Modernization of Government Governance in China

Ronghua Shen, Sheng Cao

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN:
  9789813294905
• eBook ISBN:
  9789813294912
• Topic: Politics & International Relations
• Subtopic: Asian Politics
• Index: Politics & International Relations

This book provides an all-round analysis and exploration of the course, status quo and future of the Chinese Government's governance reform under the framework of government governance modernization. The authors bring their decades of experience in crafting policy in China to explain the relationship between China's government and market, between government and society, between the central government and local governments, functional transformation, organizational structure optimization, reform of public institutions, allocation of fiscally supported personnel, the building of a law-based government and other major issues, while also laying out a case for structural changes in the years to come. 

© The Author(s) 2020

R. Shen, S. CaoModernization of Government Governance in ChinaThe Great Transformation of ChinaChina's Economic Transformation, Innovation and Development https://doi.org/10.1007/978-981-32-9491-2_1

Begin Abstract

1. Government Transformation in the Age of Reform

Ronghua Shen¹ and Sheng Cao¹

(1)

Chinese Public Administration Society, Beijing, China

Ronghua Shen (Corresponding author)

Sheng Cao

End Abstract

We are born in the great age of reform. There take place unprecedented reforms across countries around the world in a wide scope covering politics, economy, society, culture and so on. With no exception, government reform has become an integral part of profound reform in state governance. The Chinese government out of the old days in planned economy is now undergoing a historical reform from omnipotence to finite and endeavoring to seek a government governance mode catering to current economic and social development situations in China. The overall goal proposed at the Third Plenary Session of the 18th Central Committee of the CPC “to promote the modernization of the national governance system and capacity” ascertains the fundamental orientation in constructing government governance mode and determines the key emphasis of work in government reform of China. Henceforth, the government reform in China will step onto a new journey.

1.1 The International Trend of Government Reform

Since the late 1970s, government reform movement springs up in the globe. A worldwide tide of government reform takes shape when Western countries, newly emerging industrial countries, transitional countries and developing countries are all involved. Universally acknowledged as the “new public administration reform”, this reform transforms traditional government administration mode through introducing new administration concepts and methods like modern business administration practices, competitive mechanism, civic participation, co-governance, result orientation and performance management. It is also vividly referred to as “government remodeling” or “government reconstruction”.

Irrespective of the unique characteristics, new public administration reform in government reform also shares similarities in many aspects among all countries. The following sections list the trend from different perspectives.

Focus on Core Government Functions

Considering the drastic changes in this age, all countries rethink over what the government should do and should not do. The fundamental trend of the reform is to reduce government intervention, diminish government functions and scale, and make the government try its best to perform basic functions. By virtue of a series of practices such as deregulation, privatization of state-owned company, outsourcing of public service and empowerment, the government can transfer or give back some functions to the market and society, and therefore alleviate government financial burdens and fully exert the role of the market and society. At the same time, it emphasizes that the government should at least perform five core functions, including establishing the legal basis, maintaining non-distorted policy environment such as stabilizing macro-economy, investing in basic social services and infrastructure, protecting the vulnerable groups and protecting the environment. In addition, functions such as economic security, energy development, environmental protection and crisis management also hold wide attention from the public. Admittedly, the government should perform and constantly adjust functions among different countries and in different stages. For instance, comparing with Western countries, newly emerging industrial enterprises in East Asia exert a greater role in government leadership. Similarly, the government in many developed countries and developing countries started to “reduce intervention” in the 1980s. Till the late 1990s, the government transited to “moderate intervention” with an emphasis on government efficiency instead of government size.

