Why China is reforming its government agencies as it revitalizes its economy to compete with the West？

By Steven.Tian

For the year 2023 that has just passed, China's economic development has shown a roller coaster-like growth trend.

Many foreign investors and audit firms are concerned about the heavy scrutiny that the enforcement of the Espionage Act will bring to business and capital.

This situation has directly led to the accelerated flight of foreign capital accumulated in mainland China over the past few decades, and the rising hostility in Chinese society has become more serious than before.

Numerous remedial measures have begun to appear in grassroots governments across China, and some enterprises that still have foreign investment, Taiwan investment, and Hong Kong and Macao investment have suddenly become local "guests".

Investors from the West believe that the national security financial stability theory and the arbitrariness of law enforcement have caused serious uncertainty among investors about China's future political environment.

Among the many foreign investors I interviewed, many investors contrasted China’s current economic development model with that of Western countries. “China’s measures to stabilize the economy: National Security/Public Security, Central Propaganda Department/Network Information Office, Statistics Bureau, Western measures to stabilize the economy: investment, exports, consumption.”

Senior officials of the Chinese government made it clear at a recent financial reform conference that "China's financial order is completely different from that of the West." Market expectations seem to confirm that China's stock market has experienced "growth" after decades of decline.

As the economy continues to struggle and the number of unemployed people becomes confusing, the resistance among Chinese people has begun to increase significantly compared with before the epidemic.

Even so, Wang Xiaohong, the Minister of Public Security who is responsible for China’s daily security, disclosed at the National Public Security Bureau Directors’ Meeting and the internal meeting on “Comprehensive Implementation of Grassroots Fengqiao Experience Governance” on January 14 that “the Fengqiao Experience will be used in any future It will become the fundamental guiding principle for grassroots governance."

From the previous "strategic stability maintenance" to "strategic stability maintenance", this change has intensified the work burden of China's grassroots governments. The result is that heavy and redundant stability maintenance has caused great divisions and inactions within the government. Attitudes toward the government among ordinary people subjected to law have deteriorated dramatically.

When "fiscal reform" and "strategic reform" appear together, will China's grassroots governments feel exhausted?

In early 2024, many provinces, autonomous regions and municipalities in China began to announce the implementation of the "Party and State Institutions" reform plan issued and approved by the Communist Party of China in March last year, and clarified that some places would reduce the establishment and personnel of government agencies based on population and urban size. The plan calls for institutional reforms at the central level to be completed by the end of last year and at the local level by the end of this year.

According to multiple official media reports in China, more than ten provinces including Jiangxi, Beijing, Chongqing, Tianjin, Hunan, Guizhou, Shanghai, Hebei, Gansu, and Yunnan have deployed institutional reform efforts.

In the implementation details of the reform plan issued by the Organization Department of the Xiamen Municipal Committee of the Communist Party of China and the Establishment Office of the Xiamen Municipal Committee of the Communist Party of China, the judicial, public security and customs departments were not included in the scope of the reform. In the following days, Vietnam More and more grassroots public security systems have begun recruiting auxiliary police officers on a large scale.

Compared with the past, the recruitment method is not the high-profile open recruitment in the past, but is carried out through labor dispatch through some third-party human resources companies.

An unnamed researcher from Taiwan’s official think tank, Mr. Zhang, analyzed that Beijing’s various selection methods against Taiwan during the institutional reform of the CCP’s coastal areas and the Taiwan election formed a complete chain of evidence.

He also said that at present, the means and frequency of multi-level operations against Taiwan along the mainland's coast are gradually escalating and increasing. However, it seems difficult to reverse the current situation in which the mainland's economy is in a state of chaos caused by the CCP.

However, he is not so optimistic about this. He believes that based on the current capabilities of the CCP's existing departments against Taiwan, they can only provide "pre-war warning", but when it comes to real "war preparations," many CCP officials will resort to disguised evasion. method, the combat readiness capability will be reduced instantly.

Regarding Mr. Zhang’s analysis, several officials from the Chinese system that I interviewed also believed that “this is the power of capital at work.”

In fact, ever since the Chinese government launched its "institutional reform plan" in March last year, officials at all levels within the Chinese system have begun to make adequate preparations for the fallback, including "quitting the party within the system" and "relatives opening offshore institutions". Foreign Trade Company” and other methods to avoid inspection by the CCP’s Discipline Inspection Commission.

An official from northern China said that when questioning, the Discipline Inspection Commission will use a "conventional and obscure" method to "force out" that you have accepted bribes.

