Let’s continue discussing about the Two Sessions Before the sessions There were some related posts on foreign social media including Twitter Some Chinese Youtubers were also trying to predict what was going to happen They argued that the institutional reform would get rid of the Ministry of Public Security (MPS) and Ministry of State Security (MSS) for the State Council Instead, there would be the Internal Affairs Committee Which would be under direct supervision of the Central Committee of the Communist Party of China The former’s Soviet Union’s NKVD must be familiar to everyone The CCP is becoming the second Soviet Union A brutal dictatorship This rumor was spreading like wildfire After the Two Sessions, the institutional reform program was announced two days ago The whole security system remained intact Those rumormongers pretended it did not happen and went for looking into other aspects of two sessions This is quite interesting I think the most important point in doing political events analysis is relying on facts If you always speak on hearsay evidence In the end you will lose credibility To me, removing the security department is impossible The reason is Let me tell you Firstly In the Constitution of the People's Republic of China Just like Qin Gang, let’s read the constitution Article 89, Section 8 of the Constitution clearly states “Public security is led and administered by the State Council” That means the MPS is under the management of the State Council It's a constitutional rule Which also means that To remove the MPS According to the Chinese law, the constitution would have to be amended first Otherwise It cannot happen Some people would also have said The Constitution is just a piece of paper It is not worth abiding And can be changed easily But there must be a procedure to change the law And I'm telling you Though CCP doesn't respect the law As such a system is A dictatorship But the CCP tries to be decent for the law abiding on the surface For example When Xi wanted to be re-elected for the president He did not continue in office without amending the constitution Instead, he did it five years ago When he abolished the rule of two consecutive terms for the president That’s how he got re-elected If you follow these people’s logic There would be no need for Xi to change the law If he did not amend the constitution It would be blatantly illegal The CCP would never do this They will follow all the formalistically legal procedures perfectly So you cannot find anything wrong If the MPS has to be removed from the State Department The Constitution has to be amended first Otherwise, it is impossible This is my first reason Secondly, there is no need to do that We all know that There are two systems for the national management in China One is the State Council and another one is the Central Committee of CCP Whatever the State Council is in charge of Will also be supervised by the CCP through a counterpart department For example, the State Council has the State Taiwan Office In the CCP There is a leading group for Taiwan affairs The State Council has the Ministry of Personnel What about the Party Central There is the Organization Department For the State Council, there is MPS As well as Procuratorate and the Court The Public Prosecution and Law System What about the CCP There is the Central Political and Legal Affairs Commission Comparing to the public prosecution system It even has more power The Organization Department also has more power than the Ministry of Personnel So, while it's true that there's a leadership team of the State Council But in fact these leading bodies of the State Council Are supervised by the communist counterpart departments Let's take the MPS as an example It is ostensibly run by the government But in fact, the secretary of the Political and Legal Committee can directly supervise it If you are the local director of the Public Security Bureau You are subject to three types of management First, you're under the control of the MPS Second, the Secretary of the Political and Legal Committee Third, the Secretary of the Provincial Party Committee So who is in most charge of these three departments? Who has the strongest power? It's actually the provincial party secretary So the MPS is in fact under the control of the Party And isn't explicitly supervised by the State Council In this case There is no meaning to remove the MPS from the State Council And merged into the political party No way, people will attack the party if it is done so Is the party and government not separate anymore? Is it a party-state system now The CCP would never to hand others the hilt Do you know why the Communist Party founded NPC, CPPCC, public prosecution system, State Council The purpose behind this is To use them as “white gloves” To explicitly make the party-state system Into one system where the state and the party are separate To make you think that On the surface this country is Managed and ruled by the government But CCP is the real one behind it Everyone knows that So will CCP destroy this system Apparently no There would be no benefits doing it Regarding the powers of the Public Prosecutor's Office and the Political and Legal Committee, let me explain again We all know that In the past, when we were describing the public prosecution law We always emphasized “public”,“prosecution”,“law” He Weifang wrote an article before saying "In a normal country there should be law, prosecution, and public." Which meant the law should have the greatest power Public