The changes cut the number of ministries in China’s cabinet, the State Council, by eight, down to 26, to streamline government and reduce bureaucratic infighting. But it will also strengthen the Communist Party’s top-down control, one of President Xi Jinping’s overriding goals, officials said.
The overhaul bolstered the role of the country’s environment ministry, which will now take responsibility for the fight against climate change, and included the merger of the banking and insurance regulatory agencies to improve supervision of the country’s debt-laden financial sector.
The changes were announced at a session of the National People’s Congress, the country’s rubber-stamp parliament, and will be formally approved Saturday.
Liu He, the president’s top economic adviser and a member of the party’s 25-member Politburo, called the changes “profound” and “revolutionary” in a Tuesday article for People’s Daily, the Communist Party newspaper.
“Strengthening the party’s overall leadership is the core issue,” he wrote, citing a famous quote from Mao Zedong that is also used by Xi. “Party, government, military, civilian and academic — east, west, south, north and center — the party leads them all.”
The new agency for international development coordination will integrate responsibilities currently undertaken by the ministries of Commerce and Foreign Affairs and integrate its work with Xi’s ambitious Belt and Road project, a major effort to increase Chinese lending for infrastructure development around the world.
The new agency will draft foreign aid policies, grant aid and supervise projects.
The move is designed “to give full play to foreign aid as a key means of major-country diplomacy,” enhance its coordination and “better serve the nation’s diplomatic strategy” including the Belt and Road project, State Councilor Wang Yong told parliament.
Li Fan, founder of the World and China Institute think tank, said the new body would be comparable to the U.S. Agency for International Development and Japan’s International Cooperation Agency and, in a similar manner, would serve China’s diplomatic objectives.
“Usually developed countries would have a foreign aid agency like this,” he said. “China is still a developing country, but now it also sees the need to set one up as it grows more economically powerful.”
China provides few details of its aid program, but said it sent more than half of its foreign aid of more than $14 billion between 2010 and 2012 to Africa.
Analysis by AidData, a research project at the College of William & Mary in Williamsburg, Va., showed that U.S. official development assistance between 2000 and 2014 reached $366 billion, dwarfing the $81 billion coming from China. But Beijing nearly closed the gap with a much larger flow of $216 billion in commercial, non-concessional lending.
The Belt and Road project may lead to even more commercial lending to the continent.
Last week, then-Secretary of State Rex Tillerson warned African nations to carefully consider the terms of their borrowing from China, lest they “forfeit their sovereignty.”
But China Daily said Beijing’s investment in infrastructure such as railways, bridges and ports was welcomed by African nations.
“U.S. investment in the continent has been on the decline, so it is viewed as withdrawing from Africa while China has been increasing its engagement,” it wrote in an editorial. “This may explain why the U.S. cannot win consent from African countries when it points an accusing finger at China for almost anything.”
China likes to boast that its finance in Africa does not come with political strings attached, unlike Western aid.
Critics say that has enabled it to lend to governments with poor human rights records, such as Sudan or Zimbabwe under former president Robert Mugabe.
The same could also be said for the United States, especially during the Cold War, when it poured money into corrupt and autocratic regimes largely because they were not communist.
The overhaul of government is the largest since then-Premier Zhu Rongji carried out a similar streamlining in 1998. It appears to weaken the country’s top economic policymaking body, the National Development and Reform Commission (NDRC). sometimes dubbed the little State Council because of its power within the bureaucracy and wide range of responsibilities.
The Ministry of Environmental Protection has been renamed the Ministry of Ecological Environment and will take over responsibility for climate change policy from the NDRC.
The new ministry will also supervise the work of other ministries to prevent groundwater pollution, including pollution from agriculture and sewage, as well as marine environmental protection and nuclear radiation safety.
Li Shuo, a senior climate policy expert at Greenpeace East Asia, called the changes a “net positive” for the environment, but warned that moving the climate change policy away from the powerful NDRC into the historically weaker environmental ministry could be a double-edged sword.
“Climate change was the poster child of China’s environmental transition,” he said. “A large part of that was due to the fact that the climate agenda had the blessing of the NDRC. Now it is like a pretty bride marrying into a poorer family.”
Li said the details of how the merger would work were still being awaited, including the size of the climate change team in the new ministry and who would head it, which would provide more clues as to its political clout.
Amber Ziye Wang and Liu Yang contributed to this report.