Xu Guang Jian, Wu Yan. “Chinese Basic Public Service and Public Finance Reforms: A Review and Prospect”. Asian Education and Development Studies, 2016 (10), Vol. 5, Iss 4.

The purpose of this paper is to examine the financing and provision of basic public services in China. Based on a historical analysis of the functional transformation of the public finance system in China and on an empirical analysis of the current public finance system and the public service provision system, a comprehensive understanding was gained about the relationship between the financing and provision of basic public services. By analyzing issues on the public service provision system, this paper contributes to the debate about the efficiency improvement made to governmental functions in China.

Development of the public finance system in China

New functions of public finance: from a system supporting economic growth to a system providing basic public services. Customers of public services in China: from discrimination to equality. Government appropriation of expenditure for public services such as compulsory education has been increasing, which will greatly promote public service construction. The structure of public spending gradually became reasonable and healthy.

The promotion of equality in public service provision and the public finance transfer system

The Chinese government’s increasing attention on public service provision gradually spread from the eastern to the central and western regions, indicating that the development of public service provision worked with the pace of economic development. This shift explained the transformation of functions in the government and the public finance system.There are several factors that have influenced the degree of equality in China’s basic public service provision: economic development,immigration,development strategy,local democracy and governance.
Due to the uneven economic and social development in different regions of China, the ability of the government to provide public services has differed largely between the eastern, the central and the western regions. A similar difference also existed between the country’s urban and rural areas. Due to multidimensional measurements and that different indicators had been chosen to analyze equalization, greater standardization in the implementation of the transfer payment system should be emphasized more. In order to achieve an equality of basic public service provision, it would be necessary to adjust the spending preferences of local governments and ensure their efficient use of fiscal resources.

Prospect: increase the ability of the public finance system to support basic public service provision

Restructure the public finance system on the basis of the transformed functions of governments, strengthen the concept of public finance governance, ensure the public finance system’s non-profitable nature and promote the diversification of public service provision modes.The essence of fiscal federalism regression: improve the efficiency of the public services provision system by properly dividing intergovernmental fiscal powers and motivating rivalry among regional governments. Define clear lines between fiscal authority and responsibility for expenditure based on government functions. Improve the fiscal transfer payment system and enhance local governments’ fiscal capacity to provide basic public services.   Strengthen expenditure management and improve the management of funds used to support basic public services.