Government Efficiency in China

The New York Times looks at China's atempt to improve government efficiency. This is an interesting area of research and there have been other cross-country studies looking at, for example, the effect of government on FDI. Studies have also been written looking specifically at province level efficiency in China.

China Retools Its Government in Efficiency Push [New York Times]

BEIJING — China announced Tuesday that it would reorganize the central government by creating five so-called superministries, including one responsible for improving environmental protection. But the plan stopped short of creating a single agency to oversee the contentious issue of energy policy.

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The plan, submitted Tuesday during the annual session of the National People’s Congress, the legislature run by the Communist Party, is intended to streamline an overlapping array of government agencies, commissions and ministries around core issues: environmental protection; social services; housing and construction; transportation; and industry and information.

China’s complex bureaucracy is widely regarded as inefficient and often ineffective at carrying out policies that flow from Beijing, in part because agencies become enmeshed in turf battles or are focused on protecting their own entrenched interests.

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Chinese state media quickly framed the plan, expected to be endorsed this week by the legislature, as a major bureaucratic reform that would improve the way national policies were carried out. But the practical impact is far from certain as China’s bureaucracy struggles to manage soaring energy demand, rampant pollution, rising inflation and an economy that some analysts say is perilously close to overheating.

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Despite three decades of market reforms, China’s economy is still heavily shaped by the government’s central planning agency, the National Development and Reform Commission. Some analysts had contended that the government could become more efficient by stripping away some of the commission’s responsibilities, including energy policy. Speculation had centered on whether an independent energy ministry would be established.

The new plan divides authority over energy. A new “high level” energy commission would develop national energy strategies. But an energy bureau under the central planning agency would control administration and oversight of the energy sector.

Yang Fuqiang, director of the Beijing office of the nonprofit Energy Foundation, said the creation of the two energy agencies represented a political compromise. He predicted that they would eventually be merged into a full ministry, but not for a few more years. “This is a first step,” Mr. Yang said.

The plan also puts the country’s food and drug regulatory agency under the control of the Ministry of Health. China’s regulatory system has come under heavy international criticism because of scandals involving contaminated or counterfeit ingredients in food and drugs. The Chinese state news media said the new arrangement “would make for better food and drug safety.”

Mr. Kroeber said one significant change in the restructuring plan was that the central planning agency would no longer have final approval on major construction projects. But he said that calling the new entities “superministries” overstated their power and that they seemed to represent a “half step.” He said the expanded ministry over transportation would oversee civil aviation and urban road transportation, but would not include the current Ministry of Railways, which lobbied strenuously to remain autonomous.

“They haven’t gotten all the way to a coordinated transportation ministry,” Mr. Kroeber said.

The new environmental ministry would seem further proof of the emphasis placed on fighting pollution by President Hu Jintao and Prime Minister Wen Jiabao. Environmentalists have complained that the State Environmental Protection Administration was easily steamrolled in bureaucratic turf battles because it did not rank as a full government ministry. The new plan elevates the agency to ministry status, presumably with greater clout inside the bureaucracy.

Yet it is unclear if that new status will also include an expanded budget for a larger staff to carry out regulatory policies. Currently, the agency has only a few hundred employees to coordinate and regulate environmental protection.

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Xie Zhenhua, a vice chairman of the National Development and Reform Commission, said the country was steadily decreasing its energy use, but still not meeting the target of annual 4 percent reductions.