China still has much to learn about social management. "It seems to be more important than just financially helping some poor families. The government has to be able to use the funds collected through taxation to benefit the entire population," according to Jia at Tsinghua University.

The reform of government still has a long way to go. "Putting power in the cage of regulations" will require the government to become more open and transparent, said Chi.

Also, the ambiguous boundaries between the powers of the decision-makers, the administration and monitoring unit could be a breeding ground for corruption, he said.

While the government has set a target of completing the new administrative system by 2020, it has to push the process forward gradually in the coming years, Chi added.

The fresh round of administrative reform will upgrade China's role as a magnet for global investment and a destination for exports, according to the founder of a leading European consultancy on political strategy and policy development.

Greater streamlining of government institutions would help increase the global presence of Chinese businesses, said Peter Guilford, executive chairman of the g+ consultancy, which operates from offices in London, Brussels, Paris and Berlin.

"We are quite convinced that the reforms are a move in the direction of releasing the sustainable potential of this huge economy," Guilford said, adding that a more efficient and clear administrative central government structure would further improve investor confidence and provide reassurance. To that end, he said, his company will establish branches in Beijing and Shanghai in the near future.

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Zhang Yuchen in Beijing and Liu Jia in Brussels contributed to this story.