Provide Pluralistic Services

The prime trend of foreign government reform in contemporary age is to change the conventional practice of controlling all things, push forward public service marketization and socialization reform, and use market and social power to provide services. First of all, as for marketization reform, the government introduces market competition mechanism through contracting outsourcing, purchase service, public-private partnership and public ownership compensated by private ownership, and attracts private enterprises and non-government organizations to join in the production or provision of public services to improve service provision capacity. In particular, the extensive promotion of marketization reform in the field of public infrastructure construction, transportation, energy and telecommunication not only alleviates government financial pressures but also enlarges service supply and gives stable returns to private sectors. Such practice prevails not only in developed countries but also in many developing countries. The second concern is socialization reform. As for social services inappropriate for market competition such as public welfare service, mutual-aid service, community service and meager-profit service, the government cultivates and supports non-profit organizations to take part in service supply. Through building the cooperative and interactive relation with non-profit organizations, the government forms the governance mode in which “the government offers sponsorship, and the non-profit organization performs duties”. It is worth noticing here that above practice still triggers a lot of questions despite the popularity, such as decline of service quality, lack of credit and continuity, wealth gap and government responsibility defect, and remains controversial in pros and cons.

Promote Decentralization

In terms of intergovernmental vertical relation, the prime trend is to promote decentralization and autonomy. It is usually the effort of successive governments. Especially, it is also the top priority of government work in unitary state. The main practice is deregulation. The central government delegates public affairs, affiliated management right, law-making right and financial dominance right to local government, and reinforces local autonomy. After all, the goal, degree, content and form of deregulation vary from district to district. With regard to efficiency, deregulation reform mobilizes the initiative of local government so that the local government will be more responsible and proactive to offer services up to local preferences and accelerate government administration. However, some problems represented by weakening regulation ability of the central government, emergence of local protectionism and increase of regional disparity inevitably come into being. Therefore, it is noteworthy that even though many countries have greatly pushed forward local decentralization, the focus of work still concentrates on administrative decentralization, and rare concession has been made in financial decentralization. The expenditure ratio between the central and local government is 70:30 in developed countries, 85:15 in developing countries and 65:35 in the world on average. Additionally, local expenditure autonomy, taxation and loan are still under strict control and supervision.

Optimize Government Structure

A trend in foreign government reform is to regulate government institution setting and found a more capable and efficient organizational structure according to the needs of modern social administration. The first step is to integrate departments and implement the super-ministry system. The main practice is to merge departments with similar or related functions as a major department for reducing overlapping functions and cutting down coordination cost. Upon regulation, government cabinet generally contains 15–20 departments in overall developed countries and more in developing countries. Simultaneously, countries often set up independent agencies and subordinate agencies of varying quantity to take charge of professional affairs. The second step is to separate decision-making power from administrative power and set up the executing agency. In Britain, the central government falls into two parts. On the one hand, it establishes the core policy agency in charge of policy-making affairs. On the other hand, it transforms inner agencies in executing department to several executing agencies to take charge of policy implementation and service supply with full autonomy in personnel, management and finance. For the sake of the normal operation of the government, ministers have to sign an agreement with superintendents in all executing agencies to determine authority-responsibility relationship. Similar practice may be also found in Australia, New Zealand and Singapore. The last step is to stress decision coordination and set up non-substantive negotiation and coordination agencies. For instance, many countries establish special committees or inter-ministerial joint conferences in government cabinet. Although they do not have special administrative agencies, they play a vital role in government operation.

Introduce Business Administration Practices

A prominent trend in contemporary foreign government reform is to introduce modern enterprise management practices, competition mechanism and electronic information technology to reform traditional government administration mode. Here are three main practices. The first one is to emphasize customer orientation. The second one is to adopt strategic planning and management, total quality management, goal management, cost management, human resource management and other enterprise management practices for carrying forward government administration innovation, and apply electronic information technology, especially network technology, to vigorously promote e-government affairs, reconstruct governance mode and work flow and ensure the high efficiency, transparency and democracy of government administration. The third one is to practice government performance management and assessment, and divert the focus from rules and procedures to results and performance. For instance, Britain started to implement “Rayner Scrutiny” to assess and gradually improve government performance since 1979; America started to care about government performance administration issues since 1978; when the federal government officially put performance administration and assessment into force in 1993, other countries successively followed the practice. Above measures produce profound impacts on government administration mode and exert great functions in improving efficiency and lowering costs. However, limitations of such measures also suffer from query, such as imitating the administration mode of private departments, mixing the substantial difference between public and private departments, ignoring civic participation because of performance orientation or obstructing other goals of the government.

