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Institutions take on public services
By Fu Jing (China Daily)
Updated: 2004-03-24 01:11

Non-profit institutions, instead of government, will gradually take the lead in providing public services such as education, medical care and scientific research, according to national officials.

Senior legislator Cheng Siwei Tuesday announced the projected demanding goals of restructuring China's various public institutions, most of which in the past have long been sponsored by the government.

"We should change the current situation of government dominating public service," said Cheng, vice-chairman of the Standing Committee of National People's Congress, in an address Tuesday at an international forum organized by the National Development and Reform Commission.

Together with China's extensive restructuring of State-owned enterprises (SOEs) and the reshuffling of governmental agencies, the new set of reforms are regarded by Cheng as another hard nut for the government to crack as the country moves forward toward a market-oriented system.

The commission is currently responsible for a national research project in regrouping China's 1.3 million "shiye danwei" (public institutions), in which more than 28 million people are employed.

Before China embarked on the track of reforms and opening up in 1978, all institutions, like SOEs, were funded and run by the State and were deemed as a means to realize the State's will.

"The government has direct administrative control over the institutions, but more and more disadvantages have occurred especially since 1978 along with the implementation of reform policies in the direction of the market economy," said Cheng.

Most strikingly, the excessive dependence of public institutions on State appropriations has become such a heavy burden that the State treasury can hardly bear the costs any longer.

"In a market economy, the government's role is quite different from that of a planned economy and it cannot bring all the public institutions under its umbrella," said Fan Hengshan, the commission official in charge of economic reform.

Last year, the Ministry of Personnel announced the end of the "jobs-for-life" policy for the 28 million public employees within the next three years.

This means the end of the life-long tenure system which has been enjoyed by SOE personnel. Instead, employment contracts will be introduced and drawn up between State-owned institutions and their employees over the next three years.

The overhaul will lead to a number of positions being deemed redundant and rounds of lay-offs.

"The task of restructuring is pressing, but thorny because 28 million employees is no small number," said Fan. "Experiences in the sophisticated market economies should be borrowed during the overhaul."

Recently, the Ministry of Science and Technology also released a public institutions reform design, which is based on the framework of developed economies. Institutions involved in basic research, compulsory education, environmental protection and disaster control should still be under support of the government. Meanwhile, non-profit organizations, positioned between governmental organizations and industrial businesses, should play an important role in numerous public service fields like cultural organizations, education, health and social services.

"The sectors can yield profits, but the profits should be limited to reasonable levels and can be used for further development but cannot be distributed," the ministry said in a report. "Last but not least, many institutions can be commercialized and form partnerships with enterprises relying on their comparative advantages."

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