On Wednesday, May 22, the NPC Standing Committee (NPCSC) released its first-ever five-year plan on overseeing the State Council’s management of state assets [贯彻落实《中共中央关于建立国务院向全国人大常委会报告国有资产管理情况制度的意见》五年规划（2018-2022）] (Plan). This Plan implements the Communist Party Central Committee’s December 2017 opinion on establishing a system where the State Council reports to the NPCSC on its management of state assets [关于建立国务院向全国人大常委会报告国有资产管理情况制度的意见] (Opinion). This post summarizes the main contents of these two documents.
Under Chinese law, the State Council exercises ownership rights over and manages state assets [国有资产] on behalf of the State, while the NPCSC’s role is purely supervisory. Yet according to the Opinion, it has not been entirely clear how many state assets there are and the State Council’s management has been less than transparent. The NPCSC thus has had insufficient information to conduct rigorous oversight. The Opinion and the Plan seek to tackle this problem.
What undergirds the new oversight scheme are annual State Council reports on its management of state assets. The Opinion provides for two forms of such reports: (1) comprehensive reports [综合报告] that “reflect the basic situations of all types of state assets”; and (2) special reports [专项报告] that each focus on the management of a single type of state assets (the documents list four main types; see next paragraph).
The topics of reports follow five-year cycles. In the last year of an NPCSC’s five-year term, the State Council will orally deliver a comprehensive report, while in each of the four previous years, it will submit a written comprehensive report and orally deliver a special report. During the 13th NPCSC’s term, the four special reports’ topics are as follows:
- 2018: the management of state assets of financial enterprises;
- 2019: the management of state assets of non-commercial institutions [行政事业性国有资产] (i.e., administrative organs and public institutions);
- 2020: the management of state assets of non-financial enterprises;
- 2021: the management of state-owned natural resources (assets).
The Opinion specifies a different reporting emphasis for each type of state assets, in light of its “nature and management objectives.” For instance, in its special reports on state assets of both financial and non-financial enterprises, the State Council should focus on “the aggregate assets and liabilities, state-owned capital investment, distribution, and risk control, state-owned enterprises reform, state assets management and supervision, state assets disposition and distribution of revenue, assets formed by overseas investment, and corporate senior management compensation.”
The scope of the reports will gradually expand over the next few years, according to the Plan. In particular, the 2019 comprehensive report will for the first time cover infrastructure, constructions in progress, and social insurance funds, while the 2020 comprehensive report will additionally cover foreign exchange reserves, government investment funds, and public capital in public-private partnerships. More types of state-owned natural resources will also be covered in future reports.
Under the Opinion, the NPCSC’s principal form of oversight of state assets management is hearing and deliberating the State Council’s reports. When NPCSC members discuss the reports during NPCSC sessions, State Council officials are required to attend and answer questions. The NPCSC’s deliberation should focus on nine enumerated aspects, including whether the value of state-owned capital has been preserved or improved and how has such capital served national strategic goals.
The NPCSC’s oversight would also extend beyond those deliberation sessions, says the Opinion.
Before the NPCSC even receives a report from the State Council, it will conduct its own investigation and research on the topic of the report. It will solicit opinions from the interested parties, which would be forwarded to the State Council to address in the report. The State Council is required to send a draft report to the relevant NPC body to solicit its opinions. And after revising the draft, the State Council must submit the finalized report to the NPCSC ten days before a scheduled session.
After a session where the State Council’s report is discussed, the NPCSC will forward to the State Council the legislators’ views on the report. The State Council must then study those views and report back to the NPCSC within six months on what it has done to rectify any problem identified.
The Opinion requires the NPCSC to keep its oversight process transparent by releasing to the public the State Council’s reports, its members’ views on those reports, and the State Council’s responses. The Opinion also authorizes the NPCSC to adopt formal resolutions if necessary—and to employ other forms of oversight (such as forming special investigative committees) that so far have never been used.
The Plan sets forth several legislative initiatives that aim to institutionalize the new state-assets oversight scheme discussed above.
First, the NPCSC will codify the requirement that each level of government report to the corresponding people’s congress on state assets management by amending the following laws:
- Law on Oversight by the Standing Committees of the People’s Congress at All Levels [各级人民代表大会常务委员会监督法];
- NPCSC Rules of Procedure [全国人民代表大会常务委员会议事规则];
- Organic Law of Local People’s Congresses at All Levels and Local People’s Governments at All Levels [地方各级人民代表大会和地方各级人民政府组织法].
Second, the NPCSC will adopt a Decision on Strengthening the Oversight of State Assets [关于加强国有资产监督的决定] in 2020 to standardize the oversight process.
Third, the NPCSC will accelerate the drafting of a law on the management of state assets of non-commercial institutions (which is a Category III project in the 13th NPCSC’s five-year legislative plan).
Finally, the NPCSC will study the feasibility of enacting a Law on the Management of Comprehensive State-Owned Assets (Capital) [综合性国有资产（资本）管理法]. It aims to complete a feasibility report by 2022.
As noted earlier, this post summarizes on (what we think are) the core contents of the Opinion and the Plan. There is a lot more in those documents, and we recommend that anyone interested read the documents themselves.