Since the beginning of previous year, Beijing has cracked down on leverage and risky market practices, with China's financial regulators releasing a flurry of new rules in an attempt to rein in risks.
China's central bank will take over the functions of drafting important laws and regulations for the banking and insurance industries, which are now assumed by CIRC and CBRC.
Liu He, President Xi Jinping's top economic adviser, is overseeing that battle on financial risk and praised the reforms as "revolutionary" in an editorial published in Communist party mouthpiece the People's Daily on Tuesday.
Among the new entities were the ministry of natural resources, ministry of veterans affairs and ministry of emergency management.
The plan also includes the merger of the ministry of culture and the national tourism administration into one.
The securities and state assets regulators were not mentioned among the proposed changes.
The proposed changes were discussed earlier in parliament Tuesday and are expected to be formally adopted on Wednesday.
The banking and insurance regulators will become a single entity, as China is aiming to streamline administration and improve its prevention of financial risks.
China will form a powerful new competition regulator in a bid to ramp up oversight of mergers and acquisitions and price-fixing as the world's second-largest economy seeks to make policymaking more efficient and coordinated.
Financial regulators have cracked down on major companies - even taking over Anbang Insurance this year - to get a handle on building risk and unwieldy debt that some analysts worry pose a serious threat to China's financial stability.
There will be 26 ministries and commissions of the State Council after the reshuffle. It has grown rapidly in size and complexity, emerging as one of the world's largest with financial assets at almost 470 percent of gross domestic product, according to the International Monetary Fund.
Such regulatory arbitrage and risky cross-asset investments have anxious policymakers.
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