By Agence France-Presse
The proposed changes create new bureaus, do away with others, and shift around responsibilities.
At the top of the list is the government's proposed change combining the insurance and banking regulators into one agency, according to the proposal introduced at the annual session of the rubber-stamp parliament.
The new regulator will be capable of "holding the bottom line to prevent systematic financial risk", the parliament document says.
The responsibilities of the two separate regulators currently overlap in some areas, leaving regulatory roles unclear, the document says.
The two regulators will hand off duties such as proposing laws to the People's Bank of China in a sign that the central bank is beefing up its regulatory role.
China is in the midst of a battle against financial risk, as credit in the world's second largest economy has exploded since the financial crisis a decade ago.
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.
Liu He, President Xi Jinping's top economic advisor, is overseeing that battle on financial risk and praised the reforms as "revolutionary" in an editorial published in the Communist Party mouthpiece People's Daily on Tuesday.
"We should understand the necessity of promoting this deep transformation," Liu wrote.
The latest cabinet shuffle shows the government's battle continues.
China is also establishing a national market supervisory management bureau to ensure a "fair competition market environment".
The new bureau will bring together a number of separate departments under one roof, regulating everything from businesses to quality supervision to food and drug safety, according to the document.
The proposed changes put forth in the document are expected to be approved by the National People's Congress legislature, which ends its session next Tuesday.
The draft also includes a new immigration bureau and changes to the tax system.
In total, China will have 26 ministries and commissions when the changes are formally approved.