China moves to sustain growth

BEIJING: China, seeking greater efficiency to keep its fast-growing economy on track, has unveiled an ambitious government revamp as parliament prepares to finalise the transition to a new generation of leaders. 

The country's third major government restructuring in a decade will create several US-style regulatory bodies, notably a banking commission, a state asset management commission, and a food and drug administration. 

The last overhaul in 1998 was aimed at cutting the fat from a bloated and insulated bureaucracy that stifled business and frustrated even top leaders with its resistance to change. 

This year’s makeover is aimed not only at cutting red tape, but at eliminating bureaucratic overlaps that had slowed reform as rival ministries battled for control of key areas such as banking, trade and the state sector. 

The restructuring proposed by the State Council, or cabinet, was presented to the National People’s Congress (NPC) yesterday. 

It is due to approve the plan during its two-week annual session that started on Wednesday. 

The revamp comes as the world’s sixth biggest economy casts about for ways to keep revving in high gear amid problems such as the lay-off of millions of workers at ailing state firms and farmers frustrated with stalling incomes. 

“The reforms are necessary because the government has to react to the shift towards a market economy,” said Wang Zhimin, a parliament delegate from Shandong, a province in eastern China that has been at the forefront of the boom. 

“It is also part of the modernisation process that has to follow now that we have entered the World Trade Organisation,” Wang said. 

China’s gross domestic product – the broadest gauge of economic activity – rose 8% last year, thanks to booming exports, a flood of foreign investment and hefty state spending on projects such as highways, bridges and power grids. 

Beijing is aiming for 7% economic growth in 2003, and the changes should help achieve that, analysts say. 

A new banking regulator will be carved out of the central People’s Bank of China to help transform state banks from debt-laden tools of central planning into modern, market-savvy financial houses. 

The banking reform is also aimed at boosting lending to the private sector, which accounts for most of China’s economic growth but is still starved for cash as lenders stick to government-backed state firms. 

Also proposed is a new state asset management commission that will essentially be a giant holding company overseeing still-sizeable government stakes in thousands of state-run companies. 

“You get an organisation which can have sole responsibility for managing the state companies, which should help to make them accountable for the success or failure of policies in that area,” said Qu Hongbin, an economist with HSBC in Hong Kong.  

“In the past you had more than eight ministries with their fingers in this issue, but when there was a problem, people would say, well it’s not my problem,” he said. 

The revamp also calls for the Ministry of Foreign Trade and Economic Cooperation to be renamed the slicker-sounding Ministry of Commerce in charge of both foreign and domestic trade issues. 

Also on the cards is an energy commission and a food and drug administration. 

Into the dustbin of officialdom goes the State Economic and Trade Commission, a sprawling body whose powers had increasingly overlapped with others. 

Its powers will now be shared out among various bodies, including a new super-ministry called the State Development Reform Commission and charged with high-level oversight of economic transformation. – Reuters  

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