Specifics of China’s Cabinet Reshuffle

Institutional reform plan of the State Council of China was endorsed on March 18 at the first session of the 13th National Peoples Congress. As a result， the quantity of ministerial level institutions within the State Council will be reduced by eight and those at the deputy ministerial level will be reduced by seven. Thorough analysis shows that this reform plan has the following features：

Optimizing Function of Government Departments

Historically in Chinese governance it was not unusual for eight or nine government departments to cosign an official document or take joint action on a certain problem. The trend reflected the capacity for inter-agency coordination and cooperation， but also exposed disadvantages of an irrational division of labor among various agencies. Water pollution prevention is a good example of this phenomenon. Ground water was the responsibility of the Ministry of Land and Resources， surface water was the responsibility of the Ministry of Environmental Protection， effluent outlet installation was the responsibility of the Ministry of Water Resources， prohibiting the overuse of fertilizers and pesticides in rural area was the responsibility of the Ministry of Agriculture， and water in the sea was the responsibility of the State Oceanic Administration. With this reform， everything relating to water pollution will be covered by the newly-formed Ministry of Ecological Environment.

Its worth noting that the basic logic of this reform is to improve the government organizational structure， functionality and work procedures so that government responsibilities are fulfilled with integrated power. Auditing presents another good example. The inspection of major projects was formerly the responsibility of the State Development Planning Commission. The supervision of the implementation of the central budget was the responsibility of the Ministry of Finance. The audit of the leadership of state-owned enterprises was performed by the State-owned Assets Supervision and Administration Commission. After this reform， everything will be the responsibility of the new National Audit Office.

Transforming Governmental Function of Market Regulation

The responsibilities of the State Administration for Industry and Commerce， the General Administration of Quality Supervision and Inspection， and the General Administration of Food and Drug Administration will be merged into the new State Market Regulatory Administration. On the surface， this move solves the problem of multiple layers of repeated law enforcement for market entities. Further down， the establishment of the new administration enhances the transformation of government functions.

Contrasting the previous method of relying on administrative examination and approval to “filter out” unqualified enterprises， this series of reforms of the business system has given Chinas market regulation a new style in safeguarding fair competition and optimizing the business environment by providing information publicity， preventing monopolies and providing other services.

The integration of responsibilities of the three anti-monopoly agencies means that in the future， both enterprises that abuse a dominant position and governmental agencies that issue regulations to obstruct fair competition will be targeted by the new State Market Regulatory Administration.

Establishing New Departments for “Beautiful China”

Three of the newly-formed government departments are closely associated with “Beautiful China，” including the Ministry of Ecological Environment. The other two new departments are the Ministry of Natural Resources and the State Administration of Forestry and Grassland， which will take over responsibilities related to land and space planning and ecological conservation and restoration from the former ministries of land and water resources， agriculture and forestry.

In the future， the Ministry of Natural Resources will exercise “owner” responsibilities for all natural resource assets. This move will prevent the “tragedy of unclaimed land，” wherein “unowned” natural resources are wantonly destroyed. It will lay the foundation for new reforms such as a term-end accountability audit of natural resource assets for leading officials.

Invigorating Forces of Innovation

The key to whether China can realize transformation from old growth drivers to new ones and become truly strong lies in whether the country can travel the road of innovation-driven development.

This reform has optimized the innovation engine. The Ministry of Science and Technology has been restructured to strengthen， optimize and transform governmental functions related to science and technology management and services. At the same time， the State Intellectual Property Office has been restructured to strengthen the creation， protection and application of intellectual property to invigorate the “primary driving force.”

Planning to Prevent Risk

Preventing and minimizing risk is another goal of this institutional reform plan.

Considering that natural disasters occur frequently in China， the plan to integrate various responsibilities such as earthquake relief， forest fire prevention， flood prevention and drought relief under the new Ministry of Emergency Management effectively curtails serious security risks. The establishment of an effective national emergency response system under unified leadership with integrated power and responsibility will help to ensure public safety and social stability.

In current circumstances， financial mixed operation is gradually becoming a trend， new business forms emerge endlessly， and financial risk is increasingly contagious across industries and markets. The reform plan merges the China Banking Regulatory Commission and the China Insurance Regulatory Commission to solve the problem of unclear regulatory responsibilities， cross-regulation and regulatory gaps， effectively laying a foundation for averting systemic risk.

Strengthening Management of Foreign Affairs

With the rise of Chinas comprehensive national strength， an increasing number of foreigners choose to work and live in China， and Chinas participation in international cooperation is on the rise.

To promote the implementation of the win-win strategy of opening up， the reform plan has formed special government departments to address such developments.

The State Immigration Administration will be responsible for coordinating the formulation and implementation of immigration policy， managing foreigners who have been living or working in China without legal formalities and repatriating illegal immigrants.

The National Agency for International Development Cooperation will be responsible for promoting reform in foreign assistance and formulating specific foreign assistance programs.

Solving Problems with a People-Centered Approach

In its official documents， the Chinese government has repeatedly emphasized its commitment to people-centered philosophy in its efforts to modernize the countrys governance system and governance capabilities. One more feature of this reform plan is its focus on peoples livelihood to solve major problems.

The formation of the National Health Commission will promote implementation of the “Healthy China” strategy. It will also promote the idea of all-round wellness， shifting the focus from treating ailments to health care.

The formation of the State Medical Insurance Administration will facilitate the coordination of medical services， medical insurance and pharmaceuticals. Not only will it ensure peoples right to medical care but also meet the demand of reform. For example， reform of medical insurance is intended to play a restrictive role in regard to the cost of pharmaceuticals.

To protect the legitimate rights and interests of military personnel， the Ministry of Veterans Affairs will be formed to provide better services to veterans.

The reform plan also relates to other aspects of peoples livelihood. The formation of the Ministry of Agriculture and Rural Affairs， for example， will accelerate the modernization of agriculture and rural areas.