Economic Analysis On Chinese Public Institution Reform

Chinese public service institution is an important organization which provides public goods and services to the community. It plays an important role in the national economic and social development. There are a total of more than 120 million institutions, employing more than 2900 million people, more than 70% of the researchers, one-third of the state-owned assets concentrated in public service institution. However, with the development of Chinese political and economic reform and the socialist market economic system, the existing public service institution management system and operational mechanism showed a growing number of contradictions and problems, unsuitable to the requirements of economic and social development . The 16th CPC National Congress clearly adress to reform the public service institution. Due to the complexity of the institutions and wide-ranging impact, reform of public service institution is more difficult and complex compared to the government institutional reform and the reform of state-owned enterprises.Public service institution reform is a complex and systematic project involving a system of property rights reform, public financial management reform, institutional and personnel system reform and reform of the distribution system. Existing research carried out from the management point of view, did not mentioned the sight of economics. This thesis' fundamental purpose is from the viewpoint of economics to analyse the existing problems of public service institution.Chinese public service institution is an institution set up for the purpose of social welfare, organized by state organs or other organizations by the use of state-owned assets. Education, science , technology, culture and public health activities are main sectors of public service institution. Public service institution provided all kind of public goods and services as a subsidary of government.In a highly centralized planned economy system , public goods for a long time was almost monopolized by the public service institution, so that there are three core contradictions and problems arised from the public service institution : the chaotic border to provide products and rigid services mechanism; expandition the scale unreasonable; inefficient allocation of resources, poor performance. This thesis used the theories of public goods, public choice and government regulation and adopted a normative analysis, empirical analysis methods to interprete three core problems put forward above. First of all, this thesis analysed the formation of existing public service institution management system and operational mechanism on the basis of economics, secondly used public goods, public choice theory to analyse the need for the existence of public service institution, the allocation of social resources, as well as the border of the provision of public goods and private products, thirdly analysed what caused the unreasonable size of the public service institution and its bad performance .In the end, gave the best choice for public service institution reform path.The border of Chinese public service institution is chaotic, that means Chinese public service institution provieds not only public goods but also private goods inefficiently, thus wasted limited finance and social resources. For the time being in China, social product and public service must be provided by public service institution, but public service institution needs to reform its management system in order to make clear its border.The point of this thesis is to outline a definite border of public service institution between providing pubice goods and private goods according to both different characters.Chinese public service institutions owned by the state are independent outside, that causes agent problems. Officials of public service institutions seek for maxium budget, which directly leads to the unreasonable size of the public service institution. Besides finance right does not fit with bussiness rights, which is the reason of shortage of some certain public goods and services. This thesis adresses the ideas of reforming property rights system and appropriate evaluation system to settle size problem.Externality, free rider, monopolization and the rent-seeking because of insufficient regulations cause the inefficiency of Chinese public service institutions.This thesis suggests using diversified regulation system and a scientific and effective performance evaluation system to improve operating efficiency.