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China: towards political and administrative reform

Today, the nearly 3,000 delegates of China's National People's Congress (NPC), the ountry's parliament, will gather for their annual meeting in the cavernous environs of the Great Hall of the People, off the western flank of the Tiananmen Square. In recent years, the NPC's annual meeting has seen the adoption of important laws to underpin China's economic reforms. Last year, for example, it endorsed a legislation that strengthened individual property rights and revised corporate taxes.

This year, however, no major legislation is on the cards. In the spotlight instead is a series of personnel changes and proposals for streamlining the administration which, if approved, will lead to the most significant government restructuring in a decade.

Important changes in the State Council, China's cabinet, will be endorsed by the NPC following a similar reshuffling of the ruling Communist Party's inner circle at its twice-a-decade National Congress in October last year. While President Hu Jintao and Premier Wen Jiabao will be approved for their second five-year terms, several new faces are set to make an appearance.

Li Keqiang, a rising political star who till recently ran the north-eastern industrial province of Liaoning and who was promoted to the exclusive nine-member standing committee of the Communist Party's political bureau last year, is expected to be appointed Executive Vice- Premier, responsible for macroeconomic policy. Mr. Li is widely seen as being groomed to replace Mr. Wen as Premier in five years.

Under Mr. Li, former Beijing mayor Wang Qishan will likely be named one of the three other Vice-Premiers - with a portfolio that will include the financial sector and foreign trade. Other key positions to be filled include the foreign policy state councillor and the Defence Minister.

Dai Binguo, China's special representative to the border negotiations with India and currently vice-Foreign Minister, is tipped to replace state councillor Tang Jiaxuan's position overseeing foreign affairs.

Finally, Xi Jinping who like Mr. Li was also recently elevated to the standing committee of the Party polit bureau is widely expected to become Vice-President, underscoring his status as heir apparent to Hu Jintao.

The new crop of top officials reflects Beijing's growing desire for leaders with a more practical or technocratic bent than was usual in the past, when political loyalty rather than ability was the sole criterion for promotion.

New, able leaders

Thus many of the new leaders have strong functional expertise and a proven ability to deal with challenging situations.

Mr. Wang, for example, is widely credited with improving the response to the SARS outbreak in 2003 after he was installed to replace a Beijing mayor who had failed at responding to the crisis. Mr. Wang, a former head of the China Investment Bank and the China Construction Bank, also has extensive experience dealing with foreign business leaders, dating to his time in the late 1990s sorting out a massive bankruptcy case that involved several big foreign lenders. Mr. Dai Binguo, similarly, has much handson experience in dealing with delicate diplomatic negotiations.

Apart from the endorsement on the new leadership, the NPC will also discuss controversial proposals to streamline and restructure the administration. These include plans to create several "super-ministries" that would combine the functions of disparate bodies under a single entity, thus reducing bureaucratic infighting and improving administrative efficiency.

These proposals are seen as an effort to centralise power, enabling Hu Jintao and Wen Jiabao to more vigorously push through their policy initiatives. The leadership duo has been aiming to promote a more balanced growth, but their attempts have often faced opposition from regional and industrial interests.

Among the potential new consolidated ministries are ones for energy, industry, transport and finance. The proposed new Ministry of Finance for example would emerge out of the combination of three big financial-industry regulators into a single large agency covering banking, securities and insurance.

The consolidation of the various agencies that currently oversee these critical areas at different levels is also expected to benefit business interests, since super-ministries would cut down on the number of agencies from which approvals are needed.

China's environmental watchdog, the State Environment Protection Agency, is also likely to be upgraded to full ministry status, giving it a bigger budget to fight worsening environmental degradation.

However, all these proposals face resistance within the bureaucracy and as a result this NPC session may just be the beginning of a process that could take several years to complete.

Nonetheless, in the fact of their being mooted, hints to China's policy priorities are evident: energy, the environment and the economy.

This year's NPC meets at a time when China is not only facing its highest levels of inflation in over a decade but is also reeling from the havoc caused this winter by the heaviest snow in 50 years leading to economic losses of at least 111.1 billion yuan ($15.43 billion). Macro-economic issues and fiscal policy will thus be in the spotlight.

Today, Premier Wen Jiabao will inaugurate the NPC session with his annual address in which he will discuss the country’s economic performance over the last year and announce the government’s new growth targets for the coming year. He will also discuss the achievements of government policies on a wide range of issues aimed at achieving what has been dubbed “the new socialist countryside.”

Broad budget outlays will be announced with substantial increases in government spending in the areas of defence, healthcare and education.

Also being closely watched at this year’s NPC proceedings is the issue of political reform. It is China’s ruling party’s professed intention to build “democracy with Chinese characteristics.” In other words, to attempt a reconciliation of continued one-party rule with greater democratic participation.

In the run-up to the NPC, a meeting of the Communist Party’s 204-member Central Committee issued a report last month that stated the party’s commitment to “deepen political system reform.” It also said “Relative to our country’s economic and social development and relative to new demands to ensure citizens’ democratic rights and protect social fairness and justice, our political system still has many parts that are ill-adjusted.”

The two main planks of political reform in China are a gradual increase in intra-party democracy and the development of the rule of law. The idea is that citizens will be given legal rather than political rights so that the average Chinese would be able to use the courts as a means to protect their rights.

Although the NPC meet is unlikely to result in any radical moves towards political reform the very fact that it is on the agenda is indicative that Beijing realises the increasingly pressing nature of the issue.

The NPC’s annual session usually lasts under two weeks. Combined with the personnel changes, if the proposals to restructure the administration are passed as well, the proposed realignments would constitute one of the biggest restructurings in China, since the country embarked on market-oriented reforms three decades ago.

In India, the strategic and diplomatic community would do well to pay these unfolding developments some sharp attention.

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