In fact, bribery in the true sense rarely occurs directly nowadays. Most of it is "forced corruption" that mainly involves setting up "political traps" and "threatening bureaucratic interests." This situation of internal government reform seems to have attracted the attention of China's top leaders.

Although the Chinese Communist Party started a large-scale anti-corruption campaign at the beginning of the new year, it has also become one of the current forms of wait-and-see among the people regarding the government’s credibility.

As local fiscal and tax revenue based on land finance begins to decline sharply, more and more grassroots governments are beginning to consider how to reduce and increase the proportion of general fiscal output. This is something that foreign investors from the West are currently very concerned about. One of the questions.

In the past few decades, China's local governments have habitually used land revenue as the main source of revenue for the year. This also confirms the ownership issue of China's land, which belongs to the state rather than individuals.

The government uses home buyers and land transfer fees as the source of general fiscal revenue through sales. However, as the loan capital chain of many commercial and state-owned banks in China breaks down, these third-party real estate developers who rely on loans to maintain their existence have emerged. Large-scale bankruptcy and huge losses.

The emergence of fiscal reforms has put many officials who are willing to "lay down" in a very precarious position. However, judging from the situations told to me by some people within the system, what they care more about is whether future fiscal revenue can be directly proportional to their own salaries.

In previous rectification campaigns, the CCP has repeatedly emphasized "self-innovation" and "self-revolution" and used propaganda machines to demonstrate to the outside world the results of "thematic education practice results that implement the mass line." Frequently mentioning the practical results of thematic education often brings about the practical problem of rising conflicts between officials and the people within the system.

For example, in the window unit of the administrative service center of a prefecture-level city in Hebei Province, when people come to do things, various means of support are used. In the end, even if it is resolved by the complaint department, it does leave a big impression on the people's first impression. s damage.

"Breaking the iron rice bowl system" is one of the highlights of this government institutional reform. The leaders of the Communist Party of China have mentioned on many occasions the policy of "people who can move up and down" and advocated that "young people go to the front line."

Although, in the past government reforms, the reaction to the conflict between officials and the people has not diminished. On the contrary, the advanced thinking of young people and the practical problems of mass work have evolved into new conflicts and contradictions in the future.

The much-discussed "Maple Bridge Experience Governance Work Policy" has also become the focus of attention together with this institutional reform. The outside world is worried about whether the institutional reform can be hailed as a "good reform" when China's economy continues to decline and unemployment continues to increase. square"?

Public grievances and official dissatisfaction also increase the uncertainty of the political environment.

In 2023, China's top leaders began to establish the Central Ministry of Social Work, which is also the intelligence department related to the stability maintenance mechanism. In this institutional reform plan of the Xiamen Municipal Government of the Communist Party of China, the first prefecture-level city’s social work department appeared, parallel to the United Front Work Department of the Communist Party of China. Its work includes unified management of petitions and grassroots party building, including party building in so-called mixed-ownership enterprises, non-public enterprises, new economic organizations, new social organizations, and new employment groups.

Currently, the Minister of Social Work of the Communist Party of China is Wu Hansheng, and the leadership includes: Vice Minister and Director of the National Bureau of Letters and Calls Li Wenwen, Vice Ministers Zhao Shitang and Liu Zheng, and Liu Zhao, leader of the Discipline Inspection and Supervision Team of the Central Commission for Discipline Inspection and the National Supervisory Commission of the Central Commission for Social Work.

According to multiple Chinese official media reports, on January 8 this year, Wu Zhiqiang was appointed as the Minister of Social Work Department of the Inner Mongolia Party Committee.

He is the first Minister of Social Work Department of the Provincial Party Committee to make a public appearance. Afterwards, leading members of the social work departments of provincial party committees in Beijing, Jiangsu, Sichuan and other provinces made public appearances.

As an intelligence department at the socio-economic level, it may become the most obvious social situation investigation unit deployed by China’s top leaders in prefecture-level cities after the Chinese Ministry of Public Security.

However, as of the end of October 2023, China's local government debt exceeded RMB 40 trillion. Goldman Sachs, a well-known American investment bank, estimated in May last year that the total government debt of the Chinese Communist Party was approximately US$23 trillion (approximately 168 trillion yuan).

Such a high amount of local government debt has placed a heavy burden on the already weak economy. For civil servants involved, performance and bonuses have gradually become a luxury.

