Dec 6, 2012

China - China's New Leaders Come Charging In

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Combating corruption no longer lip service

Fresh off their selection as the country’s top leaders, Chinese President-in-line Xi Jinping, Premier-to-be Li Keqiang and Wang Qishan, named to head up the country’s the powerful anti-corruption body, are wasting no time setting out to seek rein in corruption and reorganize the government.

It is debatable which issue is the most important to the leadership. But certainly the speed at which scandal-ridden officials are being axed appears unprecedented. Some 63 hours after a crooked Chongqing officer appeared on the web in a sex video, he was stripped of his title. And today, according to a report in the South China Morning Post, Li Chuncheng, 56, named an alternate member of the party Central Committee just last month, became the first senior official to be targeted the an anti-corruption drive. Li earlier had been considered to become the governor of Henan. Chinese officials have also asked Macau gaming officials to step up scrutiny of money transfers – probably vainly, given past history – and have told them that tougher regulation will be introduced.

Is this the 2012 political version of Strike Hard? In 2010, police across the country opened a massive seven-month crackdown to curb rising crimes and ease escalating social conflict, targeting extreme violent crime, gun and gang crime, telecom fraud, human trafficking, robbery, prostitution, gambling and drugs.

Certainly, cleaning out political corruption is an issue that is regarded as crucial to maintaining – or rebuilding – the Communist Party’s soiled reputation. Widely reported figures have cited billionaires among the party’s top leadership. Despite attempts to crack down on Internet criticism, specific examples of corruption and abuse of power make their way onto the Web almost daily.

All three of the top leaders are have publicly made combating corruption a top priority. Xi said after his appointment last month that corruption was an urgent problem and warning that the issue could cost the party its hold on power or risk major social unrest unless widespread corruption was curbed. He himself is reported to have been appointed to shepherd the case of Bo Xilai, the ousted former chief of Chongqing, who is now awaiting trial.

It should be noted that every new leader comes in with a Strike Hard mandate and that they usually leave in defeat – even Zhu Rongji, the incorruptible premier who made it a personal crusade to clean up corruption and smuggling. Hundreds of officials are arrested and jailed, occasionally one or two is shot, then a system in which bribery, kickbacks, embezzlement, and theft of public funds are a way of life, along with rent-seeking through the granting by government officials of licenses or monopolies to favorite clients.

Xi and Li have 10 years to pull it off. The renewed energy follows a relatively dull decade as Hu Jintao and Wen Jiabao worked to maintain the status quo as frustration continued to build. In a clear departure from the past, both Li and Wang have energized the usual mundane official meetings with plenty of debate and interaction, following at least one of the diktats of Mao Zedong, who was famously quoted as saying he would doze off if anybody spoke from a prepared text.

For instance Wang Qishan, as the Secretary of the Central Commission for Discipline Inspection, the graft watchdog, summoned eight anti-graft scholars on Nov. 30 to discuss ways to tackle the daunting task of ridding entrenched corruption within the party. Wang apparently interrupted the first speaker as he was saying “Dear respectable Secretary Wang,” declaring that no such formality is necessary in his meetings, asking all participants to disregard their prepared scripts and dig deep into their thoughts.

Major government restructure
Along with attempting to clean out corruption, Xi and Li are expected to set in motion a major reorganization of the Chinese government structure, whispered to be unveiled next February at the Second Plenary Session of the 18th Central Committee. In the reorganization, long in gestation but held up for the hew leadership, 44 existing government ministries and direct-reporting institutions are expected to be consolidated to just 24 and the People’s Bank of China, the country’s central bank, could become an independent body as other central banks are across the globe, by leaving the direct supervision of the State Council and upgraded into an independent entity on a par with China’s Supreme Court.

Xi is not going to opt for western-style democracy despite his speeches, as he was quoted in a follow-on article on the state-run, reminding readers that China must follow its core values reaffirmed in the 18th Party Congress. In what has come to be known as his China Dream speech, Xi said a strong nation is not limited to wealth, but also must be united in value. He listed the pillars of the three core values as:

Country (國家): Prosperous (富強); Democracy (民主); Civilized (文明); and Harmonious (和諧)
Social (社會): Freedom (自由); Equality (平等); Justice (公正); and Rule of Law (法治)
Citizen (公民): Patriotic (愛國); Dedication (敬業); Integrity (誠信); Friendly (友善)

Our analysis of the new top leadership suggests that Xi, as a princeling, has been chosen to protect and solidify the communist regime. Revamping party discipline is seen as a must to achieve public support. He and the Standing Politburo visited the national museum to inspect the exhibition The Road Toward Renewal in a speech in which he stressed discipline and reform. “Empty talks harm the nation; real efforts prosper the state,” Xi said in an effort to make sure every party member takes the new work style seriously.

Key highlights of the web-circulated government restructuring proposal indicate that the long-sacrosanct National and Development Reform Commission (NDRC) may see its responsibilities reduced and it could be stripped of its power to decide on microeconomic and project approval matters. The Ministry of Land and Resources is to be cut in two halves with the land department transferred under the control of the Ministry of Housing and Urban-Rural Development. Most relevant to the financial markets, the People’s Bank of China (PBOC) may gain its monetary independence.

The restructuring proposal has been leaked on the web but is censored by all PRC news outlets. We have obtained it, however.