Motivate the Initiative of Government Personnel

Traditional civil service system is proved to be defective in many aspects, such as constraint by routine, promotion by seniority, sophisticated rules and lack of vigor. As such growing limitations could not cater to the needs of the development of times, many countries start to take more flexible management practices. It generally includes four major trends. The first one is deregulation. By decreasing excessive personnel rules and increasing flexibility, the government gives more autonomy to civil servants. The second one is flexible employment system. For instance, some countries have changed traditional civil servant lifetime employment system, but practice contractual employment system and temporary employment system in some posts. The third one is performance assessment. Specifically, the government has to assess in accordance with performance criteria and associate assessment results with salary, reward and punishment and promotion so as to form the incentive mechanism. The last one is full authorization. The government should replace rigid administration mode and endow more autonomy to first-line personnel, so that they may flexibly dispose affairs as per specific conditions.

1.2 Omnipotent Government Under Planned Economy

After the foundation of New China, there gradually formed a highly uniform planned economic system in the economic field which mixed administration and enterprise, mixed administrative affairs with government affairs and mixed administration and society, enterprise and social organization. All of these sectors had been collectively incorporated into state-planned management like a workshop in the factory. At the same time, the government as the decision-maker, executor and manager of state plans was ubiquitous everywhere and large in scale. It played the role as an omnipotent government.

The government under planned economy dominated the operation of national economy. It was not only the owner of production resources but also the planner and controller of national economy operation. Besides the operation of macro-economy, the government also controlled the full management, operation and production process of the subject of micro-economy—factories and enterprises. All production resources were under the centralized control of the government, which means that all resources and materials including labor force, capital and goods required by the production and operation units should be allocated as per government administrative directives. By the same token, products manufactured by the production department should be also allotted by the administrative departments as per administrative directives. The consumption process of residents also required to be controlled by government administrative departments as per administrative directives. Specifically speaking, the scale and criterion of salary as labor reward must be determined by the related department, livelihood welfare distribution should be granted by administrative departments as per directives and even the acquisition of basic livelihood materials of residents such as children school enrollment or entry to kindergarten, adult employment, housing, health care and labor security had to coincide with administrative directives. Products produced by the production units had to be disposed by government commercial departments by unified purchase and sales. Sometimes, the government set the price and profits of products, and all profits created by the production units needed to be submitted to the government. Although the government did not directly distribute individual consumers’ goods, salary criterion, scale and amount were all determined by the government according to the planned index. Any unit shall not arbitrarily regulate salary and welfare standards. Many life necessities were also directly distributed by the government.

In the city, unit system was the most fundamental institution arrangement followed by government administration. Unit here did not mean any production organization, and its function was not restricted by material production alone. On the contrary, it undertook multiple social and political functions for city staff in administrative management, cultural education and social security. Every citizen could not independently meet his or her basic necessities of life without the unit, since all life necessities were provided by the unit as planned. For instance, the unit took charge of housing allotment. The size of the house was determined by the marks of unit leaders, public democratic review and individual contribution. Moreover, the government also provided other products through units. Later on, every unit developed to be a small society with its own school for children of staff, staff hospital, canteen and so on. The staff would be still a member of the unit after retirement, and the unit managed their retirement life. Anyone could not survive once leaving the unit.

In the countryside, government management for the society depended on people’s commune and production team. At that time, people’s commune, production team and subordinate production sub-team were also the organizations like unit in the city. These organizations managed every aspect of the life of villagers. Villagers’ production and life were all managed by the production team, and they went to work and got off work together every day. Every villager would obtain work points after doing the labor for a day, and the organization settled the work points till the end of the year.

1.3 Government Transformation in Marketization Reform: From Omnipotence to Finite

After reform and opening-up in China since 1978, government functional positioning transits from omnipotence to finite along with the economic growth of socialist market economy.