security should have the least power But in China it's reversed why Because the Minister of Public Security in China is also the Secretary of the Political and Legal Committee In the past, this Secretary of the Political and Legal Committee was a member of the Politburo Standing Committee under the Chinese Communist Party system, and in Zhou Yongkang's time the prosecutor's office and the court have to report work progress to him As he had more power Now he's a member of the Politburo even though he's not a member of the Standing Committee anymore But the head of the Supreme People's Procuratorate Also the president of the Supreme People's Court Who nominally are also vice state cadres Have to report to the secretary of the Political and Legal Committee Since he’s your boss So in our country it's essentially a party-state system But not on the surface This formalistic non-party-state system Will be strictly adhered to This it what it takes for the party to rule Which is also very smart In my opinion If you really want to investigate Some changes in the internal system of the Communist Party You have to know it first We're going to talk today about the Communist Party's institutional reform of the State Council this time Looking at the past reforms Generally speaking, every two to three years or three to five years, there was a relatively large restructuring The early institutional reforms of the State Council Mainly focused on streamlining institutions Because before the opening up The State Council extended to the extent that There were 100 direct departments In the early reforms of the State Council The main thing was to streamline the agencies, streamline the personnel, simplify the functions After the late 90s The streamline was basically completed After that,the reforms Have been focusing on the modifications of the functions which would meet the needs of the state There would be new departments For example, there was no departments for the technology and information So, the ITT was established There was no reform commission To review the ongoing national projects Then the NDRC was established For institutional reforms like this can reveal the economic developing direction of the CCP As well as how the government would like to manage the state From what departments are founded, canceled and merged This will reveal the subtle changes of the CCP’s focus So this is why we look into the reform This is the major reason In my opinion, there are two major events happening during the reform The first one is The end of Li Keqiang’s ten-year premiership Li Qiang will be the new premier with his own team Starting the future 10 years in office Li Qiang, as the new premier Has his own understanding and expectations for his job in the state council So before he takes office He would make appropriate changes to the entire State Coucil Which were already done at the time of the Second Plenary Session of the Central Committee You can even say around the time of the 20th National Congress They were already planning For Li Qiang’s new ruling team To remove the barriers in the institution And set up new managing system for Li Qiang’s team This is a very important context The second one to me is The rivalry between China and the US Everybody knows that for the past five years, or arguably ten years There has been a constant conflict between these two countries On one hand, it involves with the international political aspect But it is also related to Taiwan problem and the economic development There is no peace in the economic field For example, the trade war when Trump was in office China and the US were fighting over tariffs Later the Chinese companies in the US market almost got delisted The the Huawei incident, including the chip incident Which means From China’s perspective For China’s rise in economics, the US is Adopting a strategy of containment A few days ago, on March 6th Xi had a meeting with the Federation of Industry and Commerce Which we also mentioned in the previous video Two aspects were discussed during the meeting One was to treat the private entrepreneurs as part of the state Another one was the international situation He said the situation was serious for the past five years Western countries, led by the US, have been besieging, suppressing and containing China What does this mean It means China was trying to compete fairly with western countries in the beginning Or even trying to collaborate But the western countries would not let us compete properly Instead, they tried to jam us up The chips incident is an obvious example The US won’t let China use chips Meaning Huawei’s phones can’t be made Rockets launching is also much affected So Xi must have been really stifled As China has been constrained in economics So he told these private entrepreneurs “We are on the same boat” "America is the hostile one." "We have to fight them." So the new leadership of the State Council will have to adjust the development strategy of the State Council for the next ten years So this institutional reform is an adjustment for the next decade when the strategic competition between China and the US Why? Let's see the specific reform plan of the State Council There are three major priorities in this reform First, the reorganization of the Ministry of Science and Technology (MST) including the strengthening of the National Intellectual Property Administration (CNIPA) Second, the establishment of the Digital Authority Third, the establishment of National Financial Regulatory Administration (NFRA) These are the cores of the institutional reform Others are less important such as the streamlining of institutions, the transfer of population policy from the Ministry of Health to the Ministry of Civil Affairs These are actually some technical details Let's analyse these three core reforms First, the reorganisation of the MST What was the MST previously in charge of? Money and materials.
