property regulatory and management commission (SPRMC) will be established.

The main responsibilities of the SPRMC are as follows: performing the investor's responsibilities on the basis of its authority and in accordance with the Company Law of the People's Republic of China (PRC) and other laws and administrative regulations, guiding and advancing the reform and reorganization of SOEs; sending out boards of supervisors to some large enterprises on behalf of the State; appointing or removing leading members of enterprises through legal procedures, assessing them and rewarding or punishing them in accordance with their business achievements; exercising supervision and control of the situation regarding the preservation and increment of State-owned assets under its management through statistics and examination; enacting laws and administrative regulations on the management of State-owned assets and formulating rules and regulations, guiding and supervising according to law local management of State-owned property; undertaking the task of handling other matters entrusted by the State Council.

In reforming the State property management system, it is necessary to give full play to the central and local initiatives on the premise of upholding State ownership. The State Council will lose no time to formulate administrative regulations on State property management and exercise management and supervision over State-owned assets according to law.

Perfecting the macro-control system, reorganizing the State Development Planning Commission into the State Development and Reform Commission (SDRC). The reorganization of the State Development Planning Commission into the SDRC is aimed at comprehensively coordinating the reform in various fields, so that reform will better serve to promote development. The functions of the Structural Reform Office under the State Council will be incorporated into the SDRC.

In order to reduce overlapping and redundant functions, improve work efficiency, strengthen and perfect macro-control and regulation, the functions of the State Economic and Trade Commission in the aspects of industrial planning, industrial policy, the regulation of economic operation, technological renovation, investment management, the macro-guidance to enterprises of different forms of ownership, promotion of the development of medium and small enterprises and planning for the import and export of major industrial products and raw and semi-finished materials will be incorporated into the SDRC.

The SDRC is a macro-control department responsible for the comprehensive study and formulation of policy on economic and social development, striking an aggregate balance, and guiding the overall economic system reform. Its main responsibilities are: drafting and organizing the implementation of national economic and social development strategy, long-term program, annual plan, industrial policy and price policy, monitoring and regulating national economic operation, keeping a balance of economic aggregate, optimizing major economic structures, arranging major State construction projects, and guiding and advancing economic system reform. Entrusted by the State Council, the SDRC makes a report on the plan for national economic and social development to the National People's Congress (NPC).

A banking supervision and regulation commission will be set up in China to strengthen the financial supervision and regulation system. In order to strengthen financial supervision and management, ensure the safe, steady and efficient operation of financial institutions and enhance the ability to prevent and diffuse financial risks, the functions of the People's Bank of China in supervising and regulating banks, property management companies, trust and investment corporations as well as other financial institutions handling the work of savings deposits will be separated and will then be integrated with the related functions of the Central Financial Working Commission, a Banking Regulation and Supervision Commission (BRSC) will be set up as a ministerial-level institution operating directly under the administration of the State Council.

On the basis of authority, the BRSC will exercise unified supervision and control of banks, property management companies, trust and investment corporations as well as savings deposits financial institutions. Its main responsibilities are: drafting policies and regulations on the supervision and regulation of banking industry, undertaking the responsibility of supervising market access and operation, investigating and prosecuting acts of violating laws and regulations according to law.

Along with the establishment and perfection of the socialist market economic system, the Bank of China, as the central bank, will play a more prominent role in the macro-control system. The People's Bank will no longer undertake the above-mentioned functions of financial supervision and regulation. Thereafter, the People's Bank should strengthen its function in formulating and implementing the monetary policy, keep perfecting the related rules on the operation of financial institutions and improve its macro-control policy on the financial industry, give better play to the role of the central bank in macro-control and preventing and diffusing financial risks and further improving financial service.

To further expedite the reform of the circulation management system, a ministry of commerce will be established.

A ministry of commerce will be established in a bid to adapt to the development trend of the integration of domestic and foreign trade business and the new situation emerged after China's entry into the World Trade Organization (WTO) and promote the formation of a modern market system, the State Economic and Trade Commission's functions in the management of internal trade, foreign economic coordination, the planning for the import and export of important industrial products and raw and semi-finished materials and organization of the implementation of the plan, the functions of the State Development Planning Commission in the planning of the import and export of agricultural products and organization of the implementation of the plan, as well as the functions of the Ministry of Foreign Trade and Economic Cooperation will be integrated.

The Ministry of Commerce is a State Council department in charge of domestic and foreign trade and international economic cooperation. Its main responsibilities are: studying and formulating policy regulations on standardizing market operation and circulation order, expediting the establishment and perfection of a market system, deepening the reform of the circulation system, monitoring and analyzing the conditions of market operation and commodities supply and demand, organizing and carrying out international economic cooperation, undertaking the responsibility of organizing and coordinating matters relating to anti-dumping and anti-subsidies and organizing investigation into industrial damages.

Strengthening the construction of system for supervision and regulation over food security and safety production. In order to guarantee the health of the people and safety of their lives and tighten supervision and regulation over food security, a State food and drug administration will be established on the basis of the State Drug Administration, which will remain an institution directly under the State Council. Its main responsibilities are: it will continue to exercise the function of the State Drug Administration, undertake the responsibilities of comprehensive supervision related to the management of safety of food, health products and cosmetics, organize and carry out investigation and prosecution of major accidents according to law. The State Administration of Work Safety under the management of the State Economic and Trade Commission will be upgraded into an institution directly under the State Council and will take charge of comprehensive supervision and management over safety production and strengthen supervision over coal mining safety.

According to Wang Zhongyu, The State Family Planning Commission will be renamed the State Population and Family Planning Commission in order to strengthen studies on population development strategy and promote the comprehensive coordination of population and family planning work.

After reform, apart from its General Office, the State Council will be composed of 28 departments. According to the stipulations of the Organic Law of the State Council, the readjustment of these institutions and the establishment of the departments of the State Council will be examined and approved by the First Session of the 10th National People's Congress.

Ups and Downs of Gov't Reforms

The State Council, China's cabinet, has never stopped working since 1978 to make its role more suitable for the country's increasingly market-oriented economy.

By 2002, the State Council had undergone four major changes since China began its reform and opening-up policies in late 1970s.

The overhauls have been mainly aimed at making government bodies operate more efficiently.

When the People's Republic of China was founded in 1949, it established 35 central ministries and commissions.

But the number had soared to 100 just two decades later.

To arrest this trend, the first administrative reform was carried out in 1982, cutting the number of ministries and commissions to 61.

The number of ministerial staff was decreased from 51,000 to 30,000.

Five years later, however, the number had again grown to 72.

A second reform was launched, reducing the number of ministries to 68.

By 1992, the situation had again deteriorated, with the number of ministries and commissions reaching 86.

In 1993, about 40 million people were employed in governments at all levels, compared with around 15 million in 1979.

So another round of restructuring took effect in 1993, which temporarily fixed the number at 59.

But the old establishments faced increasing pressure as problems such as overstaffing, bureaucracy and financial burdens emerged.

A new government downsizing campaign in 1998 was aimed at streamlining overlapping government functions.

This round of governmental restructuring was to adapt the role of the government in accordance with the market economy.

The move is based on the idea that the government is not the parent of a big family who handles everything, but is instead a supervisor or guide who controls the macro-economy through legislative and economic means.

Enterprises became independent from the government as the central and provincial governments reduced and restructured departments for the purposes of economic administration.

In 1998, there were 8 million civil servants but, in the three years to 2001, the government cut that number in half.

The system will still need further improvement as the market economy develops more quickly and becomes stronger.

By People's Daily Online

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