Fulfilling Government Functions Fully and Correctly

From: English Edition of Qiushi Journal Updated: 2014-05-09 16:36
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The full and correct fulfillment of government functions represents the core aspect of our efforts to balance the relationship between the government, the market, and society.

I. The significance of fulfilling government functions fully and correctly

1. The full and correct fulfillment of government functions is an inherent requirement for improving the socialist market economy

Since the reform and opening up drive began in 1978, China has constantly advanced the transformation of government functions in response to a changing economic base. The transformation of government functions has provided an important guarantee for the success of the country’s initiatives in reform, opening up, and modernization. Despite this, however, China’s efforts to transform government functions are still falling short on the whole. The scope of direct resource allocation by the government is still too large; there is still too much government interference in the micro-economy; the provision of public services remains insufficient; and market regulation and social administration are still relatively weak. In the socialist market economy, the role of the government should be to serve market entities. By protecting the legitimate rights and interests of market entities, the government should safeguard fair competition in the market and encourage members of society to create wealth. Therefore, under new circumstances, it is important that the government fulfills its functions fully and correctly. Powers that should not rest with the government should be fully relinquished; roles that belong to the market need to be placed in the hands of the market; and the functions of the government should be shifted towards creating a sound environment for development, providing quality public services, and safeguarding social fairness and justice. Only by doing so will we be able to fully exert the decisive role of the market in allocating resources, and provide society as a whole with stronger motivation to engage in innovation. 

2. The full and correct fulfillment of government functions is a pressing requirement for adapting to profound changes in our economic and social structures

Profound changes are everywhere to be found in China—in economic and social structures, in the balance of interests, and in the way that people think. While these changes have provided considerable stimulus for the country’s development and progress, they have also presented us with numerous new situations and new problems in government administration. Some of the examples include the following: as the role of the market has continued to expand, the relationship between the government and the market has become more complex; as different social groups continue to display different demands, the diversity of interests across society as a whole is becoming increasingly great; with rapid growth in the demand for various public services, it is becoming more difficult for the government to provide diversified public services; as social mobility has increased, the floating population has become increasingly large; with the rapid spread of the Internet, information can now be transmitted faster and with greater ease; and as people become more environmentally conscious, public disturbances resulting from environmental issues are growing in number. In order to address these new situations and problems, the government must give stronger play to its functions in public service provision, social administration, and environmental protection. This means that it must provide quality and efficient public services, exercise social administration in an innovative way, and make greater efforts to protect the environment and conserve ecosystems. Only by fulfilling its functions fully and correctly and performing the roles that it is supposed to perform in a sound and thorough manner will the government be able to adapt to economic and social change and meet the rising expectations of the people.   

Sketch: The Compulsory Exercises. Being much more than a case of simply streamlining fees, the clearing up of administrative fees needs to be closely integrated with wider efforts to deepen the reform of the administrative management system and accelerate the transformation of government functions. / Xinhua (Sketch by Zhu Huiqing)

3. The full and correct fulfillment of government functions is a fundamental requirement for maintaining the principal position of the people in our country

Socialism with Chinese characteristics is a cause for hundreds of millions of Chinese people. Now that their basic material needs have been satisfied, the Chinese people are demonstrating a growing demand for social participation and self-fulfillment, as well as a greater awareness of concepts such as democracy, rights, and public supervision. Bearing this in mind, the government should make more effective use of social forces and social organizations, enhance public identification with and participation in socialism with Chinese characteristics, and give full play to the enthusiasm, initiative, and creativity of the public in the management of their own affairs and the provision of their own services. Only by fulfilling its functions fully and correctly, allowing social organizations to assume the roles that they are capable of assuming, and focusing its efforts on areas that are beyond the reach of social organizations will the government be able, under the new circumstances, to energize society, mobilize all positive forces, and create an institutional environment that is more conducive to achieving social fairness and justice and to promoting social harmony and progress.

