Overhaul designed to make country more resilient to Western sanctions
Chinese President Xi Jinping attends a session Tuesday of the National People's Congress. (Photo by Yusuke Hinata)
BEIJING -- China's legislature is set to approve an administrative overhaul this week that would put public security, financial regulation and technology -- areas now handled by the state -- under direct Communist Party control.
Officials in the State Council, China's cabinet, presented a finance and technology reform proposal to the National People's Congress on Tuesday. It will be officially approved Friday.
The changes will further concentrate power in the hands of President Xi Jinping as the leader of the Communist Party. By tightening the party's control over a broader swath of government, Beijing seeks to ensure its financial system and supply chains, especially for semiconductors, are prepared for a Taiwan conflict and any Western sanctions that ensue.
The proposed reforms will create a new Central Financial Work Commission taking over regulation of industries such as banking and insurance, along with some duties of the central bank. A new party-controlled commission will be formed to foster the development of the high-tech sector.
Plans also include splitting off certain functions from the Ministry of Public Security, which is responsible for policing, and the Ministry of State Security, which handles counterespionage, into a new internal affairs committee.
Among other goals, these changes likely aim to help the party more effectively quash dissent online and get a clearer picture of domestic capital flows.
Beijing also appears to be bracing for a future confrontation with the U.S. It has seen the precedent set by the response to Russia's invasion of Ukraine, which largely severed Russia from international financial networks, and is itself dealing with restrictions on semiconductor exports that are hindering arms manufacturing.
"Western countries -- led by the U.S. -- have implemented all-round containment, encirclement and suppression against us, bringing unprecedentedly severe challenges to our country's development," Xi said in a speech Monday. This rare direct shot at Washington likely referred to its perceived meddling in Taiwan and measures like the chip sanctions.
China has enacted anti-sanctions legislation that observers say gives it a basis to retaliate if the U.S. and Europe take such steps in response to a Taiwan contingency. A law allowing for retired military personnel to be called up to the front lines in an emergency took effect this month.
China's constitution states that "leadership by the Communist Party of China" is an essential part of the country's system of government. Government agencies, the armed forces and companies all have party committees within their organizations.
But administrative functions like policing and financial regulation had been left to the experts on the State Council. The party had avoided directly interfering, in order to keep internal power struggles from bleeding over into government or the public's day-to-day lives.
The organizational overhaul represents a radical change in direction from the separation of party and state advocated by Deng Xiaoping.
Deng paved the way for administrative duties to be handled by the State Council, with the party focusing on politics. He also moved toward a collective leadership system to prevent too much power from accumulating at the top of the party, a lesson learned from the turmoil of the Great Leap Forward and the Cultural Revolution under Mao Zedong.
But Xi appears intent on rising to Mao's level of power. He secured a rare third term as party leader in October, and after the constitutional two-term limit on the presidency was scrapped in 2018, the National People's Congress is set to install him in that role for a third term as well.
https://asia.nikkei.com/Politics/China-People-s-Congress/China-to-move-finance-and-tech-under-direct-party-oversight
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