Liu He, a Harvard-trained economist who is a trusted confidant of Xi, has emerged as the front runner to be the next governor of the People's Bank of China.
Liu said in a commentary in the official People's Daily that the responsibilities and authority of government ministries overlapped in some places, while the division of labor by some state agencies was not effective and led to inefficiencies.
It was necessary to reform the party and state institutions to solve such problems and promote further economic, social, political, cultural and ecological advances, he said.
"Deepening the reform of the party and state institutions is an inevitable requirement for strengthening the long-term governance of the party," Liu said in the commentary.
"Strengthening the party's overall leadership is the core issue," he said.
China removed presidential term limits from its constitution on Sunday, giving President Xi Jinping the right to remain in office indefinitely. That confirmed Xi's status as China's most powerful leader since Mao Zedong died more than 40 years ago.
Among other proposed changes in the biggest ministry shake-up in years, China said it will merge its banking and insurance regulators, and create new bureaus.