Is China Actually Serious About Bureaucratic Reform?

Weibo users have their doubts.

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Delegates prepare to vote for China's new president during of the fourth plenary meeting of the National People's Congress (NPC) at the Great Hall of the People in Beijing on March 14, 2013. (Barry Huang/Reuters)

On March 10, the secretary-general of China's State Council, the executive branch of government, announced its plan for bureau downsizing, which was to be approved by the National People's Congress. Upon the announcement, the plan became the most eye-catching subject for domestic and overseas media reporting on the Two Sessions, China's annual congressional meeting. Both state mouthpieces such as the China Daily and the People's Daily as well as internationally renowned media including Reuters and BBC have recounted the plan in detail.

The plan contains six major steps to divide and merge ministries and bureaus. The Railway Ministry has long been criticized for acting both as a regulator and as the runner of China's railroad network. According to the plan, the Railway Ministry is to be shut down, with its policy and regulatory subdivision merged into the Transportation Ministry and a new state-owned company created to run the business.

Important changes will also befall other controversial bureau sectors. The National Population and Family Planning Commission, which oversees implementation of China's so-called one-child policy, is to be merged with the Ministry of Health. The infamous State Administration of Radio, Film and Television (SARFT) and the General Administration of Press and Publication (GAPP), two major media censors, are to be merged.

Since 1982, the State Council has initiated seven waves of bureaucracy reorganization. The recent plan follows conventional practice over the last two decades: every five years, at the opening session of the National People's Congress, the State Council has submitted a proposal to restructure itself. In 1998, a revolutionary reform, reducing the number of the State Council's constituent organs from 40 to 29, marked a significant and profound transition from a planned economy to a market economy at the administrative level. Since then, each restructuring proposal has been quantitatively modest, calling to eliminate one constituent organ in 2003 and in 2008, and this time, two.

In November 2012, Tea Leaf Nation covered viral online rumors of the "a detailed plan to make 'super-ministries' out of existing governmental organs." Compared to the rumored version, the real proposal turned some substantive measures into reality, while dropping more controversial ideas, such as reorienting the National Development and Reform Commission and calling off the State Administration of Taxation. The newly released reorganization layout is solid, but by no means revolutionary.

The alleged purposes of the reform are "to streamline administrative processes, to transfer governance power to the market and society, and to increase administrative efficacy." But while the newly released bureau reorganization is necessary to achieve those goals, it is not on its own sufficient. The 2003 and 2008 reforms resulted in neither decentralization of governance power nor a realignment of the balance of power between state and society. And the proposed reorganization, which is almost certain to be enacted, is likely to disappoint many observers who expect policy shifts. For example, Feng Wang, vice director of the State Commission Office for Public Sector Reform, clearly indicated at a press conference that after the merger of the National Population and Family Planning Commission with the Ministry of Health, the so-called one-child policy would not be changed.

It's thus not surprising that Web users question what real difference the bureau downsizing would make. On Sina Weibo, China's Twitter, Guangyuan Ma (@ 光远看经济), a commentator on economics, opined that division of the Railway Ministry would--at best--not change anything, so long as the railways remain monopolized. Ma wrote:

The key of railway system reform is de-monopolization. If the monopoly is not eradicated, eliminating the Railway Ministry and establishing a state-owned railway company will result in no change other than less coordinated support for railway infrastructure construction. If the transportation ministry takes the role of the railway ministry to control ticketing, more officials will have opportunities for rent-seeking and more citizens will have difficulty getting tickets.

Weibo user @叶熏0904 argued that the reform should not happen in name only. "If the seventh bureau restructuring only focuses on merging and name-changing of bureaus and neglects the key issues of power devolution and personnel downsizing, the vicious circle that the previous six waves of bureau downsizing faced- power [swelling as reforms are made]--will continue."

Undoubtedly, restructuring bureaus will not automatically solve the underlying problem. What really matters is not the government's size, but its power . This time, the Chinese public was pleasantly surprised to find this line of thought echoed in the proposed plan. For the first time in two decades, the State Council did not default to putting forward a plan for "Institutional Reform," but a plan for "Institutional Reform and Transformation of Administrative Functions" which lays out ten major principles to transform administrative functions.

Among the ten principles, the highlights include:

  • Ending the requirement of administrative examination and approval over items including certain investment activities, businesses, and occupational certifications;
  • Streamlining the business registration system;
  • Reducing "special transfer payments," which are cash transfers from the Central government to local governments for specific purposes. Because the payments are subject to bargaining, local government fiercely lobby for the payments, a process which creates fertile ground for rent-seeking and fraud; and
  • Reforming administration of social organizations to encourage independent guilds and community organizations. Prior examination and consent from government bureaus will not be needed to register NGOs.

The principles piggyback off of previous top-down attempts initiated by the State Council to restrain administrative power. In October 2012, the central government removed 171 items of administrative examination and approval and devolved another 117 items to local governments. The October announcement stated that "the government must stop intervening with anything that citizens and [private] organizations can decide for themselves, that the market competition system can effectively adjust, and that guilds and mediators can administrate," interpreted by many as a major signal that the government was set to forgo more power.

In the recently announced plan, similar language appeared again, sounding even more determined than before. The announcement called for a "retreat from micro-level intervention," and stated vividly, "We should attend to where our duties lie and not step in whatever is not our business."

The announcement appears to foreshadow further restraints on administrative power. According to @ 童大焕, an editorial writer for the Oriental Morning Post, this is the only path the government can realistically take. "If the state takes one step back, the market economy will lead China to progress further and further. If the state does not return the power of resource allocation to the market, no matter how it restructures the bureaucracy, people will still be constrained under the shadow of a planned economy," he wrote.

Columnist Lian Peng (@连鹏) also argues that the growth and misallocation of power should be the real target of administrative reform. He wrote:

Whether reform can [have the desired consequences] depends on: 1) whether administrative power is effectively circumscribed by law; 2) whether more governance power is transferred to society and the state reorients itself towards public services. A reform is authentic only if citizens are granted more power and benefits.

This post also appears at Tea Leaf Nation, an Atlantic partner site.