Planning agency set for change in role

National Development and Reform Commission ill-suited to new economyThe power of the mainland's top economic planning agency may be reduced in the years ahead, as the Communist Party seeks to shift the economy away from a reliance on production towards consumer-led growth.迷你倉尖沙咀For decades, the National Development and Reform Commission (NDRC) has been known as "the little State Council" for its unparalleled clout among government agencies to approve or reject major industrial projects.But its role as economic gatekeeper will likely be handed over to a new central leading work group, possibly to be led by President Xi Jinping or Premier Li Keqiang , which will focus on deepening reforms in key areas, from politics to the environment and culture. The purpose of the commission would mainly be to devise mid- to long-term economic strategiesThe changes are deemed essential for the mainland to continue to grow its economy at a rate of about 7 per cent a year as it embraces domestic spending. The authorities have acknowledged the past reliance on investment has created overcapacity across industries and heightened financial risk while exaggerating the worst effects of state-sector monopolies.Yale University Professor Stephen Roach said curtailing the commission's power was necessary. "With the third plenum shifting the focus of China's macro strategy from a production-oriented approach that was tailor-made for the NDRC to a more balanced consumer-led strategy, a new policy decision-making process is warranted," he said."Largely for that reason, the ascendance of the new leading committee threatens to marginalise the role of the NDRC," said Roach, a former non-executive chairman for Morgan Stanley in Asia and veteran China watcher.Chi Fulin , executive president of the Hainan-based China Institute for Reform and Development, expected some of the commission's responsibilities to carry out reforms would be handed over to the central leadership."Currently, the NDRC not only manages macroeconomic policies but is also responsible for carrying out reforms. It would be difficult for such an agency to carry out reforms against itself," he said. Chi, a well-known state researcher, said it was unclear whether there would be lay-offs at the NDRC.Lian Weiliang , the NDRC deputy chairman, told a press briefing late last month the commission would be mainly responsible for "pushing forward, implementing, and comprehensively mini storageo-ordinating" future reforms of the economy. This would include studying ways to open up markets and guiding economic experiments in trial zones, he said.The amount of investment the central government needed to directly review would be reduced gradually, eventually by as much as 60 per cent, Lian said.Companies should decide on the viability of projects rather than the NDRC, unless they pertained to national security, the environment or development of strategic resources, Lian said.One of the NDRC's functions is to oversee the reforms of the pricing of oil, water, transport and energy, but is has long been criticised for focusing too much on development at the expense of reform efforts.Under the current system, state-owned enterprises win the lion's share of resources due to their bargaining power, but this has led to inefficiency, according to Xu Xiaonian , an outspoken economist and professor at the China Europe International Business School. He has urged the government to dismantle the NDRC, saying it was more of an obstacle than an aid to developing a market economy.The NDRC is a legacy of the State Planning Commission established in 1952, which helped to manage the centrally planned economy modelled on the Soviet Union. It took on its current form after merging with two state agencies in 2003.Although the government has sought to streamline the bureaucracy in recent years, the NDRC has retained final say on major investments. It approved nearly 1,500 projects between April 19 last year and March 21 this year, according to a report by China Newsweek magazine in April.Economic growth, after soaring by about 10 per cent a year for the past decade, cooled to a 13-year low of 7.8 per cent last year. It is forecast to stay below 8 per cent this year as the government reins in credit supply to prevent asset bubbles, and as demand for Chinese-made products falters.Yuan Gangming , a researcher with the Chinese Academy of Social Sciences, was doubtful whether the NDRC could be reformed. "Reducing investment approvals was the most exciting step mentioned in the third-plenum document. But I doubt it will become a reality, because it's also an area in which the government is reluctant to relinquish," he said.Gu Shengzu , a lawmaker who specialises in economic and financial affairs, suggested the NDRC's influence would not wane, as it would still have to tackle the "heavy" tasks of planning various reforms.迷你倉