Deregulation to Market and Society

Since the reform and opening-up, the government transits from direct administration to indirect administration, and from micro-administration to macro-administration in economy and society. In the meantime, some functions used to be assumed by the government have been gradually transferred to the market and the society. The reform of the economic system oriented toward socialist market economy gradually replaces former planned economy. Simultaneously, a new pattern of multiple ownership which concurrently develops state ownership, collective ownership, individual proprietorship, joint venture and foreign capital ownership replaces former single collective and government ownership. As for social organizations, the government also transits the attitude from restriction to support and does not perform direct management functions. Instead, it transfers such functions to related non-government organizations, such as non-government industry associations, business leagues and volunteer groups. Government administrative departments which used to directly allocate goods and personnel, directly participate in enterprise operation and management, and directly allocate welfare under concentrated administrative planning system have liberated themselves from such daily affairs. First, in the separation of the enterprise from administration, the government deregulates the management right, decision-making right and personnel right to the enterprise, and deregulates most economic rights to the society. Second, the central government greatly deregulates rights to local government. After the reform and opening-up, local governments at all levels greatly increase their rights in cadre administration, public administration, social administration, political decision, economic decision, tax and finance. Third, the government gradually loosens administration on the society and expands the free space of citizens.

Separation of Enterprise from Administration

The market economy requests enterprises to be independent legal entity who enjoys independent right of management and takes full responsibility for business profits and losses. The government should withdraw from enterprises and deregulate more rights to press ahead with enterprise development. Marketization-oriented economic reform greatly changes the highly concentrated economic and social operation mode in the past. Marketization reform emancipates production resources from the system controlled by administrative power. Therefore, all sorts of social economic organizations such as state-owned enterprises and private enterprises can attain resources and self-development space required by survival and development, and voluntarily combine resources across districts, industries and departments. Economic growth not only creates huge disposable profits to enterprises but also greatly increases individual disposable income.

As a sort of resource allocation means, the market directly contacts with or regulates production factors or the organization unit of property—enterprise, instead of the ownership. The market system demands rational production factors or property organization forms so that enterprises may cater to the requirements of property socialization operation and in the meantime organize production and operation economic entities as per market price signals. In history, the separation of ownership from management right, the independence of legal person’s property from ownership, the separation of ownership from legal person’s property right and foundation of balance mechanism enabled capitalist private ownership to break up its own limitations, meet socialization production requirements and organize production across the society. Socialist government could fully create conditions for the operation of market economy through innovating public ownership property organization mode and adjusting ownership social structure.

The reform which aims to establish market economy system encourages enterprises to turn from the affiliated agencies of administrative departments to independent production and operation organizations which run according to the law of market economy, or say independent economic entities which take full responsibility for business operation, profits and losses. Once obtaining independent business operation right, enterprises may become independent business operation entities. The government transforms its functions and means to intervene economy in strict accordance with market economy operation rules, and requests all government agencies to realize rational allocation pursuant to market economic requirements. When enterprises acquire independent management right and become real entity of operation with independent property right, the association among enterprises in turn propels the development of social organizations in service of the enterprises, and provides necessary resources and space for such social organizations.

Social Development

The reform which aims to establish market economy system encourages the economy-administration, society-administration- and politics-administration integrated power structure and operation mode formed under highly centralized administrative planning system to gradually disintegrate in the orientation of social public administration. With the formation of a rela...

Table of contents

• Cover
• Front Matter
• 1. Government Transformation in the Age of Reform
• 2. Government and Market: Clarify the Boundary and Supplement Each Other
• 3. Government and Society: Public Governance in Interaction
• 4. Central and Local Governments: Straighten Out Power Relation
• 5. Government Function: Move Toward Finite and Action
• 6. Government Structure: Move Toward Super-Ministry System
• 7. Public Institutions: De-administration
• 8. Financial Support Personnel: Structural Adjustment Under Total Quantity Control
• 9. Law-Based Government: Normalize Power Execution
• Back Matter