China Unveils Superagencies to Fight Pollution and Other Threats to Party Rule
Posted March 13, 2018 2:39 p.m. EDT
BEIJING — Days after China’s president, Xi Jinping, consolidated his position as national leader, he moved to extend his control Tuesday by unveiling new superagencies to tackle three major potential threats to popular support for Communist Party rule: financial recklessness, environmental pollution and official corruption.
The plan for reorganizing the government, released to the national Legislature in Beijing, would shake up some of China’s most powerful bureaucracies by gathering powers that had been scattered across multiple regulatory agencies into a few new, stronger entities.
It would create two enlarged ministries for protecting the environment and managing natural resources, as well as a new financial regulator spanning banking and insurance. A separate draft law would create a new anti-corruption agency with greater reach than the current one, which is run by the Communist Party.
With the announcements, Xi is moving to strengthen his authoritarian leadership over the entrenched cadres and vested interests that his allies have blamed for frustrating reforms he promised in 2013, a year after taking power. Xi has pushed for firmer action to control rising corporate and state debt, and to cut the smog and water pollution that have caused widespread fear and anger about public health.
But there are many uncertainties about how the government revamp will work in practice, and whether it can actually achieve its goals. Critics have said imposing top-down party control may backfire by deterring officials from acting boldly and creatively to fight pollution and other problems.
“These are good initial steps potentially, but what really matters is where they go from here,” said Andrew Polk, a founder in Beijing of Trivium/China, which advises companies. “The fact that there was the political will to push this through, and mothball and combine some entities, says a lot. But now the execution becomes key, and that hasn’t always been effective.” The proposals were issued to the party-controlled Legislature, the National People’s Congress, two days after it passed a constitutional amendment that abolished a term limit on the presidency, opening the way for Xi to stay in power for many years. And they appeared nine days after the party leadership issued a blueprint for reorganizing the government to enhance centralized control under Xi.
“Without the party’s leadership, none of China’s modernization goals can be achieved,” Ding Xuexiang, an aide to Xi, wrote Monday in the People’s Daily, the party’s main newspaper.
While Xi has sought to reassert the Communist Party’s control over society and the economy, Tuesday’s changes did not specify what an enhanced party role would look like. That will likely come later, as the party works out its growing voice in policymaking and enforcement.
Responsibilities for protecting the environment will now come under a new Ministry of Ecological Environment, an expanded version of the old Ministry of Environmental Protection. The new ministry’s mandate will include efforts to curb greenhouse gas emissions, a pressing but contentious task in China, which is by far the world’s biggest greenhouse gas polluter. The ministry will also take charge of protecting water resources from pollution, another important issue in China.
Ma Jun, director of the Beijing-based Institute of Public and Environmental Affairs, which has pushed for tighter enforcement of environmental laws, said that consolidating oversight powers in a single ministry would strengthen the hand of environmental policymakers.
“This is a major, major change,” Ma said. The old ministry, he added, was hampered by “so many overlapping and duplicative responsibilities, for example, in areas like water management.”
A new Ministry of Natural Resources will oversee land use and urban planning, sensitive areas where competition over land rights between farmers and developers has led to both corruption and protests. The new ministry will also manage allocation of rights to water, grasslands and forests.
The changes could make for better enforcement of environmental and resource protection, “but not just because the enlarged ministries consolidate and streamline formerly scattered regulatory authorities,” said Yanmei Xie, a researcher on Chinese policymaking in Beijing for Gavekal Dragonomics, a company that advises investors.
“The more important factor is that they are vested with the power to fulfill a mandate that is of top-level political importance,” she said.
In financial regulation, however, the government chose to take only a half-step toward creating a single large regulator, an idea that has been under intense debate in China for several years. The government opted to combine the banking and insurance regulatory agencies, but left separate the China Securities Regulatory Commission, which oversees stock markets and other financial trading.
Last autumn, Xi set up a small, lightly staffed Financial Stability and Development Committee in an effort to coordinate financial regulators, also including the central bank. But preserving the securities agency’s independence means that financial institutions will continue to be able to play regulators off against each other.
Larry Hu, an economist in the Hong Kong office of Macquarie Securities, said that after the government’s takeover this year of Anbang Insurance Group, which made aggressive bets on overseas real estate and other potentially speculative investments, the government may be especially focused on reining in other insurers. “They’ve become like hedge funds, they’re not performing the role of insurance companies,” he said.
By contrast, China’s stock markets may be less of a priority. While they long had a reputation for insider trading and other abuses, they have calmed more recently as government-backed investment funds have played a larger role. The government has also been keeping a closer eye on sudden moves by large private shareholders.
Legal experts were warier of the new anti-corruption agency, the National Supervision Commission. A final draft law to create the agency was released to the Congress on Tuesday after months of discussion.
The commission would inherit and expand some of the investigatory powers of the main anti-graft agency, the party’s Central Commission for Discipline Inspection.
Chinese and foreign law experts have said the new commission would also retain many of the arbitrary, secretive powers of the party agency. But while the old agency could detain and investigate only party members, the new commission would have the power to investigate other holders of public posts, especially administrators and managers who are not party members.
“There is no doubt that this proposed ‘reform’ has encountered huge misgivings,” Jerome A. Cohen, faculty director of the New York University U.S.-Asia Law Institute and an expert on Chinese law, said by email. “Xi Jinping regards these changes as positive because they will give an official fig leaf to a terrifying investigatory/punishment process that until now has been largely practiced by the party against party members.” The 3,000 members of the National People’s Congress, who are carefully vetted by the party, are all but certain to overwhelmingly approve the new agencies before ending the Legislature’s annual session Tuesday.
On Sunday, only five members opposed or abstained from voting on a measure sweeping away the 35-year-old provision that had limited the president to two terms. That opened the door to Xi staying in power for longer than a decade as president, as well as his other leadership posts as party chief and military chairman.
In a vote scheduled for this weekend, the Congress is expected to re-elect Xi for a second five-year term as president, and also approve a new roster of leaders to work under him and the premier, Li Keqiang.