Public Service System in China: Central and Local

Author: China (Hainan) Reform and Development Research Institute
Publisher:
Publish Date: 2007-01-17
Features: Recently, the new book China's Public Service System: Central and Local Relations, edited by the China (Hainan) Reform and Development Research Institute, was published by the China Economic Publishing House. The publication of this book has concentrated the research findings of the China (Hainan) Reform and Development Research Institute and has compiled the papers from the institute's 2006 International Symposium on "China's Public Service System: Central and Local Relations." Standing at a new historical starting point, the book begins by analyzing the challenges faced by the current central-local relations, which are oriented toward economic output, and points out the basic direction and tasks for reforming and adjusting central-local relations during China's economic transition and social transformation. The publication of this book is highly timely. Currently, building a harmonious society has become China's overarching, forward-looking, and strategic goal. China is in a golden period of development and a period of frequent conflicts, and it is necessary to ensure social fairness and justice, reduce the significant wealth gap, and maximize the reduction of disharmonious factors in society. The book points out that with the comprehensive and rapid growth of public demand in China, it is necessary to accelerate the establishment of a socialist public service system in the process of further improving the socialist market economy system, with the goal of meeting the basic needs of all members of society, and gradually achieve equalization of basic public services. Focusing on the equalization of basic public services, further reforming and standardizing central-local relations can not only gradually narrow the gap in basic public services between regions but also have a significant and positive impact on breaking the GDP performance mindset, accelerating the establishment of a service-oriented government, coordinating major interest relationships, and maintaining social fairness and justice. The book considers the issue from the perspective of China's transition from a survival-oriented society to a development-oriented society, a historical new starting point. At a specific stage of social transformation, the comprehensive and rapid growth of public demand is inevitable. Precisely in this context, issues such as high medical costs and difficulties in accessing education have gradually become prominent. In fact, there are factors of insufficient investment in public services in China, but the key problem lies in unreasonable institutional mechanisms. In recent years, the Chinese government has made significant investments in basic public services. However, overall, the current central-local relations still remain oriented toward economic output. In the new stage of reform and development, this economic output-oriented central-local relations face an inherent and irreconcilable contradiction between the macro-control objectives of the central government and the performance evaluation of local governments. The book also collects papers from some international experts, which is very helpful for drawing on international experience. From an international perspective, establishing central-local relations on the basis of equalization of basic public services is crucial for social harmony. Based on China's current realities, the book points out that achieving a shift in central-local relations from an "economic output-led" model to an "equalization of basic public services as a priority" model is both realistic and urgent. An economic output-oriented central-local relations leads local governments to focus more on the economic growth and fiscal revenue of their regions, driving rapid investment growth. In this context, some local governments are enthusiastic about attracting investment and managing cities. As a result, the government's public service capabilities are weakened, and the government's public service functions are severely inadequate and absent. The book systematically proposes countermeasures and suggestions for the next phase of China's public service system construction and reform and adjustment of central-local relations. , it is necessary to update government concepts, shifting from "regulation" to "governance." Overall, in the provision of public services, the government not only sets rules but is also a key participant, responsible for the final outcomes, and needs to maintain a certain level of control. It is also important to note that in the new era, there is widespread competition and cooperation among government organizations and non-governmental organizations. This, to some extent, indicates that people in the process of social development are not only subject to the regulation of the government but are also influenced by various non-governmental organizations and ideologies. At the same time, the performance evaluation and measurement systems for government-provided public services are also evolving. In the process of building the public service system, efficiency needs to be improved through interaction and mutual restraint. The government should strengthen the public finance system, adjust the structure of fiscal revenue and expenditure, and allocate more funds to the public service sector, especially to meet the basic public service needs of vulnerable groups, providing effective supply in a timely manner. Second, the public service responsibilities of central and local governments should be institutionalized and constrained. Currently, the division of financial power between central and local governments has been solidified by the fiscal division system of 1994, and it is necessary to further improve the shared tax revenue distribution mechanism and increase the intensity and effectiveness of fiscal transfers. However, without clearly defined overall public service responsibilities, the division of responsibilities between central and local governments still relies on administrative orders, leading to a lack of competition and interaction in public service provision and a certain degree of formality in accountability mechanisms. Since administrative institutions are also composed of individuals representing various interests, there are incentive and constraint issues in the face of incomplete and asymmetric information, which may affect the implementation of urgently needed public service projects. Additionally, it needs to be noted that if the public service responsibilities of central and local governments are not institutionalized and legally constrained, the practice of local governments "running to departments for funds" may decrease with "rectifications" but will manifest in other forms. This "rent-seeking" in the form of "special interest groups" contradicts social fairness and justice and may lead to public service provision that does not achieve the desired outcomes. Third, it is necessary to promote and ensure the transparency of the public service process. Transparency, accountability, and enforcement are key to effective policy implementation by administrative institutions, among which transparency is particularly important for addressing the current shortage of public service provision. From the perspective of information symmetry, transparency is conducive to promoting democracy in decision-making, increasing opportunities for power constraints, thereby reducing waste and leakage in the use of funds and promoting the equalization of public services through social fairness and justice. Legislation should jointly guarantee the transparency of transfers from both substantive and procedural aspects, measuring outcomes rather than just processes. On the basis of clarifying the diversified provision of public services, the entire responsibility definition, fiscal division, and financial security of public services should be brought into the public eye, thereby enabling effective and practical exercise of supervisory functions. Overall, the book tightly grasps this major issue of building a harmonious society and puts forward many forward-looking propositions on public service system construction and central-local relations. As China's reform practice progresses, in-depth research on these theoretical issues will become increasingly important. For government officials, experts, and practitioners concerned with this research, the book is well worth reading.