Amendments that mark a crucial turning point
New legal structure is designed to tackle the challenges facing China’s economy in its critical transition period
NPC deputies during the annual session.
At the heart of this amendment was the proposal to install a legal framework to allow restructuring of the State Council, which will consist of 26 ministries and commissions. Streamlining China’s administrative system by cutting red tape is seen as a necessary step toward more efficient governance. Another way of looking at it is that the new legal structure is designed to tackle the new challenges that face China’s economy in its critical transition period.
The latest shake-up of China’s financial regulatory system is a prime example of institutional restructuring designed to resolve existing problems in the shadow banking sector. At the NPC meeting, lawmakers approved the proposal to merge the China Banking Regulatory Commission and the China Insurance Regulatory Commission to better handle financial risks.
Although any direct impact on global markets is perhaps yet to be felt, this effectively marks the biggest regulatory reform of China’s financial market over the past 20 years. It is also a much-needed step of crucial regulatory restructuring for China to curb excessive borrowing and financial risks at this juncture.
China also unveiled a revolutionary Cabinet restructuring plan, aiming to transform the State Council and ministries into a more efficient, service-oriented government. The plan, approved by the lawmakers during the two sessions, marks the eighth Cabinet restructuring since 1982.
Although streamlining China’s Cabinet has long been a major topic at the NPC meetings, this is the first time that meaningful reform proposals were put forward to directly address Beijing’s commitment to resolving its three crucial challenges — financial risk prevention, poverty reduction and environmental protection.
Everyone familiar with Chinese policymaking will know that when China talks about long-term goals, it often means more than five years.
One of the most frequently used phrases by government officials is Two Centenary Goals. The idea was first proposed during the 15th Party Congress in 1997. Back then, China’s GDP was merely 11 percent of US GDP. Fastforward two decades, to when China’s GDP was 62 percent of US GDP. Even on per capita terms, the change has been remarkable. China’s per capita GDP multiplied roughly tenfold in those two decades.
If you are still wondering what the “China Dream” means, it is to realize the Two Centenary Goals. The first centenary is 100 years since the establishment of the Communist Party of China. The goal here is to build a moderately prosperous country by 2021. The second centenary is 100 years since the establishment of the People’s Republic of China. By 2049, China seeks to become not just prosperous, but also a modern socialist country.
The domestic legal institutional changes will help legitimize the Chinese Dream. Of course, the success of domestic development depends on the simultaneous advancement of China’s foreign policy. This is where the constitutional amendments will have further impact.