II. Overall requirements for fulfilling government functions fully and correctly

1. Further streamlining administration and delegating power

The transformation of government functions represents the core aspect of our efforts to deepen the reform of the administrative system, being the basis on which we will ensure the full and correct fulfillment of government functions. We need to identify cutting the number of items that require government approval as the entry point in our efforts to transform government functions, and work to further streamline administration and delegate power. We need to promote the delegation of power by the government to the market, so that the decisive role of the market in the allocation of resources can be fully exerted. We need to promote the delegation of power by the government to the non-government sector, so that social forces can play a bigger role in the management of social affairs. At the same time, we also need to promote the delegation of power by the central government to local governments, so that we can give full play to the initiative of both the central government and local governments. In particular, we need to make sure that the government refrains, to greatest possible extent, from directly allocating various resources through administrative means. By cutting back the power of the government, we will be able to increase the vigor and vitality of the market and society.

In working to streamline administration and delegate power, our first task must be to reduce the number of items that are subject to the approval of the government. China has made changes to its administrative approval system on a number of occasions over recent years, achieving significant results in this regard. Despite this, however, there are still too many matters requiring government approval and permission, and there is still too much discretionary authority in administrative approvals. Put simply, China’s administrative approval system is still unable to meet requirements for our economic and social development. The Third Plenary Session of the Eighteenth CPC Central Committee resolved to deepen the reform of China’s administrative approval system. According to the resolution that was adopted at the session, “administration over micro-level matters by the central government will be reduced to the greatest possible extent, while government approvals for matters that market mechanisms can effectively regulate will be cancelled without exception.” From now on, government permission and approval will no longer be required for matters that market mechanisms can effectively regulate, for matters that social organizations can take charge of in place of the government, and for matters that citizens and businesses can independently and lawfully determine. Of course, in reducing the number of matters requiring administrative approval, our intention is not for the government to adopt a hands-off approach to everything; rather, the government will carry out the necessary administrative reviews in a more standardized and efficient way, ensuring that such reviews are performed in a well-standardized, procedure-based, transparent, and effective manner on the basis of well-defined powers and responsibilities. At the same time, we need to adopt innovative new changes in government administration. Following the principle of looser controls over market entry and tighter supervision over market entities, the government needs to strengthen its supervision and management over market entities and market activities, and shift the focus of its attention from ex ante government approval to ongoing and ex post supervision and management.

In our efforts to streamline administration and delegate power, we must also work to address the problem of power being overly concentrated in the government. Enterprises constitute the main body of the market economy. Accordingly, the principal role of the government in the market economy should be to create a favorable business environment. The government should delegate power to enterprises and the non-government sector so as to give the market and society more space in which to exert their roles. At the same time, the central government should delegate power to local governments and higher-level authorities should delegate power to lower-level authorities so as to reduce the micromanagement of local governments and communities by the central government. The Decision of the CPC Central Committee on Major Issues Concerning Comprehensively Deepening Reform (hereinafter referred to as the Decision on Comprehensively Deepening Reform) states: “Economic and social matters that directly concern local communities, that are large in volume and extensive in coverage, and that can be more conveniently and effectively managed by localities, are to be placed under the jurisdiction of localities and communities without exception.”

2. Placing stronger emphasis on the roles of the government in formulating strategic plans, regulating market activities, and providing public services

In order to fulfill its functions fully and correctly, the government must minimize its involvement in micro-level affairs and pull out of areas that it should not regulate and cannot regulate well. By allowing the market to truly play the decisive role in the allocation of resources, we will be able to achieve an increase in market efficiency. At the same time, the government should continue to guide and regulate economic activities, focus more on formulating strategic plans, regulating the market, and providing public services, and compensate for market deficiencies and market failures. Through these efforts, the government will be able to create a sound environment for the healthy development of the market economy.

Internationally speaking, the trend of economic globalization is continuing to deepen, while new breakthroughs are emerging from an ongoing technological revolution and the continued transformation of industry. Domestically speaking, China’s economic growth is slowing down, pressure from excessive production capacity is mounting, the cost of labor is rising rapidly, and the constraining effect of the environment and resources on China’s economic growth is increasing. The combination of these factors has made the task of transforming China’s economic growth model and upgrading the Chinese economy all the more pressing. Therefore, the government needs to devote more energy to grappling with major issues, considering long-term interests, and drawing up overall plans. It must enhance its analysis of macro-level, comprehensive, and strategic issues, and strengthen its capacity to formulate and implement strategies, plans, policies, and standards for the country’s development. At the same time, as the role of the market continues to increase, the task of safeguarding fair market competition is also becoming increasingly pressing. Therefore, the government must tighten regulation over market activities, improve the measures that it employs in market regulation, and work to safeguard a unified national market that is characterized by fair, honest, and orderly competition. In addition, the government also needs to improve its capacity to provide basic public services. Through the establishment of a sustainable system of basic public services, the government must strive to meet a growing demand for diverse public services in education, employment, social security, and healthcare.

