China will overhaul supervision of its financial system and bolster science and technology to try to catch up with the west, as Xi Jinping embarks on a third term as president with one of the biggest reforms of the state apparatus in years.

The changes — part of a series of ministerial reforms to China’s state council, the country’s cabinet — include establishing a new financial regulatory commission, reorganising the science and technology ministry and creating a department to oversee China’s vast trove of data.

The measures come as Xi seeks a tighter grip over the government at the annual meeting of China’s rubber-stamp parliament this week as he embarks on a third five-year term.

The reconstituted science ministry will seek to combine education and research with practical applications, as well as establishing a “national technology transfer system”, state media said, without elaborating.

The overhaul shows Chinese leaders’ focus on building up the country’s semiconductor industry, which has been battered by US curbs on the sale of high-end chips and related machinery to China.

“In critical areas, we need to be self-reliant and in control,” Xi told delegates on Sunday. “First-rate tech which is strong and self-controlled is essential for our high-quality development.”

Rory Green, an economist at TS Lombard, said the overhaul “looks like an attempt to restructure the party-state to align with Xi Jinping’s longer-term policy objectives”.

He said the changes were aimed at creating a “common prosperity” political economic model, using Xi’s phrase for a system that more fairly distributed wealth. “Xi’s core objectives are security . . . technology upgrading [and] risk avoidance,” Green said.

As part of the reforms, China will create a State Financial Regulatory Commission out of the current banking and insurance watchdog to oversee all activities in those sectors other than the securities industry.

This is to “resolve long-term problems in the financial area, and bring all types of financial activities under supervision”, according to Xiao Jie, secretary-general of the cabinet.

China faces mounting risks from increasing leverage in the financial system, typified by the collapse of Evergrande, the country’s most indebted property developer.

Rapid financial innovation, including fast-growing online payment services offered by internet billionaire Jack Ma’s Ant Group, is also leading to calls for more regulatory co-ordination and improvements in consumer protection.

The new commission’s responsibilities will include oversight of financial conglomerates and consumer protection. These functions used to be partly carried out by the People’s Bank of China and the markets watchdog, the China Securities Regulatory Commission.

The CSRC, however, will also be strengthened under the overhaul. It will report directly to the cabinet and take over reviewing the issuance of bonds including billions of dollars of debt issued by local government financing vehicles (LGFVs). At the moment, it shares this responsibility with the National Development and Reform Commission, which oversees state-owned enterprises.

“The CSRC will become more powerful, which is good,” said Ji Shaofeng, a former Chinese financial regulator. Bonds issued by LGFVs “have a huge amount of problems because [the] NDRC saw them as a way to raise capital for local governments instead of focusing on financial risk”, he added.

China will also establish a National Data Bureau to oversee and protect the country’s mountain of data, according to the overhaul plan.

Chen Long, co-founder of Beijing-based research company Plenum, said the new bureau should provide greater clarity.

Beijing also said it would reduce staffing in state institutions by 5 per cent. Local offices of the PBoC will be streamlined and staff in the financial regulatory system will be paid on the same basis as civil servants, potentially leading to pay cuts for them.

Ryan McMorrow, Sun Yu, Joe Leahy and Nian Liu in Beijing, Cheng Leng and Eleanor Olcott in Hong Kong

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