Friday, March 07, 2008

China vows to clean up government role in economy

China will embark on a programme to cut red-tape and reduce state interference in business, the government announced, warning that bureaucracy was breeding corruption and undermining economic development.

China's Communist Party leadership released a broad blueprint for "administrative system reform" late on Tuesday, a day before the Party-run National People's Congress meets to pass that plan and a separate one to merge dozens of ministries into several "super ministries".

The administrative plan warns that murky and unwieldy bureaucracy threatened healthy social and economic development.

"There is excessive interference in the micro-economy, social administration and public services remain quite weak, and there are still quite stark problems with overlapping, inefficient departments in which power and responsibility are divorced," said the document issued on the government Web site (

A five-year programme will attack these problems by seeking to separate business and "market intermediaries" from government and making the levers of economic policy and market regulation more transparent, the announcement said.

"Transfer out the matters that should not be under government administration, and truly perform well those that it should," the document urges.

The announcement comes as Chinese and foreign private investors have complained of growing, not retreating, government influence in "strategic" parts of the fast-growing economy.

Nor does the plan directly address the role of the ruling Communist Party in administration and the economy -- a sensitive topic as leaders juggle a growing private economy with the desire to keep unchallenged political control.

A recent study from the Party's top think-tank, the Central Party School, warned that the "backwardness of the political system is affecting economic development" and argued the country should embark on "comprehensive political system reform".

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