China's government is weighing plans to consolidate its bureaucracy into fewer, more-powerful ministries, as it seeks to be able to respond more quickly to economic and social demands. For companies that do business in China, the changes could streamline regulatory processes that now sometimes get mired in bureaucratic wrangling. Among the changes being discussed is a financial super-ministry that would combine the three agencies now overseeing banking, securities and insurance. Other areas where researchers have suggested merging existing agencies into new ministries include energy, transportation and the environment. Driving this urge to merge is a growing sense that China's officials spend too much time solving disputes between arms of the bureaucracy and not enough time solving major issues.
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"The idea is for the big ministries to do more macromanagement and less micromanagement," says Wang Yukai, a professor at the National School of Administration in Beijing. "The current system still doesn't meet the needs of the market economy. With so many ministries there are lots of coordination problems and interagency disputes." President Hu Jintao has said one priority is to "reduce government intervention" in the economy. Last year, the government canceled 128 different types of administrative permits once required for businesses. Mr. Hu's administration also has been working to make policy more effective in areas where it has long been weak. Many of his initiatives, such as improving environmental protection and expanding social services, have been constrained by conflicts between central and local officials and between agencies with different priorities.
Details of the plan could emerge in March at the meeting of the National People's Congress, China's legislature. That is when Mr. Hu and Premier Wen Jiabao will begin their second five-year terms; the start of a new term is traditionally a time for such shuffling. Some reorganization of government agencies has happened every five years since 1983. Mr. Hu signaled the possible shift in a speech at a Communist Party meeting in October. "We will step up our efforts to streamline government organs, and explore establishing large ministries with integrated functions," he said, to "address the problems of overlapping organizations and functions and conflicting policies from different departments."
A commentator for the official Xinhua news agency last month, noted that countries such as the U.S, France and Singapore have only 15 to 20 ministry-level agencies. China now has 28, which "greatly reduces administrative efficiency" because of the time required for interagency coordination, the commentator wrote. The rise of the big-ministry idea suggests the political pendulum is swinging away from the specialization favored in previous rounds of reorganization. In 2003, for instance, new stand-alone regulators were created for electricity and commercial banking, areas previously governed by departments of larger agencies. The idea was to ensure such important sectors were overseen by dedicated and professional staff.
How to best coordinate the efforts of the existing, specialized agencies remains a matter of debate, particularly in the financial sector. Chinese officials have grown increasingly frustrated by the current system, as financial firms that have broadened the scope of their business now face oversight by multiple agencies. Foreign banks also blame conflicts between regulators for holding up access to the Chinese market, for instance in a still-unfulfilled promise to allow them to issue credit cards. One suggestion has been for a vice premier to head a new body that would oversee the banking, securities and insurance regulatory agencies but leave them largely independent, according to a person briefed by Chinese officials on the discussions. That essentially would formalize existing reporting lines. Another proposal argues for integrating the regulatory agencies more fully.
Wall Street Journal
