New streamlined government wins congress approval
The National People's Congress has approved legislation that will streamline the government and create or reorganise several key departments.
The move creates a new Ministry of Commerce and super-commissions overseeing state-owned enterprises (SOEs), economic policy, banking and a food and drug administration.
A new State Asset Management Commission (SAMC) will take over the daily management of state-owned enterprises.
'If implemented fully, the SAMC would act as a 'privatisation ministry', giving outright ownership of SOE assets to governments at various levels,' said Fred Hu, a China economist with US brokerage Goldman Sachs in Hong Kong. 'The commission could then turn enterprises around and restructure or sell them without undue interference.'
There are an estimated 180,000 state-owned enterprises worth 6 trillion yuan (HK$5.6 trillion) on the mainland, but reforms have stalled in recent years because of complicated cross-ownership of many of these firms. The commission's job would be to clarify and divide the share-holdings of the firms, which would help accelerate their restructuring and eventual sell-off.
Hu Zhisen, a textile entrepreneur and delegate from Hunan, said he voted for the legislation. 'I might invest in a state firm myself,' he said.
Gu Fengyang, a civil engineer working at a state-owned firm in Suzhou and a delegate from Jiangsu, said he also voted for the bill, but was not worried about losing his job.
'I don't think this new law will hurt state-owned firms,' said Mr Gu. 'Private enterprises create jobs and we are increasingly relying on them for employment.'
Another new body is the China Banking Regulatory Commission, which takes over the regulatory role from the People's Bank of China. The bank will now only be responsible for monetary policy.
'This should be effective,' said Huang Yiping, a China economist with US brokerage Salomon Smith Barney in Hong Kong. 'It means the government is at least serious about reforming the state banks.'
State banks, currently besieged by non-performing loan ratios of as high as 50 per cent, are in dire need of reform.
Also new is the State Commission for Reform and Development, which replaces the State Development and several similar departments.
Another new body is the Ministry of Commerce, which will take over the duties of the Ministry of Foreign Trade and Economic Co-operation as well as the price supervisory duties of the State Economic and Trade Commission. In addition, the Food and Drug Administration will be formed.
However, some people have reservations.
Qing Xiao, chairman of the China Merchants Group - which has a Hong Kong-listed subsidiary and for years operated under the Ministry of Foreign Trade and Economic Co-operation, said he was worried about the new reporting structure.
'In principle, I'm for this new law, but I'm still unclear as to how it will work and who we report to in the future.'
Wang Tianyi, an NPC delegate and chairman of the state-owned enterprise Tangshan Iron and Steel, said he was also concerned.
'We're most worried that the state asset commission will become a stern nanny,' he said.
And Minister of Agriculture Du Qinglin confirmed the concerns of those at state-owned firms who fear the worst is yet to come: 'This is just the beginning of our structural reforms.'