It was the national science and technology development fund either for enterprises, or for local governments, or for universities Then the MST was responsible for the approval and distribution of these research institutions So in the past, although the MST was relatively inferior to the State Council ministries and was no sense of presence it actually had power. What was this power? To distribute money and goods But this time the function of giving out money and goods was stripped away Agriculture related affairs are taken care by Ministry of Agriculture Health issues are supervised by Ministry of Health Educational problems are taken charge by Ministry of Education The MST now only retains the National Natural Science Foundation So what does the remaining MST do? Still to be restructured and strengthened It is actually to develop China's science and technology development strategy According to what they say "to form a national system for the development of technology" This is a very meaningful statement We all know the Chinese system for mobilizing the resources nationwide which is in the Olympic strategy The average Chinese person is not very good at sports but it is still possible to win gold medals at the Olympics, why? Because it takes limited resources to train a handful of athletes to compete with others for gold It does work, although it has been criticized by many people For example, China could win a gold medal in archery But how many people could play archery? This Olympic gold medal is not necessarily related to the level of sport of the general public But you have to admit it works It really can win Olympic gold So this time the MST is being reorganised to form a national system for the development of technology to compete with the US in all aspects of technology In my own analysis CCP believes that the US-China competition is not just about economic volume Because China is no longer afraid of the US in terms of volume in general The US has imposed trade sanctions on China To be honest, for the US it is also a Pyrrhic victory Because large amounts of Chinese manufacturing are also very critical to the US But what the US is able to strangle China now is in those high-tech fields China has no alternative The most obvious one is the chip sector If China can break through in this field it will no longer be afraid of the US The US will no longer be able to control China I think this is the most important strategy for restructuring of the MST Hopefully, within the next ten years the entire country will be able to compete with the US in a high-tech intellectual race at this level Including the CNIPA, which also it wants to do so Because if you want to invest in high technology you have to strengthen the protection of the intellectual property system Only when intellectual property rights are protected will civil society be more willing to invest in technological innovation Of course, we don't know whether it will work or not But what we are doing now is actually an analysis of the logic behind the institutional reform of the State Council This is the first point Second, the establishment of the Digital Authority which has two functions The first is security and the second is development Security means As we all know the data for China and the other countries are actually two parallel universes Because China has its own firewall There is no exchange of data with foreign countries So some data can be transmitted abroad Some data cannot For example, in China, Apple is required to set up "Guizhou on the Cloud" to store the information collected from customers separately. Take Musk's Tesla, for example Tesla collects road information all the time so can this data be abroad? Another example is DIDI It has more than one billion Chinese people's taxi information including the vehicles' operational information Can this information be transmitted to the US? So the approval of digital information that can be transmitted abroad is a very important function of the Data Authority The second is to promote the development of digital assets We all know what the most important asset for economic development is nowadays Not oil or minerals It is digital, data The companies that thrive on data are the most competitive in this era What do you think Google is? It is an information processing company Including those most popular AI companies they are dealing with information Including China's Alibaba, Meituan, Didi What are the assets of these companies in essence? Information, data. Only when these data are developed will the country be the most competitive in the new historical period So, the Data Authority also has the responsibility to promote the development of China's data assets As you can see China has now set up data exchanges in Shanghai and Beijing The purpose is to assetize data and trade it It should be said that it is relatively quick to react Because it realizes that the future of the world economy is based on data I read this data Block chain is used as the technology base Block chain cannot be turned into bitcoin or virtual currency in China but it can be turned into