A Study On The Market-oriented Reform Of Public Utility In China

It is known that public utility supplies the product and service to members of society fortheir production and living, thus it has some character of public sector, and its product issimilar to quasi-public goods, which could be consumed by everyone as long as he can affordthem, but obviously can‘t be allocated with satisfaction by the market. The market right of theorganizations, which is responsible for distribution the product and service, is primarilyderived from the efficiency mechanism of the nature monopoly. In real economic life, theseorganizations are always authorized to franchise by the government, and its character ofoperation doesn‘t relate to the pattern of ownership, including state-owned, private and mixedownership.Generally, public utility is composed of such crucial industry with the characteristic ofnature monopoly, which control national economy such as electricity, gas, heating, watersupply, sewage disposal, garbage disposal etc. Public utility has a significant effect on publicservice, welfare, and social interest. Its mission is to ensure and improve the quality ofpeople‘s lives. As an unsatisfactory existing state of affairs, public utility of China is at lowerlevel of marketization, and is lack of competition mechanism. Obviously, its developmentdoesn‘t adapt to the market economy, thus the performance should be further optimized due tosome symptoms, for instance, excessive administration of operations, unclear boundary of thegovernment and firms, lack of incentive and constraint of institutions, segmentations by areaand industry, barrier by administration, restrictive of factors transfer, disparities of areadevelopment, uneven allocation and utilization of resources, and difference level of universalservice etc.Therefore, a profound renovation of the system is required for public utility operationaimed at introducing market mechanism by the adjustment for social interest, which wouldserve for the target instead. Currently, the new era task of improving economy system isadvanced into a significant strategy of state-owned enterprises and monopoly industry by thestatus of reform and opening in China. The grand objective to create public service system hasbeen established with some specific policy implement for supporting and guiding thenon-state-owned economy to extend their operation field to infrastructure and public utility. Ingeneral, it‘s the policy background of the proposition.The market-oriented reform of public utility is the major issue，which is associated withthe national economy and the social progress, meanwhile, it contains multiple functions such as deepening reform of the state-owned enterprises and public sector, and promoting thenon-state-owned economy into the monopoly industry. According the law of competition andthe premise of the construction of socialist market economy, the key solution of the researchlies on these problems, including what is the defect in the system of China‘s public utility?How can we correct the status? Why doesn‘t the original operation system meet the trend ofsocial and economic progress from the profounder perspective of rule of market? What isappropriate choice to return to the market? What problems can be solved by the means andtechniques of the reform? What is the fundamental goal and outline for China‘smarket-oriented reform of public utility? In summary, issues stated above are demanded to beadvanced constantly with the practical exploration, especially to enlighten the reality bytheoretical response.In practice, the marketization for either commodity or factor in the competitive field hasbeen developed rapidly by the reform since the transformation from planned economy tomarket economy in China. Practice shows that the growth of a competitive market hasmatched the trend of social and economic development undoubtedly, and then improve theproductive force enormously. Accordingly, that it is feasible or not for the effect spreads fromthe competitive marketization to the field of monopoly becomes the demand of the time. Atpresent, with the economic globalization, the historical trend of utilizing the economic drivingforce by the market would not be reversed. Hence, usage of the market advantage, which thepositive effect would be produced by competition in conditions that decision-making ofliberty, separation and coordination by market at last, and permeating, radiating, grafting thepattern into public utility with nature monopoly must be workable if the process would beadjusted appropriately. Obviously, a reformation have to undergo the process with a series oftechniques and incubation program, because the simple copy from others could be lead tomaladjustment, and increase the cost of trial and error for the reform contrarily.The theoretical difficulty for the market-oriented reform of public utility is the effectivecompatibility between the nature monopoly and the competition, namely, the realization ofworkable competition in the field of monopoly. Researching the proposition of competitiveregulation in China‘s monopoly industry, the core of the market-oriented reform of publicutility is to find out the collaborative driving forces, which are complementary and stimulativefor each other, to reconcile the five pairs of contradictions accompanying with naturemonopoly such as the appropriate boundary between government and market effectively etc.The purpose of the research is to restore the true dialectical unity logic and internal conceptand category reflecting on the antagonistic conflict appearance, by the analysis paradigm of western theory of monopoly, competition, regulation, industrial organization based on thesocialist market economic theory. Furthermore, under the theoretical deduction and empiricaltest, with the changing conditions, the balanced evolution path of the market-oriented reformof public utility would be explored, thus the rational cognition about the concept and categoryof the workable competition in monopoly field could be deepened, and the preliminaryanalytical framework would be established on the theoretical logic system of competitiveregulation in monopoly.It is revealed by the research that the substance of market-oriented reform of publicutility is workable competition mechanism being introduced into the industry based on theperformance potential of monopoly by the compare with international experience ofmarketization, after restoring restricts of the policy environment, and the difference ofinstitutions. Consequently, an appropriate market boundary of the nature monopoly will bedefined, and eventually the consequence of the reform should be evaluated and test by theenhancing of the efficiencies and social welfare. To sum up, the core of the study for formingthe theoretical point of view and the policy suggestion to the public utility reform in aninnovative ways is indicated that some factor marketization approaches are the workable pathfor the market-oriented reform, for instance, elaborating the theme that it‘s not a propercontent and outlet for both the privatization, and the pan-marketization in the market-orientedreform of public utility, comparing the different implementation between the product orservice and the factor marketization, demonstrating the diversification for property rights ofpublic utility, the privatization, the FDI development model, the cross-regional merger, andthe competition of franchise.