Research Institutions Corporate Governance Structure Construction

The reform of government-sponsored institutions (hereinafter referred to as institutions) has been widely recognized as a continual topic in process of Chinese-style reform. The reason why the public hold the focus on this field is that the reform has been launched for almost 30 years but still on the way. Since the implementation of reform and open policy, particularly the convening of the 16th National Congress of the Communist Party of China (CPC), the government have made a series of wise decisions and rational deployment about the reform of institutions, such as decentralization of power and transfer of profits, separation of government and institutions and separation of supervision from day-to-day operations, leading to considerable progress within public sectors. However, the reform as a whole hasn't made substantial breakthrough, a certain number of salient problems including poorly defined functions, irrational structures, and low service quality and efficiency are sill common. Faced the increasing demand for public service in a new era, it is an urgent need to deepen the reform of institutions for developing social undertakings. The 2nd Plenary Meeting of the 17th Central Committee of the CPC discussed the issues on further reforming the government administration system and clearly put forward the idea of the categorization reform of institutions, particularly attached great importance to the improvement on the corporate governance of institutions. As a new subject of the reform of institutions, the corporate governance of institutions not only refers to the great change on the management system and operation mechanism of institutions, but also deals with the important adjustment on ideological concepts and interest relations of associated parties. Therefore, this new field needs both theoretical research and practical experience.Along with the separation of the proprietary rights and the management rights, corporate governance is designed as a set of policies and institutions regulating the relationship of responsibility, right and interest among varied stakeholders involved in order to reduce or eliminate the possible principal-agent problems. Based on the overview of the organizational practice at home and abroad, corporate governance results from Western enterprise units, and has exerted a far-reaching impact on not-profit organization governance, public school and hospital governance, reform of Chinese state-owned enterprises and management of Chinese non-governmental organizations. These existing mature results would have typical demonstration for the exploration of corporate governance of institutions. The proprietary rights of institutions belong to the State, while the management rights of institutions belong to both administrative departments and leaders of institutions. This clear separation of two organizational rights has been recognized as the basic principle of the introduction of the corporate governance into institutions. Also, corporate governance of institutions is expected to effectively solve the current problems involved with the management system of institutions including non-separation of regulation from operation, owner absence, insider control and slack supervision. Therefore, the deployment of the reform of institutions pointed by the corporate governance seems to be more feasible.The pilot project of the corporate governance of institutions has been launched in five provinces:Guangdong, Zhejiang, Chongqing, Shanghai and Shanxi, and currently the pilot work is going smoothly but still on the initial step. On the whole these pilot areas have actively chosen the institutions with certain representative characteristics and varied stakeholders involved. So far the primary framework of the corporate governance of institutions has been built and the associated operation mechanism of institutions is being continuously improved. Specifically, the construction of corporate governance of institutions has achieved the following results, such as coordinating relations between government and institutions, giving full play to the decision-making board, optimizing the pattern of resource allocation and insisting the principle of the Party assuming the responsibility for cadres'affairs. Except these potential effects, the construction of the corporate governance of institutions is still facing certain obstacles, such as lack of overall arrangements on the reform of above pilot provinces, divergent perception of associated parties towards the ongoing reform, lack of standard modes of the corporate governance of institutions and relative lag of the chained institutional reform. The investigation of these possible reasons caused above obstacles would make good preparation for the further deployment of the corporate governance of institutions.The advancement on the construction of the corporate governance of institutions is not only an urgent need for the renovation of the management system of institutions, but also the inner requirements for the transformation of government functions. First, three principles including separation of government and institutions, checks and balances of powers, and public welfare characteristics should be followed as the guidance for building and perfecting the corporate governance of institutions. Second, from the perspective of the internal construction, corporate governance of institutions should initially identify the scope of applications, build the basic framework of the corporate governance, and then choose the practical modes of the corporate governance of institutions in accordance to the particular features. Third, in terms of the external supervision, the government's management of institutions should be mainly embodied in policy guidance and industry supervision by moving back and forth. Also laws and regulations in this regard should be improved as well as a social supervision system should be established, so as to insure institutions'scientific decision and effective operation. Finally, building the corporate governance of institutions is a quite complex project which involves certain chained reforms. Many aspects including human resources management, income distribution, social security and fiscal policies should be strengthened in order to guarantee the overall progress and effectiveness of the reform.