Mr. Guo, a source familiar with China’s senior management, told me that in view of the tightening of “three official expenditures” announced at the beginning of the year (referring to the three expenditures arranged by fiscal appropriations for going abroad, vehicle purchase and operation expenses, and official reception expenses), ) have begun to control expenditures at the top level, but in some more developed provinces such as "Guangdong, Zhejiang, Shanghai" and other places there is still a small balance of local disposable finances, so the treatment of civil servants there is slightly better.

He also mentioned that funding expenditures in Xiongan New Area, Hebei Province, which is closest to Beijing, still come directly from the central government’s financial expenditures.

Frequent stability maintenance has made China's grassroots governments miserable, and more and more government departments have begun to choose to "lay flat" in response to inspections from higher-level governments. Even for very obvious policy issues, transformative decisions will not be made until major problems arise.

But when it comes to maintaining stability, every grassroots government official attaches great importance to it. Some Chinese dissidents who have long been under stability control posted on the overseas social media "x" how they were suppressed by the authorities before China's upcoming two sessions.

Even for those who have been subject to political criminal charges before, no matter how low-key they are later, the authorities will exploit them for some bureaucratic benefits that can lead to promotion.

The economic base determines the superstructure. This is an eternal truth. However, China's economy is currently showing unprecedented weakness, which has created a strong rebound in China's grassroots stability maintenance. Generally speaking, what China's grassroots stability maintenance demonstrates is "governance effect" rather than "management effect."

Some local officials often ignore the first effect of the "coercive" methods they use in governance, while ordinary people pay great attention to this.

On the contrary, under the normalization of grassroots stability maintenance, "movement-style" stability maintenance is put in front of us, and public opinion information is collected on a regular basis.

Create a scale effect. This benefit is the so-called "love guides action" policy.

"Love guides action" is one of the intelligence tasks recently deployed by the Ministry of Public Security of China. "Where the intelligence points is the direction of action" is one of the main contents proposed by Western scholars who study Chinese political issues regarding "movement-style" stability maintenance. This also has to make many Western societies wary of Beijing's "long-arm jurisdiction" strategy.

How much benefit can sustained "high-pressure stability maintenance" bring to China's economic development?

As the Lunar New Year is approaching, many university graduates, masters, and doctoral students are unable to find jobs. However, local governments are still recruiting stability maintenance personnel such as grid guards and security guards at high salaries.

These recruited positions provide a temporary "safe haven" for the employment of these top students.

Government departments hope to recruit some high-quality talents to form the main method of maintaining stability at the grassroots level, but the expenditures of these people are indeed not included in the scope of this institutional reform. At the same time, state-owned enterprises in many places in China have established armed ministries managed by the military.

This move is considered by the outside world to strengthen the maintenance of stability and suppress debt collectors from all sides amid the real estate boom and high local debt.

"The functions of public security will become increasingly blurred, but the responsibilities are indeed clear," an unnamed official from the European Union Security Ministry said. It is obvious that after expanding the accusations of national security, grassroots stability maintenance is only a way for those who do not know how to use high-tech means to avoid surveillance and big data fraud, such as using Musk's Starlink and some virtual satellite networks in China.

Compared with the Ministry of National Security, which has a single responsibility for public security, it is particularly important to be able to handle the current tense relationship between China and the Western world. Anti-subversion and anti-infiltration have become the focus of the Ministry of National Security this year.

But in fact, in many cases, some insiders from China’s Ministry of State Security and Ministry of Public Security often communicate abroad for financial gain, making Beijing mistakenly believe that the United States and other Western countries are engaged in sabotage activities.

In addition, Chinese official experts will publicly praise U.S. spy agencies’ intelligence-gathering capabilities and their technology. Chinese intelligence journals frequently publish studies on U.S. espionage operations.

The China Institute of Contemporary International Relations, a research institution directly under the Ministry of National Security, said in a recent study of the U.S. national security sector that "China should make some changes based on an in-depth assessment of relevant U.S. practices."

The New York Times previously reported that “an investigation of more than 30 online job advertisements issued by the National Security Department found that the National Security Bureau usually recruits personnel directly from universities, especially for core positions. According to two people with knowledge of the recruitment, the National Security Bureau In recent years, it has been recruiting technology talents, including hackers.”

Precisely, Beijing's biggest concern is that the United States and its allies will prevent China from acquiring technological know-how critical to economic and military development.

As this institutional reform continues to deepen, China has become acutely nervous and uneasy about the current social instability. However, on the one hand, it has to expand the scope of foreign visas, and at the same time, millions of people are subject to "border controls." contradict each other.