- China’s ruling Communist Party is setting up commissions to oversee finance and technology, state media reported Thursday.
- The changes come as Chinese President Xi Jinping sees party unity as essential to building the country.
- Beijing has not yet announced who will head the new party committees.
People pose with the Chinese Communist Party flag during a visit to the Museum of the Chinese Communist Party in Beijing on March 3, 2023, before the opening of the annual session of the Chinese National People’s Congress on March 5.
Greg Baker | Afp | Getty Images
BEIJING — China’s ruling Communist Party is setting up commissions to oversee finance and technology, state media reported Thursday.
The changes come as Chinese President Xi Jinping sees party unity as essential to building the country. This contrasts with the tendency of Chinese leaders in recent decades to delegate more power to the government and its ministries.
A new “Central Finance Commission” is set to strengthen the party’s “centralized and unified leadership over financial work,” state media said Thursday in Chinese, according to a CNBC translation. The commission is responsible for high-level planning in financial stability and development, the report said.
The Chinese government’s annual legislative meeting this month highlighted that tackling financial risks is a priority for policymakers this year.
The report said the administrative office of the new commission would take over the responsibilities of the State Council’s Financial Stability and Development Committee, a group once headed by the essentially retired Liu He and now disbanded.
Alongside this administrative office, a “Central Financial Work Commission” will be established to focus on ideological and party work in the financial industry, state media said.
Although state media did not specify, a financial affairs commission of the same name was created after the Asian financial crisis of 1998. The commission was disbanded after about five years, leading to the creation of the now-defunct China Banking Regulator in 2003.
It is unclear how the commission’s future work will compare to history.
Back in the late 1990s and early 2000s, the Central Financial Work Commission helped streamline financial regulation and supervision — minimizing the influence of powerful interest groups on regulators, said Sebastian Heilman, a professor of political economy in China. at the University of Trier. in paper. He later became the founding president of the Mercator Institute for China Studies.
“But hierarchical institutions of party control were unable to introduce market-based incentive structures for financial executives and failed to suppress financial mismanagement and corruption,” Heilman wrote in 2004. “Furthermore, they caused friction with emerging new forms of corporate governance and the growing activity of foreign investors’.
Thursday’s announcement included previously released details of plans to restructure the State Council – the top executive body of the Chinese government – with the creation of the Central Science and Technology Commission.
The responsibilities of this party committee are taken over by the restructured Ministry of Science and Technology.
State Council changes created a National Financial Regulatory Administration to oversee most of the financial industry – except for the securities industry. The plan also changed the name of the China Securities Regulatory Commission under the State Council from something like the Council’s Development Research Center to that of a customs agency.
Beijing has not yet announced who will head the financial administration or the new party committees.
The changes announced on Thursday are due to take effect nationally by the end of this year.
Other new commissions include groups to oversee the party’s work in industry associations and Hong Kong and Macau affairs, state media said. Beijing has tightened its grip on the regions, which – under the “one country, two systems” structure – enjoy freedoms that do not exist on the mainland.
Xi — China’s president and party general secretary — has consolidated his power and overseen an increased party presence in the economy, including among non-state-owned enterprises.
The new committees are part of the party’s central committee, which has about 200 members. From these members comes the main leadership – the Politburo and its Standing Committee.
Changes to the composition are made every five years at party congresses, the last of which was held in October. At that congress, Xi paved the way for his unprecedented third term as president and filled the party leadership with loyalists.