China's New Leaders Come Charging In

Fresh off their selection as the country's top leaders, Chinese President-in-line Xi Jinping, Premier-to-be Li Keqiang and Wang Qishan, named to head up the country's the powerful anti-corruption body, are wasting no time setting out to seek rein in corruption and reorganize the government.

It is debatable which issue is the most important to the leadership. But certainly the speed at which scandal-ridden officials are being axed appears unprecedented. Some 63 hours after a crooked Chongqing officer appeared on the web in a sex video, he was stripped of his title. And today, according to a report in the South China Morning Post, Li Chuncheng, 56, named an alternate member of the party Central Committee just last month, became the first senior official to be targeted the an anti-corruption drive. Li earlier had been considered to become the governor of Henan. Chinese officials have also asked Macau gaming officials to step up scrutiny of money transfers--probably vainly, given past history--and have told them that tougher regulation will be introduced.

Is this the 2012 political version of Strike Hard? In 2010, police across the country opened a massive seven-month crackdown to curb rising crimes and ease escalating social conflict, targeting extreme violent crime, gun and gang crime, telecom fraud, human trafficking, robbery, prostitution, gambling and drugs.

Certainly, cleaning out political corruption is an issue that is regarded as crucial to maintaining or rebuilding the Communist Party?s soiled reputation. Widely reported figures have cited billionaires among the party's top leadership. Despite attempts to crack down on Internet criticism, specific examples of corruption and abuse of power make their way onto the Web almost daily.

All three of the top leaders are have publicly made combating corruption a top priority. Xi said after his appointment last month that corruption was an urgent problem and warning that the issue could cost the party its hold on power or risk major social unrest unless widespread corruption was curbed. He himself is reported to have been appointed to shepherd the case of Bo Xilai, the ousted former chief of Chongqing, who is now awaiting trial.

It should be noted that every new leader comes in with a Strike Hard mandate and that they usually leave in defeat--even Zhu Rongji, the incorruptible premier who made it a personal crusade to clean up corruption and smuggling. Hundreds of officials are arrested and jailed, occasionally one or two is shot, then a system in which bribery, kickbacks, embezzlement, and theft of public funds are a way of life, along with rent-seeking through the granting by government officials of licenses or monopolies to favorite clients.

Xi and Li have 10 years to pull it off. The renewed energy follows a relatively dull decade as Hu Jintao and Wen Jiabao worked to maintain the status quo as frustration continued to build. In a clear departure from the past, both Li and Wang have energized the usual mundane official meetings with plenty of debate and interaction, following at least one of the diktats of Mao Zedong, who was famously quoted as saying he would doze off if anybody spoke from a prepared text.

For instance Wang Qishan, as the Secretary of the Central Commission for Discipline Inspection, the graft watchdog, summoned eight anti-graft scholars on Nov. 30 to discuss ways to tackle the daunting task of ridding entrenched corruption within the party. Wang apparently interrupted the first speaker as he was saying "Dear respectable Secretary Wang,? declaring that no such formality is necessary in his meetings, asking all participants to disregard their prepared scripts and dig deep into their thoughts.

Major government restructure

Along with attempting to clean out corruption, Xi and Li are expected to set in motion a major reorganization of the Chinese government structure, whispered to be unveiled next February at the Second Plenary Session of the 18th Central Committee. In the reorganization, long in gestation but held up for the hew leadership, 44 existing government ministries and direct-reporting institutions are expected to be consolidated to just 24 and the People?s Bank of China, the country?s central bank, could become an independent body as other central banks are across the globe, by leaving the direct supervision of the State Council and upgraded into an independent entity on a par with China?s Supreme Court.

