People pose with the flag of the Communist Party of China as they visit the Museum of the Communist Party of China in Beijing on March 3, 2023, ahead of the opening of the annual session of the National People’s Congress on March 5.
Greg Baker Afp | Getty Images
BEIJING – China’s ruling Communist Party has set up a commission to oversee finance and technology, state media announced Thursday.
The change comes as Chinese President Xi Jinping sees unity within the party as essential to building the country. This contrasts with the tendency of China’s leaders in the past decade to give more power to the government and ministers.
A new “Central Finance Commission” is set to strengthen the “centralized and integrated leadership of the party through financial work,” state media said Friday in Chinese, according to a CNBC translation. The commission is responsible for high-level planning on financial stability and development, the report said.
The Chinese government’s annual legislative meeting this month confirmed that tackling financial risks is a priority for policymakers this year.
The report said the new commission’s administrative office will take over the responsibilities of the State Council’s Financial Stability and Development Committee – a group once overseen by the retired and now disbanded Liu He.
In addition to these administrative offices, a “Central Financial Work Commission” will be established to focus on ideological and party work in the financial industry, state media said.
While the state media did not specify, a financial commission of the same name had been established after the Asian financial crisis of 1998. The commission was disbanded after about five years, which led to the establishment of China’s now-defunct banking regulator in 2003.
It is unclear how the commission’s work compares to history.
Back in the late 1990s and early 2000s, the Central Financial Commission helped make financial regulation and supervision more streamlined — reducing the influence of powerful interest groups on regulators, Sebastian Heilmann, professor of China’s political economy at the University of Trier, said in a paper . He later became the founding president of the Mercator Institute for China Studies.
“But the hierarchical institutions of Party control failed to introduce a market-based incentive structure for financial executives and failed to prevent financial mismanagement and corruption,” Heilmann wrote in 2004. increased foreign investor activity.”
Tech Restructuring and the State Council
Thursday’s announcement included previously released details of plans to restructure the State Council – the top executive body of the Chinese government – by establishing a Central Science and Technology Commission.
The responsibility of the party commission is taken over by the restructured Ministry of Science and Technology.
State Council changes created the National Financial Regulatory Administration to oversee most of the financial industry – except for the securities industry. The plan also changes the designation of the China Securities Regulatory Commission under the State Council from the equivalent of the Council’s Development Research Center to a customs agency.
Beijing has not yet announced who will head the new financial administration or party commission.
The changes announced on Thursday will take effect nationally later this year.
Other new commissions include a group to monitor the party’s work in industrial associations, and the affairs of Hong Kong and Macao, state media said. Beijing has tightened its control over the region, which – under the “one country, two systems” structure – enjoys freedoms it doesn’t have on the mainland.
Xi – China’s president and the party’s general secretary – has consolidated his power and overseen the party’s rise in the economy, including among non-state-owned businesses.
The new commission is part of the party’s central committee, which has about 200 members. From these members, the core leadership – the Politburo and the standing committee.
Membership changes take place every five years at the party congress, the most recent of which was held in October. At the congress, Xi paved the way for an unprecedented third term as president and party leader with loyalists.