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In this article we talk about the central people’s government of PRC: the State Council. It is the highest executive body of the state power and the highest organ of state administration. We will first introduce the composition and functions of the State Council, then pay more attention to the new government’s institutional reform as adopted by the 10th National People’s Congress (NPC) this year.
  

1. Composition and functions
The State Council is composed of the Premier (Wen Jiabao as current Premier), the Vice Premiers (currently 4 people), the State Councilors (currently 5 people), the Ministers of various Ministries and Commissions (currently 28 people), the Auditor General (1 person), and the Secretary General (1 person).
In addition, the current State Council includes the following: an ad hoc organization directly under the State Council, which is newly set up, called Commission of the State-owned Assets Supervision and Administration; 18 organizations under direct administration of the State Council, such as General Administration of Customs and State Intellectual Property Office; 6 working organs directly under the State Council, such as Overseas Chinese Affairs Office and Legislative Affairs Office; 14 institutions directly under the State Council, such as Xinhua News Agency and Chinese Academy of Sciences; and 12 administrations and bureaus under the Ministries and Commissions of the State Council, such as the State Grain Administration and the State Post Bureau.    
The term of the office of the State Council is the same (five years) as that of the NPC. The Premier, Vice Premiers and State Councilors serve no more than two consecutive terms. Executive meetings of the State Council include the Premier, who presides over the meetings, the Vice Premiers, the State Councilors and the Secretary General. Under the leadership of the Premier, the Auditor General directs the auditing body which independently exercises its power to supervise by auditing the revenue and expenditure of all departments under the State Council and of the local governments at different levels.
The State Council is to carry out the principles and policies of the Communist Party of China and the regulations and laws adopted by the NPC, and to deal with such affairs as China’s internal politics, diplomacy, national defense, finance, economy, culture and education. It exercises the powers of administrative legislation, administrative leadership, submitting proposals, economic management, diplomatic administration, social administration and other powers granted by the NPC and its Standing Committee.       

2. Institutional Reforms
a.   Reforms in history
      The institutional reform adopted by the 10th NPC is in fact the fifth large-scale government restructuring since the 1980s. The first one took place in 1981 approved by the 5th NPC, reduced the agencies of the State Council from 100 to 61, while the staff number in the State Council decreased from 51,000 to 30,000. The second government restructuring in 1988 and the third one in 1993 further reduced the numbers of agencies under the administration of the State Council. In the third restructuring the Taiwan Affairs Office and Information Office of the State Council were added.
       The fourth institutional reform in 1998 was also a dramatic one. It cut the number of State Council departments from 40 to 29, and staff numbers were cut in half, from 32,000 to 16,700. Similar reforms also were carried out in local government agencies. The key inherent theme of these reforms was to adapt the state planning apparatus to the needs of economic reform and development, to separate administration from enterprise management and to improve government management and its style of working. 

b.    The restructuring of the new government in 2003
       Adopted by the 10th NPC in March 2003, the restructuring of the new government this year reduced the number of ministerial-level departments from 29 to 28. Though the restructuring seems to be mild in the sense that it keeps the general government structure unchanged, its main objectives are to clarify bureaucratic responsibilities, achieve streamlined decision-making and take government further away from micromanaging the economy.
       CSASA The Commission of the State-owned Assets Supervision and Administration (CSASA) was created in the reform. It is expected to bring the oversight of State assets under one body. There are 195 large enterprises owned by the central government, plus their subsidiary companies, increasing the number of such enterprises with State assets to 12,000. Previously, there were several departments involved with overseeing these State assets, which resulted in complicated cross-ownership of the assets. The new Commission is to work as an investor as stipulated in the company law and keep out of other affairs. A key concern in such a restructuring is how to divide the state assets between the central government and local authorities, and how to organize the local State-asset management bodies.
        SDRC The State Development and Reform Commission (SDRC) integrates the functions of the former State Development Planning Commission, the Structural Reform Office and the State Economic and Trade Commission. The new Commission is to strength the government’s macroeconomic control. It is responsible for the comprehensive study and formulation of policies on economic and social development, and for guiding and advancing economic system reform.
        CBRC The China Banking Regulatory Commission (CBRC) takes over the regulatory role from the People’s Bank of China. CBRC will exercise unified supervision and control of banks, property management companies, trust and investment corporations as well as savings deposits financial institutions. The central bank will be mainly responsible for drawing up and implementing monetary policies, while still supervising financial activities such as cash flow and the entry and exit of foreign reserves.
         Ministry of Commerce    Before the establishment of the Ministry of Commerce, China divided domestic and foreign trade as a copy of the former Soviet Union’s system. Such a separation was not in line with the new role of China after her entry into the WTO with the open market and the need to absorb foreign investment. The Ministry of Commerce thus integrates the functions of the former State Economic and Trade Commission and that of the former Ministry of Foreign Trade and Economic Co-operation. Lu Fuyuan, now 58 years old, is the first commerce minister.
        SFDA and SAWS The State Food and Drug Administration is to exercise the functions of the former State Food Administration, and to strengthen the management of the safety of food, health products, cosmetics and medicine which are directly related to people’s life. Together with the upgrading of the State Administration of Work Safety to an institution directly under the State Council, such institutional restructuring shows the need and action for increasing consciousness for people’s fundamental interests and public safety.

3. “Four phrases” of the new government
The newly elected Premier Wen Jiabao, in a meeting with the press during the 10th NPC, put the work of his new cabinet in a nutshell of “four phrases”: “achieve one goal,” “implement two key policies,” “solve three major economic problems” and “promote reforms in four major aspects.”
       The one goal is to maintain a sustainable and comparatively rapid development of the national economy and improve people’s living standards.
       The two key policies are to realize the strategic economic restructuring and continue to open up to the outside world.
       The three major economic problems include how to solve unemployment and social security system, how to increase fiscal revenue and cut public spending, and how to correct and standardize the economic order.
       The “reforms in four major aspects” include the reform of the rural economy, the reform of state-owned enterprises, the reform of financial system and the reform of governmental agencies.    
 

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CHINAINSIGHT (CI) is published monthly ((except July/August and November/December are combined) by China Insight, Inc., an independent, privately owned company started in 2001 and headquartered in the Twin Cities area of Minnesota.

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