China to Close 11 Ministries in Effort to Avoid Fiscal Crisis

In a bold move to reduce the size of government and wean the country from state meddling in business, China plans to eliminate 11 ministries and lay off government employees and civil servants, adding as many as 4 million bureaucrats to the swelling ranks of unemployed here.

The unprecedented downsizing scheme, outlined in a speech by outgoing Premier Li Peng before the National People’s Congress on Thursday, represents China’s attempt to avoid the economic crises affecting other Asian countries by reducing the role of government in the private sector of its economy.

“This reform involves greater changes both in institutions and people than were ever made before,” Li said in his opening report to China’s supreme legislative body.

At several points in his speech, Li bluntly informed government employees that, for the first time in the history of modern China, their jobs were no longer secure.

China already has millions of unemployed state factory workers, particularly in the northern Manchurian rust belt cities of Shenyang, Harbin and Changchun. However, the restructuring plan marks the first time that the unwieldy government apparatus overseeing the state-planned economy will be touched.

“The incompatibilities of government institutions to the development of a socialist market economy have become increasingly apparent,” said Li, a Soviet-trained engineer who had been an earlier champion of the centralized economy. “Unwieldy organization and failure to separate the functions of government from those of enterprises have given rise to bureaucracy, promoted unhealthy practices and created a heavy financial burden.”

Although the plan was announced by Li--who next week will conclude his final term as premier, a position he has held since 1989--it is clearly the brainchild of China’s economic chief, Zhu Rongji, who is expected to be announced as Li’s replacement.

Details of the reorganization plan were expected to be unveiled later today in a speech before parliament by Luo Gan, secretary-general of the State Council. However, much of the specifics have been published in Hong Kong newspapers.

Included in the ministries to be scrapped are many of those directly tied to industrial and mining sectors, including the ministries presiding over coal, power, metallurgical industry, machine building, electronics and chemical industries. The reorganization will also be marked by a consolidation of the country’s information and propaganda agencies under a newly created “super ministry,” the Ministry of Information Industry.

Other new, consolidated ministries include the State Commission of Science, Technology and Industry for National Defense; the Ministry of Labor and Social Security; and the Ministry of Land Resources.