Potential New Form

Ministry of Foreign Affairs(外交部)
Ministry of Foreign Affairs(外交部)

Ministry of National Defense (国防部)
Ministry of National Defense(国防部)

National Development and Reform Commission
National Development and Reform Planning Commission
*Stripped of its power to decide on microeconomic and project approval matters

Ministry of Civil Affairs (民政部)'s function of project approval (批的)

National Bureau of Statistics (国家统计)

Development Research Centre of the State Council

State Council Research Office (院研究室)'s planning function ()

State Ethnic Affairs Commission (国家民族委)
State Ethnic and Religious Affairs Commission
*Inclusive of State Peaceful Reunification Commission

State Administration for Religious Affairs

Overseas Chinese Affairs Office(侨办)

Hong Kong and Macau Affairs Office (院港澳)

Taiwan Affairs Office (院台)

Ministry of Human Resources and Social Security
Ministry of Social Work (社会工作部)

Ministry of Civil Affairs (民政部)

Ministry of Education (教育部)
Ministry of Education and Science (教育科学部)

Ministry of Science and Technology (科技部)'s function of technological planning and management

State Intellectual Property Office (国家知识产权)

Ministry of Industry and Information Technology
Ministry of Industry and Information Technology

Ministry of Science and Technology (科技部)'s function scientific management in macroeconomics

Ministry of Public Security (公安部)
Ministry of Public Security(公安部)

National Audit Office (审计)
Ministry of Supervision and National Audit (审计)

Ministry of Supervision (察部)

Government Offices Administration of the State Council

National Bureau of Corruption Prevention (国家防腐局)

Ministry of Justice (司法部)
Ministry of Justice (司法部)

Legislative Affairs Office (院法制)

State Bureau for Letters and Calls (国家信访)

Ministry of Finance (政部)
Ministry of Finance (政部)
*Local taxation bureau will no longer exist

State Administration of Taxation (国家税务总)

Local Taxation Bureau (地方税)

Ministry of Environmental Protection 境部)
Ministry of Environmental Protection and Resources

Ministry of Land and Resource (国土源部)'s function of resource management of MLR (国土源部的源管理)

National Energy Administration (国家能源局)'s function of energy development and planning (能源开发规)

Ministry of Housing and Urban-Rural Development
Ministry of Housing and Urban-Rural Development

Ministry of Land and Resource (国土源部)'s function of land planning unit of Ministry of Land and Resource

Ministry of Transport (交通部)
Ministry of Communications (交通运)
*The old Ministry of Railway will change name to Railway Construction Planning and Management.

Ministry of Railway (道部)

Ministry of Agriculture (农业)
Ministry of Agriculture (农业)

Ministry of Water Resources (水利部)

State Forestry Administration (国家林)

State Administration of Grain (国家粮食局)

Ministry of Commerce (商部)
Ministry of Commerce (商部)

Ministry of Culture (文化部)
Ministry of Culture (文化部)

China National Tourism Administration (国家旅游局)

State Administration of Cultural Heritage (文物管理局)

State Administration of Radio, Film, and Television

General Administration of Press and Publication

State General Administration of Sports (国家体育)

National Population and Family Planning Commission
Ministry of National Population and Health (人口与生部)

Ministry of Health (生部)

General Administration of Customs(国家海关署)

State Administration for Industry and Commerce
State Administration of Market Discipline
*State Electricity Regulatory Commission (电监) and National Energy Administration (国家能源局)'s function of energy prices regulation(能源价格) will be supervised by National Energy Regulatory Commission (国家能源督管理)

State Food and Drug Administration (药监)

State Administration of Work Safety (监总)

General Administration of Quality Supervision, Inspection and Quarantine (质监总)

State Food and Drug Administration

State Administration of Coal Mine Safety ()

State Electricity Regulatory Commission (电监)

National Energy Administration (国家能源局)'s function of energy prices regulation (能源价格)

China Banking Regulatory Commission (银监)
China Financial Industry Regulatory Commission
*directly under the State Council

China Security Regulatory Commission (证监)

China Insurance Regulatory Commission ()

Counsellors’ Office of the State Council
Counsellors' Office of the State Council(国院参事室)

Ministry of State Security (国家安全部)
State Administration of State Security (国家安全)
*directly under the State Council

State-owned Assets Supervision and Administration Commission of the State Council (国委)
State-owned Assets Supervision and Administration Commission of the State Council(国委)

State Council Research Office (院研究室)'s function of drafting documents (文件起草)
General Office of the State Council ()

State Council Information Office (院新闻办)

State Archives Administration (国家档案局)

China Earthquake Administration (地震局)
China Earthquake and Meteorological Research Centre

China Meteorological Administration (气象局)

Change in Nature
National Council for Social Security Fund (社保基金会)
From public-sector institution (机构) to enterprise ()
National Natural Science Foundation (自然基金会)
Xinhua News Agency ()
Local railway bureau (地方路局)
Chinese Academy of Sciences (中科院)
From public-sector institution (机构) to government sponsored research institution (科研机构)
Chinese Academy of Engineering (工程院)
Chinese Academy of Social Sciences (社科院)
China Earthquake Administration (地震局)
China Meteorological Administration (气象局)

Steve Wang

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