Xi’s bureaucratic shuffle is a slow waltz

Last Updated:2013-03-13

By Geoff Raby

As possibly the world’s biggest networking opportunity grinds on in Beijing, the 'twin meetings' – the National People’s Conference and the Chinese People’s Political Consultative Committee – are providing some important indications about the likely policy directions and character of the new Xi Jinping era.

Not surprisingly, the Communist Party’s official mouthpiece has hailed these reforms as a bold step, going beyond “the usual streamlining… [to a] …. transformation of government functions”. The new political slogan for these reforms is “Respect the Market, Rediscover Society”.

While we do not really know what all this means, the emphasis does seem to be on differentiating Xi from his predecessor as a leader of action and decisiveness, someone who is favourable to the market and who wants to reign in bureaucratic meddling, which is a major source of corruption, and who understands that China’s middle class want something more than just material improvement.

Against this the actual administrative reforms just announced look quite modest. The number of ministries will be cut by just two, from 27 to 25. The powerful Ministry of Railways has been folded into the Ministry of Transport. This reform was attempted five years ago but was successfully fought off by the ministry and its old-guard supporters in the upper echelons of the party.

The Ministry of Railways, like the People’s Liberation Army, has always been something of a state within a state. It even had its own police force, dance and theatre troupes, and so on. Such was the cradle to grave security it gave its employees that parents would pay bribes to get their kids a job in the ministry. A traditional symbol of communist construction and nation building, it had long been a power base for conservative political leaders. Some, like the outgoing NPC Standing Committee chairman Wu Bangguo, leveraged their political careers on major projects such as the Qinghai-Tibet railway.

Last year, the former railways minister, Liu Zhijun, was dismissed of all his positions and placed under investigation for corruption and other breaches of party discipline. The case has still not come to court. He was the pioneer of China’s high-speed rail network and advocate of its rapid development. Ironically in view of Liu’s fate, the network today is also a source of great national pride.

Additionally, China’s National Population and Family Planning Commission has been folded into the Ministry of Health. In case some mistakenly thought that this might presage a change to China’s 'one child' family planning policies, official comment has been quick to emphasis that the family planning policies will remain unchanged, aside from a slight increase in the allowance for one child couples to have a second child.

Nonetheless, China’s family planning policies have been increasingly subject to public debate. No reason has been given for this administrative change other than the general one of improved administrative efficiency, suggesting that some new policy directions are likely to emerge in time from the Ministry of Health.

Other administrative changes have included bundling together numerous regulatory and standards setting bodies – often with overlapping responsibilities – into ministerial-level bodies. Reflecting the ongoing public anxiety about food quality in China, several food-safety agencies will be folded into a ministerial-level General Administration of Food and Drugs. Two supervisory bodies have been merged, the National Oceanic Administration into the Ministry of Land and Resources and the State Electricity Regulatory Commission into the National Energy Administration, which is itself under the National Development and Reform Commission.

Administrative reform has often accompanied or presaged new stages in China’s economic reform policies. Since 1982, there have been six rounds of major government reorganisation. Most significant were the administrative changes introduced in 1993 following Deng Xiaoping’s 'southern tour' when he threw his full authority and support behind China’s reform and open-door policies.

Xi Jinping has set about making his mark early with high-profile campaigns to tackle corruption and government waste and extravagance. These are having some impact but at the same time run the risk of falling short of expectations and in doing so fostering public cynicism. The internet provides the means for this to spread throughout the society. Daily the Chinese equivalents of Twitter are read for the latest posts concerning government corruption and abuse of privilege. Having raised expectations, Xi is under pressure to deliver.

So it is now with administrative reform. The difficulty is that it may not amount to more than old wine in new bottles. The names of ministries change, some bureaucrats gain power, others lose it, activities are reorganised and rebadged but not a lot changes. While the scrapping of the Ministry of Railways is a significant indicator of Xi Jinping’s authority and willingness to use it against powerful vested political interests, reform of central economic regulatory agencies, especially the all powerful NDRC is what will really make a difference. It seems Xi is either unwilling or unable to at this time make such needed fundamental changes.

Geoff Raby is Chairman and CEO of Geoff Raby & Associates and a former Australian Ambassador to China.

This article first appeared in the Business Spectator: