NPC | New anti-graft body set to boost Xi’s extended rule

China is set to give President Xi Jinping a powerful new weapon as he prepares to rule indefinitely — a Communist Party-led anti-corruption agency to police not only the party’s cadres, but also doctors, teachers, entertainers and other state employees.

The move is part of a sweeping government reorganization to boost the authority of the party headed by Xi, who has firmly established himself as China’s most formidable leader since Mao Zedong.

On Sunday, China’s rubber-stamp legislature scrapped a two-term limit on the presidency, paving the way for Xi to rule for as long as he wants. That has dismayed critics who fear a return to one-man rule and the destruction of modest measures in place since 1982 to constrain power in China.

The National People’s Congress yesterday began a third and final reading of a draft supervision law that would extend the newly formed anti-graft body’s authority, led by the party, over vast numbers of workers in the public sector.

Chinese University of Hong Kong law professor Ryan Mitchell said expanding the scope of the anti-graft agency’s powers to include government workers may have been “calculated as a way to intimidate the bureaucracy into more closely following the party line.”

The law would merge the party’s anti-graft watchdog body with one overseeing the civil service to form a new National Supervision Commission, defined as a political body independent of the Cabinet, courts and prosecutors, raising fears of political abuse.

The body will have the right to detain suspects for up to six months without seeking a judge’s permission. Authorities must inform the suspect’s family and work unit of their detention within 24 hours, except in cases where evidence might be destroyed or the investigation otherwise impeded, according to a text of the draft law.

Other details, such as where suspects will be held, who will be responsible for their welfare and what form of legal representation they will be permitted, have not been announced.

A chief flaw of the new commission is that it will operate outside standard legal procedures ensuring due process, said Mitchell and other experts, including Hong Daode, a professor of criminal law at Beijing’s China University of Political Science and Law.

“There should never be two different sets of procedures when handling criminal cases,” Hong said.

The bill will establish supervisory commissions at various levels down to the counties. They will have the power to scrutinize government employees, as well as people working in state-owned companies and research institutes, schools, hospitals, sporting bodies and elsewhere. In Beijing alone, a pilot program instituted last year quadrupled the numbers under scrutiny to almost 1 million.

The commission also replaces the party’s previous procedure for investigating corruption suspects known as “shuanggui,” whose opaque nature led to frequent allegations or torture, forced confessions and other abuses.

“Replacing ‘shuanggui’ with rigorously regulated detention will help settle a long-lingering legal problem,” Li Jianguo, a senior official with the legislature, said in introducing the draft law. “This has displayed our resolve and confidence to realize a full, law-based governance.”

Hong questioned that assertion, saying the commission would be free to operate with few constraints, especially in the detention of suspects and denying them the right to legal representation.

“Now they’ve broken all the restrictions,” he said.

Also yesterday, the congress began a review of a major reorganization of government agencies, including the establishment of a ministry of veterans’ affairs to oversee the welfare of China’s millions of retired soldiers.

Veterans who served as far back as the 1950-53 Korean War have staged sporadic street protests, including in Beijing, demanding higher pensions and improved benefits. Currently, local governments are placed in charge of veterans’ welfare, creating huge inequalities in services and compensation across the country.

Plans were also announced to create a newly powerful regulator to oversee the scandal-plagued banking and insurance industries as they try to reduce debt and financial risk.

The proposed Cabinet reshuffle and draft supervision law are almost certain to be passed during the legislative session, which wraps up next week.Christopher Bodeen, Beijing, AP

Beijing merges bank, insurance regulators to tackle risk

China’s government announced plans yesterday to create a newly powerful regulator to oversee scandal-plagued banking and insurance industries as they try to reduce debt and financial risk.

The move is in line with the ruling Communist Party’s efforts to gain more direct control over the state-dominated economy and reduce financial risk following a run-up in debt that prompted global rating agencies to cut Beijing’s government credit rating last year.

The new agency, a merger of separate Cabinet bodies that oversee banks and insurers, will be charged with “preventing and dissolving financial risks,” said the plan submitted to the ceremonial national legislature for endorsement. It did not mention the third financial regulator, which oversees the securities market.

Separately, the plan also calls for creating a national market regulator, drawing in anti-monopoly, pricing and other powers from food and drug, industry and product quality agencies.

Beijing has launched a series of regulatory overhauls over the past two decades, creating and merging agencies, to respond to the growth of China’s vast, state-owned banking, insurance and finance industries.

The latest announcement follows Beijing’s promise in November to raise and eventually eliminate limits on foreign ownership of banks, insurers and securities firms.

The division of responsibility among multiple financial agencies prompted concern regulators were failing to keep track of increasingly complex activity by banks, insurers and companies.

Despite being mostly state-owned, Chinese banks, insurance and securities firms are highly autonomous. Bosses of the biggest state-owned institutions often rank higher in the ruling party than the officials in charge of regulatory agencies, allowing them to defy rules.

Lack of coordination hampered the official response to a stock market collapse in 2015.

The insurance industry has been shaken by corruption scandals and complaints of reckless speculation in stocks and real estate. Banks face complaints they obscure their levels of lending and risk.

Regulators seized control of privately owned Anbang Insurance Group, one of China’s biggest insurers, in February and said they were acting to protect its solvency. Two other insurers were penalized earlier following complaints of reckless speculation.

The top insurance regulator, Xiang Junbo, was expelled from the ruling party in September and charged with taking bribes. Authorities have yet to give further details.

Some major companies that have run up multibillion-dollar debts to banks face pressure to pay those down while others face questions about their solvency.

China’s total corporate, local government and household debt surged to the equivalent of more than 270 percent of annual economic output, high for a developing country, after Beijing used repeated infusions of credit to shore up economic growth following the 2008 global crisis.

Authorities announced plans last year to allow some state-owned companies to pay down debt using stock but few have done so.

Officials speaking this week at the annual meeting of the ceremonial legislature have tried to defuse public concern. The central bank governor, Zhou Xiaochuan, said the rise of debt has slowed and risk is manageable.

The latest change would bring together the China Banking Regulatory Commission and the China Insurance Regulatory Commission. AP