China's government restructure won't succeed without limits on state power

Hu Shuli says the laudable aim to rationalise the government's role must in the end help China build up its market economy and civil society

PUBLISHED : Thursday, 21 March, 2013, 12:00am
UPDATED : Thursday, 21 March, 2013, 2:50am

After months of speculation, the reorganisation of China's State Council has finally been approved by the National People's Congress.

Under the shake-up, China's rail business will no longer be managed by the regulator. Three national agencies will be formed or beefed up - on health and family planning; food safety; and media and publication. Two others, the National Energy Administration and the National Oceanic Administration, also saw their scope expanded. These changes, as well as the members of the new cabinet, are a matter of great public concern, given their impact on China's development.

The reorganisation is notable for several reasons.

First, it is primarily a response to "some long-standing, prominent social problems", as Vice-Premier Ma Kai put it in the blueprint for the overhaul. It also sought to address issues of public concern, including rail operations, health care, and food and drug safety.

Problems in these areas have become prominent as China has developed; some are serious, needing urgent attention. Apart from the railway problems, which were a legacy of the planned economy, the rest emerged after the country undertook market reforms.

Second, the overhaul seeks incremental rather than drastic change. It streamlined functions without upsetting vested interests. This is clear from the names of the new or newly expanded agencies.

Third, agencies in charge of macro-economic planning were left untouched, and no government role was abolished, only transferred. Thus, government power was not only not weakened, it was in fact strengthened. The reason for this cautious approach could be found in Ma's warning of the difficult economic and social challenges that await China.

Compared with the six previous overhauls of China's ministries, the reform this time appears to be more low-profile and pragmatic. No grand theme was trotted out, unlike the times in 1982, 1998 and 2003 when reorganisation was likened to a revolution. Also absent were the fierce ideological debates of the past, on the relationship between government and market, big or small government, institutional reform versus systemic reform, and the ills of bureaucratic thinking.

The focus this time is on "changing the functions of government". Notably, the full title of the blueprint mentions this, alongside the goal of "organisation reform".

In fact, no organisation reform is possible without changing the substance of government function. If only cosmetic changes are made, and government power that should be weakened is instead strengthened, the so-called reorganisation will contribute nothing to the goal of building a sound market economy, or help China solve its immense economic, social, political and environmental problems.

Last month, the second plenary session of the party's 18th Central Committee said the reorganisation should "reduce or decentralise the approval procedures for investment projects; reduce or decentralise the vetting and approval for production and business activities; reduce the layers of qualification and eligibility licensing; reduce government fees and payments; streamline overlapping government duties; simplify industrial and commercial registrations; improve the management of social organisations; improve and strengthen marco-economic planning; strengthen construction of basic infrastructure; and improve the rule of law". These are good guidelines for the new government.

To be sure, redefining government functions isn't easy. The key lies in clarifying the relationship between government, market and the people.

First, power must be restricted. In today's China, this means the government must stop interfering in business, investment activities, public affairs and social intermediary organisations. The government should let the market allocate resources. It leads, but works with social groups and civil society for social progress.

Over the three decades of reform and opening up, interest groups have grown only stronger. Those in power will always seek to strengthen their control, helped along by people who have been more than willing to overlook the rules. No serious attempt at reform can ignore this. As previous government reorganisations have shown, this is the most difficult challenge reformers must overcome.

Thus, if this reorganisation is to succeed, the government must do much more than redraw the organisation chart and spell out the new job scopes. To really serve the people, as their job demands, government agencies and officials must have self discipline, and their conduct be subject to public scrutiny.

It is the people that grant government its power - this is the view that government officials must take to heart. Only then can an exercise to limit government power succeed. Thus, political reform in fact goes hand in hand with government reorganisation.

Admittedly, the round of changes this time is much milder than expected. As with its continuing task to strengthen China's market economy, the government must keep making adjustments to its reorganisation, to ensure slow but steady change. The restructure of China's government is but a work in progress.

This article is provided by Caixin Media, and the Chinese version of it was first published in Century Weekly magazine.