China to streamline government into 'super ministries'

Posted in China | 12-Mar-08 | Author: Jim Yardley| Source: International Herald Tribune

Chinese top leaders attend a plenary session of the National People's Congress at the Great Hall of the People in Beijing on March 10.

BEIJING: China announced Tuesday that it would reorganize the central government by creating five so-called "super ministries," including one charged with improving environmental protection. But the plan stopped short of creating a single agency to oversee the contentious issue of energy policy.

The plan submitted Tuesday during the annual session of the National People's Congress, the Communist Party-run legislature, is intended to streamline an overlapping array of government agencies, commissions and ministries around core issues like environmental protection; social services; housing and construction; transportation; and industry and information.

"The reshuffling is aimed at resolving long-term problems and contradictions as China's economy grows," stated an explanation of the plan issued Tuesday by the State Council, the government's highest executive body.

Chinese state media quickly framed the plan, which is expected to be endorsed this week by the legislature, as a major bureaucratic reform that would improve implementation of national policies. But the practical impact is far from certain as China's bureaucracy struggles to manage soaring energy demand, rampant pollution, rising inflation and an economy that some analysts say is perilously close to overheating.

"What does this do?" asked Arthur Kroeber, managing director of Dragonomics, an economic research consultancy in Beijing. "What it will accomplish is some incremental change in a couple of areas. But on the whole, I don't see that this advances in any substantial way the coordination between different agencies."

Despite three decades of market reforms, China's economy is still heavily shaped by the government's central planning agency, the National Development and Reform Commission. Some analysts had argued that the government could become more efficient by stripping away some of the commission's responsibilities, including over energy policy. Speculation had centered on whether an independent energy ministry would be established.

But the new plan divides authority over energy. A new "high-level" energy commission would develop national energy strategies. But an energy bureau under the central planning agency would control administration and oversight of the energy sector.

Yang Fuqiang, director of the Beijing office of the nonprofit Energy Foundation, said the creation of the two energy agencies represents a political compromise. He predicted that they would eventually be merged into a full ministry, but not for a few more years.

"This is a first step," Yang said.

Kroeber said one significant change in the restructuring plan is that the central planning agency would no longer have final approval on major construction projects. But he said that calling the new entities "super ministries" overstates their power and that they seemed to represent a "half step." He noted that the expanded ministry over transportation would oversee civil aviation and urban road transportation but would not include the current railway ministry, which lobbied strenuously to remain autonomous. "They haven't gotten all the way to a coordinated transportation ministry," Kroeber said.

The new environmental ministry would seem further proof of the emphasis placed on fighting pollution by President Hu Jintao and Prime Minister Wen Jiabao. Environmentalists have complained that the State Environmental Protection Administration was easily steamrolled in bureaucratic turf battles because it did not rank as a full government ministry. The new plan elevates the agency to ministry status, presumably with greater clout inside the bureaucracy.

Yet it is unclear if this new status will also include an expanded budget for more staff to carry out regulatory policies. Currently, the agency has only a few hundred employees to coordinate and regulate environmental protection.

China is still failing to meet its targets for improving energy efficiency and reducing pollution. On Tuesday, senior officials said that China must make bigger improvements during the next three years or the country will fail to meet its five-year goal of reducing energy usage per unit of gross domestic product by 20 percent by 2010.

Xie Zhenhua, vice chairman of the National Development and Reform Commission, said the country was steadily lowering its energy usage but still not meeting the target of annual 4 percent reductions. Last year, China's energy consumption per unit of GDP dropped by 3.27 percent.

"We still face a challenging situation," Xie said at a news conference at the Great Hall of the People. "The economy continues to grow, and the pattern of heavy industrialization has not changed."