Xi is not going to opt for western-style democracy despite his speeches, as he was quoted in a follow-on article on the state-run, reminding readers that China must follow its core values reaffirmed in the 18th Party Congress. In what has come to be known as his China Dream speech, Xi said a strong nation is not limited to wealth, but also must be united in value. He listed the pillars of the three core values as:

Country (國家): Prosperous (富強); Democracy (民主); Civilized (文明); and Harmonious (和諧)

Social (社會): Freedom (自由); Equality (平等); Justice (公正); and Rule of Law (法治)

Citizen (公民): Patriotic (愛國); Dedication (敬業); Integrity (誠信); Friendly (友善)

Our analysis of the new top leadership suggests that Xi, as a princeling, has been chosen to protect and solidify the communist regime. Revamping party discipline is seen as a must to achieve public support. He and the Standing Politburo visited the national museum to inspect the exhibition The Road Toward Renewal in a speech in which he stressed discipline and reform. ?Empty talks harm the nation; real efforts prosper the state,? Xi said in an effort to make sure every party member takes the new work style seriously.

Key highlights of the web-circulated government restructuring proposal indicate that the long-sacrosanct National and Development Reform Commission (NDRC) may see its responsibilities reduced and it could be stripped of its power to decide on microeconomic and project approval matters. The Ministry of Land and Resources is to be cut in two halves with the land department transferred under the control of the Ministry of Housing and Urban-Rural Development. Most relevant to the financial markets, the People?s Bank of China (PBOC) may gain its monetary independence.

The restructuring proposal has been leaked on the web but is censored by all PRC news outlets. We have obtained it, however.


Potential New Form

Ministry of Foreign Affairs(外交部)

Ministry of Foreign Affairs(外交部)

Ministry of National Defense (国防部)

Ministry of National Defense(国防部)

National Development and Reform Commission


National Development and Reform Planning Commission


*Stripped of its power to decide on microeconomic and project approval matters

Ministry of Civil Affairs (民政部)'s function of project approval (调整审批的职能)

National Bureau of Statistics (国家统计局)

Development Research Centre of the State Council


State Council Research Office (国务院研究室)'s planning function (规划职能)

State Ethnic Affairs Commission (国家民族委员会)

State Ethnic and Religious Affairs Commission


*Inclusive of State Peaceful Reunification Commission


State Administration for Religious Affairs


Overseas Chinese Affairs Office(国务院侨办)

Hong Kong and Macau Affairs Office (国务院港澳办)

Taiwan Affairs Office (国务院台办)

Ministry of Human Resources and Social Security


Ministry of Social Work (社会工作部)

Ministry of Civil Affairs (民政部)

Ministry of Education (教育部)

Ministry of Education and Science (教育科学部)

Ministry of Science and Technology (科技部)'s function of technological planning and management


State Intellectual Property Office (国家知识产权局)

Ministry of Industry and Information Technology


Ministry of Industry and Information Technology


Ministry of Science and Technology (科技部)'s function scientific management in macroeconomics


Ministry of Public Security (公安部)

Ministry of Public Security(公安部)

National Audit Office (审计署)

Ministry of Supervision and National Audit (监察审计部)

Ministry of Supervision (监察部)

Government Offices Administration of the State Council


National Bureau of Corruption Prevention (国家防腐局)

Ministry of Justice (司法部)

Ministry of Justice (司法部)

Legislative Affairs Office (国务院法制办)

State Bureau for Letters and Calls (国家信访局)

Ministry of Finance (财政部)

Ministry of Finance (财政部)

*Local taxation bureau will no longer exist


State Administration of Taxation (国家税务总局)

Local Taxation Bureau (地方税务局)

Ministry of Environmental Protection (环境部)

Ministry of Environmental Protection and Resources


Ministry of Land and Resource (国土资源部)'s function of resource management of MLR (国土资源部的资源管理职能)

National Energy Administration (国家能源局)'s function of energy development and planning (能源开发规划职能)

Ministry of Housing and Urban-Rural Development


Ministry of Housing and Urban-Rural Development


Ministry of Land and Resource (国土资源部)'s function of land planning unit of Ministry of Land and Resource


Ministry of Transport (交通部)

Ministry of Communications (交通运输部)

*The old Ministry of Railway will change name to Railway Construction Planning and Management.

Ministry of Railway (铁道部)

Ministry of Agriculture (农业部)

Ministry of Agriculture (农业部)

Ministry of Water Resources (水利部)

State Forestry Administration (国家林业局)

State Administration of Grain (国家粮食局