3. Appropriately defining the roles of the central and local governments

Given China’s vast size, significant regional disparities, and unbalanced economic and social development, the micromanagement of local affairs by the central government is not only both unviable and ineffective, but also interferes with the attempts of local governments to manage local affairs on the basis of local conditions. In seeking to ensure that both the central government and local governments are fully motivated, the central government should refrain as much as possible from indiscriminately imposing the same policies on all regions, instead allowing localities more room to display their abilities. At the same time, local governments must safeguard the authority of the central government by adhering to a nationwide perspective. While ensuring that the central government plays a stronger and more effective role in macro control, we should also ensure that local governments assume greater responsibility for public services, market regulation, social administration, and environmental protection.

Strengthening the responsibilities of the central government in macro control is a pressing task, one that will have an important bearing on China’s overall development. Owing to a number of changes that have taken place in China’s economy in recent years, it has become more difficult for the government to achieve its four objectives of securing economic growth, keeping prices stable, creating jobs, and maintaining the balance of international payments. As the situation facing macro control becomes increasingly complex, the central government needs to further improve and strengthen macro management, establish stronger mechanisms for defining macro-regulatory targets and policy tools, and refine mechanisms for formulating macro-control policies and making macro-control decisions. In addition, a sound framework of macro-control policies needs to be put in place so that macro control can become more scientific and proactive and so that macro-control measures can become authoritative and effective. By doing so, we will promote steady and sound social and economic development.

Giving local governments greater responsibilities will help them to take full advantage of their close proximity to the public and their ability to exercise direct management. In an effort to strengthen public services, local governments need to increase spending on public services, expand the coverage of public services, and work to gradually make the delivery of basic public services more equitable. Local governments need to attach still more importance to strengthening market regulation, focusing particularly on the quality and safety of products that are vital to people’s health and safety, such as food and drugs. As local communities are the priorities of social administration, local governments need to strengthen the development of communities and community-level social organizations, give play to the roles of various social organizations, and improve social administration and services at the community level in an effort to safeguard social fairness, justice, harmony, and stability. In addition, local governments should also play a bigger role in environmental protection. By taking more active steps to address prominent issues, local governments must do a better job of satisfying public demands for clean air, clean water, and safe food.

4. Promoting the government procurement of public services

To build a service-oriented government, it is essential that we make innovative changes to the way that government services are provided. The Decision on Comprehensively Deepening Reform clearly states: “In principle, all logistic operations and services should be subject to competition and procured from the non-government sector through the execution of contracts, entry into entrustment agreements, or by other means.” This means that restrictions on market access to public services need to be further relaxed, that a sound system for the government procurement of services needs to be gradually established, and that service providers should be chosen via open and fair competition, with services being procured from the best provider. Doing so will be conducive to addressing the shortage of public products and services in certain areas; to establishing efficient and reasonable systems for the distribution and supply of public service resources; and to ensuring that the public is able to enjoy better, more diverse, and more convenient public services. 

5. Accelerating the reform of public institutions on a per-category basis

Accelerating the reform of public institutions on a per-category basis represents an essential aspect of our efforts to transform government functions. We will work to clearly define the relationship between public institutions and the government departments that are responsible for overseeing their performance, and cancel the status of public institutions as quasi government institutions. Over a period of time, we will rescind the administrative ranks that are granted to schools, research institutes, and hospitals, establish legal person governance structures in public institutions, and promote the transformation of eligible public institutions into enterprises or social organizations. This requires that we accelerate the reform of public institutions on a per-category basis, and work out effective means of separating government administration from the operation of public institutions and supervision from operation. It also requires that we work out ways of establishing various forms of legal person governance structure, and formulate sound internal mechanisms for decision-making, implementation, and supervision in public institutions. Through the implementation of reform, we will clearly define the functions and positions of public institutions, highlight their non-profit nature, and allow them to play a bigger role in improving public services. By doing so, we will be better disposed to realize the goals that the government has set with regard to public services.

(Original appeared in Qiushi Journal, Chinese edition, No.22, 2013)

Author: Vice-Chairman of the National Development and Reform Commission of the People’s Republic of China

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