Reports Indicate That the Shanghai Food and Drug Administration Has Been Abolished, Potentially Triggering a Major Upheaval in the National Food and Drug Regulatory Model

Recently, news of the issuance of a document regarding the establishment of the Shanghai Municipal Market Supervision and Management Working Committee has begun circulating online. According to the document, the Shanghai Municipal Party Committee has approved the "establishment of the CPC Shanghai Municipal Market Supervision and Management Working Committee," responsible for the Party work of departments such as the Shanghai Municipal Administration for Industry and Commerce, the Shanghai Municipal Bureau of Quality and Technical Supervision, and the Shanghai Municipal Food and Drug Administration. Simultaneously, the Shanghai Municipal Bureau of Quality and Technical Supervision Committee and the CPC Shanghai Municipal Food and Drug Administration Committee are abolished.

In fact, this is not the first similar departmental reform nationwide.

On July 30, 2014, Tianjin merged its Administration for Industry and Commerce, Food and Drug Administration, and Bureau of Quality and Technical Supervision into the Tianjin Municipal Market and Quality Supervision and Management Commission—initiating the practice of "large departments managing the market" in municipalities directly under the central government. After the establishment of the Tianjin Market Supervision and Management Commission, the more than 7,000 employees formerly belonging to the three bureaus became "one family." The original 47 departments of the three bureaus were merged into 37 departments. While the number of institutions decreased, the functions increased: the regulatory functions related to food safety, formerly belonging to departments such as the Grain Bureau and the Industry and Information Technology Commission, were incorporated into the Market Supervision and Management Commission. Market supervision departments at all levels throughout the city were subsequently established. According to a previous report by People's Daily, Tianjin is not the first city to implement a "one-department-manages-the-market" system. Previously, Shenzhen Special Economic Zone, Shanghai Pudong New Area, and Zhoushan City in Zhejiang Province had also explored establishing market supervision bureaus. Shenzhen established the Shenzhen Municipal Market Supervision and Management Commission, under which were the Shenzhen Municipal Food and Drug Administration and the Shenzhen Municipal Market Order Administration. Responsibilities related to industry and commerce administration, quality and technical supervision, intellectual property, food safety supervision, price supervision and inspection, as well as the supervision of pharmaceuticals, medical devices, health foods, and cosmetics, were all incorporated into this agency.

However, Tianjin has taken a much larger step. In terms of responsibilities, the Tianjin Market Supervision and Management Commission connects with the State Food and Drug Administration, the State Administration for Quality Supervision, Inspection and Quarantine, and the State Administration for Industry and Commerce, covering the business areas of these three departments. It pioneered a new large-scale market supervision system from the city level down to townships and streets, a first in provincial-level administrative reforms nationwide.

Upon closer examination, the public opinion and social foundation for this "three-in-one" system is already very "solid." The People's Daily argues that before the establishment of the Tianjin Market Supervision Commission, food safety supervision was a classic case of "nine dragons governing the waters"—on the surface, the industry and commerce, quality supervision, and food and drug administration departments seemed to each fulfill their responsibilities in food safety, but in practice, their functions often overlapped, leading to "misalignment." More importantly, segmented enforcement resulted in both overlaps and gaps in the exercise of regulatory functions by each department, leading to poor coordination, mutual buck-passing, and "absence." The attempt at reforming the large-scale market and departmental supervision system is an exploration of transforming government functions and further streamlining administration and delegating power. Even more noteworthy is the frequent release of clear signals at the national level.

In fact, from 2013 to 2017, the "three-in-one" reform, which involved streamlining administration and delegating power, became the top agenda item for the State Council's executive meetings for five consecutive years: at the first State Council executive meeting in 2017, Premier Li Keqiang outlined three agenda items, including measures to innovate government management and optimize government services; the executive meeting on January 13, 2016, decided to introduce a series of reform measures to streamline administration and delegate power; the first executive meeting in 2015 determined measures to standardize and improve administrative approvals; the first executive meeting in 2014 decided to further introduce three measures to deepen the reform of the administrative approval system; and going back to the first executive meeting after the establishment of the current government in March 2013, the focus was still on promoting the transformation of government functions. Public data shows that as of January 2017, the current central government had cancelled or delegated 618 administrative approvals from State Council departments in nine batches; cancelled 283 administrative approvals designated by the central government for local implementation in three batches; cleaned up and standardized 323 intermediary service items in three batches; revised the enterprise investment project approval catalog in three batches, reducing approvals by 90%; cancelled 433 occupational qualification licenses and certifications in seven batches; and cancelled, suspended, or reduced 496 administrative fees and government funds. Looking further back, it's not hard to find that as early as 2013, the "Decision of the CPC Central Committee on Several Major Issues Concerning Comprehensively Deepening Reform" proposed to fully and correctly fulfill government functions, further streamline administration and delegate power, deepen the reform of the administrative approval system, minimize the central government's management of micro-level affairs, and allow market mechanisms to effectively regulate economic activities.

The corresponding provisions for the rumored abolition of the Shanghai Drug Administration are also readily available. The Third Plenary Session of the 18th CPC Central Committee explicitly proposed—"Accelerate the classification reform of public institutions, increase government procurement of public services, promote the streamlining of relationships between public institutions and their competent departments and the removal of administrative functions, and promote the transformation of qualified public institutions into enterprises or social organizations. Establish a unified registration and management system for all types of public institutions." In this light, the Shanghai Municipal Market Supervision Commission is truly "justified," and it is highly likely that this model will be piloted in the municipality and then promoted nationwide. Undoubtedly, this change in the national food and drug supervision model will truly unleash a major storm.