China’s two session and state council reform
THE China’s Two Sessions are still going on in its capital Beijing. Its Government Work Report has rocked the world business community for its immense last five years socio-economic achievements and healthier prospects of the future. The majority of the economists have termed its GDP target of 5 percent as sign of superior economic policy, facilitator of global economy, icon of stability and sustainability and above all outcome of constant and continued structural reforms. Undoubtedly, in the last five years China has become engine of global economic growth and now its share in the global economy has reached 30 percent which is indeed momentum and remarkable. Now it has started its journey of opening-up, modernization and massive industrialization.
In this regard, the 14th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) has planned deep institutional reforms of the State Council which has gained worldwide attention. These have become hot topic in the international media outlets. The draft amendment to China’s Legislation Law was deliberated on March 7 which primarily focused on sci-tech, financial regulation, data management, rural rejuvenation, intellectual property protection and senior citizen caring. It seems that all these amendments are meant to achieve more importance in institutional setup, more contributory role in functional allocation, productive role in institutional mechanism and more efficient role in operational management.
Additionally, the reform amendments are the imperative of national rejuvenation against a harsh international environment which is a timely endeavour and would have tremendous implications for China and the world at large in the days to come. Historically, the said reform would be the ninth such reform since China’s reform and opening-up began over four decades ago. It has overarching theme of optimizing government institutions and modernizing national governance to further consolidate and integrate China’s socioeconomic potential to widen the opportunities and meet the challenges of the time. Hopefully these will achieve their desired goals in the future.
Critical analysis reveals that the previous eight reforms announced and implemented during critical junctures along China’s development path, and have played a pivotal role in boosting sustained growth and ensuring national progress. In this connection, the reform in 1982 was aimed at deepening economic restructuring from planned economy, and slashed State Council institutions from 100 to 61. Thus it was transformational reforms which were initiated to change the nature, composition, scope and utility of the prevailing economic, production and governance system in the country. Moreover, the reforms in 2013 were mainly based on the function reform of government institutions. Therefore, it was functional reforms which succeeded to change the functionality of the states and its associated organs.
The last reform in 2018 has further consolidated government bodies to 26 under the State Council. Thus it was consolidative reforms which successfully created spirits of integration, interaction, stability and sustainability in the economy, politics and productive channels. Interestingly, the reform 2023 has proposed to downsize 5 percent of positions in all departments of the central state organs, aimed at streamlining government institutions and boosting efficiency. So it initiated more smarter and good governance system in the country. It has also proposed to initiate meaningful down-sizing in the state machinery.
Nevertheless, the proposed reform upheld sci-tech development a key strategic priority. Sci-tech is the key to socioeconomic development in the future. Over the years, China has witnessed robust sci-tech development. According to the Australian Strategic Policy Institute (ASPI) China had a “stunning comparative advantage in 37 of 44 critical and emerging modern technologies. Unfortunately, the USA has initiated numerous policy measures against China mainly, imposition of socio-economic, trade, business and technological sanctions through strengthening of export controls, tightening of two-way investment screening, and dampening people-to-people exchanges in the sci-tech sector.
The restructuring of the Ministry of Science and Technology and establishment of Science and Technology Commission of the Communist Party of China (CPC) Central Committee is dedicated to the imperative of sci-tech development by coordinating the whole-process management of sci-tech innovation, pushing for breakthroughs in critical technologies and achieving greater self-reliance to protect China’s national interest and safeguard national security. The plan also proposed upgrading China’s intellectual property management to protect indigenous innovation and ensure a legal environment for sci-tech development.
Interestingly, the reform on the financial sector is watched across the world. Ever since the global financial crisis in 2008, financial risk management has been a major concern in China and around the world. To achieve national financial stability, sustainability, openness and transparency China’s State Council set up the Financial Stability and Development Committee in 2017, and consolidated the Banking Regulatory Commission and Securities Regulatory Commission into one body in 2018.
It aimed at ensuring the stable and healthy development of the financial market, the State Council has now proposed to modernize the financial watchdog by setting up a National Financial Regulatory Management Administration (NFRMA) directly under the State Council. It tasked to strengthen risk management and protect financial consumers. Hopefully, the proposed reform would also reform local financial regulatory bodies to mitigate grass-root level financial risks and build social resilience against financial shocks. Thus harmony and stability in the national financial system would be systemized, streamlined and segmented which would be vital to protect financial and banking sectors from any internal and external shock.
Ours is the age of data sciences and its management has become one of the hottest topics of human survival and technological superiority. It is now decided to create a National Data Bureau (NDB) which would be a major step towards digital China. It would also unleash the great potential of data while overseeing data security, data privacy and data flow. Furthermore, facing the prospect of demographic change, the government would invest more resources to upgrade the elderly-care work mechanism to deliver more tangible benefits to common people which vividly reflects China’s people friendly policies.
The reform also desires to push rural revitalization through optimizing the functions of the Ministry of Agriculture and Rural Affairs. China would bring the Public Complaints and Proposals Administration directly under the State Council which would further enhance spirits of good governance. To conclude, the reform would be an important step toward China’s good governance based on massive modernization and common prosperity endeavour. Hopefully, it would improve China’s business environment and promote ways and means to achieve desired goals of socio-economic development, modernization, industrialization and opening-up in the global post-pandemic recovery.
