Challenges ahead in institutional reform

By Xiong Wenzhao, Zhang Wei and Zhang Bufeng (China Daily)
Updated: 2007-10-29 07:15

As China enters a new stage of reform and opening up, especially after the concept of a scientific view on development and construction of a socialist harmonious society were brought up, the market economy and social development impose new requirements on government institutional reform.

Five major institutional reforms were introduced in the past three decades. The new stage of reform should aim to further promote separation between the government and enterprises as well as between the government and public institutions, reinforce the government's ability to provide public service, regulate the central-regional relationship according to the law and improve administrative efficiency.

There are three challenges to further promote institutional reform.

First, government institutional reform should cope with the requirements of political democratization.

The public's democratic demand to participate in decision-making can be realized through administrative democratization. Through administrative democratization, political demands of various strata of society can be met, their political wishes can be expressed and the base of public opinion can be enhanced. All these will promote the development of political democratization. In this sense, institutional reform will be part of the reform of the political system.

Second, reform of government institutions should cope with new social issues brought by the transition to a market economy. The government's social service functions should be enhanced.

An effective government is needed to solve a series of problems that concern public interests, including unbalanced urban-rural development, the huge income gap, unemployment pressure, housing shortages, the high cost of medical services and education.

Third, the reform should cope with the impacts of globalization to improve our national competitiveness. Against the background of globalization, any changes in concept, behavior and organization will rapidly expand to all corners of the world. New behavior patterns and policy measures are needed to cope with the changes.

The following points should be considered in the future reform of government institutions.

The establishment of multi-function ministerial-level departments should be considered. The reform should concentrate functions of similar departments into one, this will lead to better efficiency.

Here administrative factors, such as agriculture, transportation, social security, energy, land and resources, as well as culture, education and public health, should be considered in designing the departmental layout. The reform of government institutions under the category of economics should be deepened.

The government's public service concept should be reinforced and supervision of public products enhanced.

Our government is still basically an economic construction-oriented one instead of a service-oriented one. To build a service-oriented government, it should shoulder the responsibility of providing public services first. Its attention should focus on managing the supply of public services and products.

The government should only conduct social management and industrial guidance but not specific operations. The supply and management of public products should be separated. The interest chains between administrative departments and specific suppliers should be cut.

The core of central-regional government relations is the distribution of power while the changing of government functions is the premise and basis to construct function relations between central and regional governments. The following issues should be stressed during the process of changing government functions.

The change of functions should be in line with the rational division of power. Only when the functions of central and regional governments are clarified, power can be distributed accordingly.

The functions of central and regional governments should be scientifically defined as the base for government institutional reform.

The scope of power for central and regional governments should be divided rationally according to the law, and the socialist market economic system's definition of central and regional governments' functions. Thus the central government's authority will be maintained, and the vitality of the regional governments enhanced.

The division of economic management authority is a key part of the power distribution between central and regional governments. The basic approach should be that the central government focus on macro-control, especially financial control, monetary policy making, decision making on major projects and national investment control, while avoid intervening in specific decisions on regional issues and the operations of enterprises.

The central government should further enhance its macro-control ability and supervision of regional governments, grant regional governments relevant rights such as economic adjustments, State assets management and limited rights on investment decisions. In respect to investments, investors' responsibilities and the risk restriction mechanism should be reinforced.

The interest distribution relations between central and regional governments should be regulated. Though a financial and taxation system emphasizing tax distribution has been established basically, problems over the transfer of payments as well as the rational division of taxes and fees need to be addressed.

Macro regional policies should be introduced to solve the imbalanced development of different provinces and regions.

A scientific supervision mechanism should be set up to guarantee administration according to the law.

Xiong Wenzhao is a professor with Central University of Nationalities, Zhang Bufeng is a lecturer of the university, and Zhang Wei is a master's student

(China Daily 10/29/2007 page4)

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