a part of data assets I think this aspect is a very important logic in the establishment of the Data Authority The third is the establishment of the NFRA NFRA is a relatively technical area In the past, there were some problems with financial regulation in China The CBIRC is under the control of the People's Bank of China (PBOC) The PBOC is actually similar to the central banks of foreign countries In the early days, the PBOC had savings function which was later abolished to issue currency and settle foreign exchange Meanwhile, the PBOC is above CBIRC But there is a problem If you are a central bank, setting monetary policy, issuing bonds settling foreign exchange Then you should not exercise the financial regulatory function The financial supervision function is a regulatory function of the government So this time, the CBIRC is separated from the PBOC and establish NFRA specially I find that it should be learned from Hong Kong Because Hong Kong has Monetary Authority Then the PBOC is only responsible for setting monetary policy issuing bonds and foreign exchange settlement The function of financial supervision has been upgraded In addition, China Securities Regulatory Commission (CSRC) is not placed under the NFRA Because the CSRC is more important The power to issue bonds in the National Development and Reform Commission (NDRC) is transferred to the CSRC It's not as easy as it used to be for local governments to issue debt Because in the past, local governments only needed to deal with NDRC In the future, the CSRC will be responsible for approval and it becomes a direct department of the State Council instead of an institution A civil servant now What's the difference? It means that the power of the CSRC is likely to become greater in the future Compare the CSRC to Hong Kong's Securities Regulatory Commission (SFC) The power of the SFC is significantly greater than that of the CSRC The most obvious point is that the SFC actually has criminal powers Both the Mainland and Hong Kong have the power to impose administrative penalties For example, if a company does not regularly disclose information discloses false information, or manipulates the market you can impose penalties on it But if financial crimes or securities crimes are involved The CSRC has to refer such acts to the public security authorities It does not have the power to investigate and prosecute But the SFC actually has this power It can directly prosecute securities offenses According to my understanding the transformation of the CSRC from an institution to a direct subsidiary of the State Council means that its powers will be enhanced in the future This part of the management system is basically learnt from Hong Kong These are the three core elements of the State Council's institutional reform Finally, I would like to say The CCP is actually relatively responsive in the process of state management in general Like the Data Authority there is no such agency that I can see in any government in the world But it is very quick to turn around When it realizes that data management and data assets are an important part of the future economic development process it immediately elevates it to a very high level of national strategic development A special data authority has been established This is the first point Second, when it realizes that in the next decade the US-China competition will mainly be in the field of high technology it reorganizes the MST to fight a competitive war with the US in the field of high technology so-called competition between major powers What do I mean by this? Many people think that the CCP is relatively weak and will collapse at any time But my view is that Never underestimate the inherent dynamism of the system China's GDP development is expected to grow by 5% this year The international community in general is above 5% If we calculate it at 5%, it's also very fast That's the fastest in the world within a large country Not to mention Vietnam Why could it maintain such a dynamic economic development? Once it is free from the epidemic CCP still has some solutions for development within the economic sphere If we can't face up to this ability it's hard to treat it as an opponent In fact, when we face an opponent the worst thing is to belittle it So in my opinion Don't underestimate the power of the entire CCP system The future of this set of State Council reforms is for Li Qiang to take over I can't predict what will happen when the new Prime Minister takes office and what will be the final outcome of the competition with the US under such a system We just wait and see Well, that's all I would like to say today Thank you all China's current reform of the State Council is the most important in the past few years, as it focuses on the great power tug-of-war and competition between China and the US over the next decade. China believes it is no longer afraid of the US in terms of economic volume, but is still under the control of the US in the key high-tech segment.
The purpose of the reorganization of the MST is to formulate a strategy for the development of science and technology in China over the next ten years and to develop a national system of science and technology in China, in the hope of competing with the US in the field of science and technology. The establishment of the Digital Authority, on the one hand, focuses on data security and, more importantly, on promoting the development of the digital economy and capturing the core assets for future economic development Sub: 橘子，Sun