By Ding Yuanzhu (China Daily)
Updated: 2008-04-11 07:36

In the government reshuffle approved by the National People's Congress last month, an important point was stressed: Social institutions should be given more leeway to play their part in public services.

As a bridge to connect the administrative, businesses, individuals and the society, the social institutions are also known as social organizations or intermediary departments.

Examples of these social institutions include those that offer information, advisory services and legal aid to businesses, and the charity funds that accept donations from businesses and individuals for the needy.

These institutions can play a significant role in nurturing social development with Chinese characteristics, especially the growth of social security.

Since the growth of the social security system should not solely depend on the administrative, or be totally marketized, it leaves much room for the social institutions to act.

According to international experience, social development promoted only by the government is usually inefficient and expensive.

Social institutions and businesses should be allowed into this field under fair market competition and proper supervision.

In the United States, non-profit organizations received about 35 percent of their 2005 income from the administrative, either through contracts or applications to special funds. The non-profit organizations in China's Hong Kong Special Administrative Region receive 80 to 100 percent of their income from the administrative.

In Hong Kong, the government and the social institutions used to form a "partnership" in offering public services. Under this partnership, the social institutions dispensed advice as consultants or carried out plans as the agents.

But in recent years, the Hong Kong government began to award contracts to these institutions, in which the financial input of the government and the services offered by the organizations are explicitly stated.

Changing from partner to contractor, the institutions became a supplier of services needed by the administrative. And the administrative is now able to choose the best supplier from the market.

More market-oriented, our new mode of public service will hopefully, be more reliable and efficient. However, it requires a comprehensive upgrade related to the management and development of the social institutions.

The first step is to categorize the institutions according to the fields they are engaged in, and formulate policies tailored for each of them.

The social institutions in businesses related fields or those with a better capability to support themselves financially should get favorable tax policies. Institutions that are dedicated to charitable work, should get financial aid from the government.

As a matter of fact, most social institutions do not have healthy financial inputs if they are not profit-oriented. Financial aid from the government would be a significant factor to their further development.

Government aid could be granted in various forms besides direct subsidy. There are mature practices in other countries and regions for our reference. The government could entrust the welfare institutions owned by the State to qualified social institutions, like pension companies.

After selection through transparent procedures, the administrative could contract the management of these public facilities to proper organizations. The government pays these organizations for their services and keeps a close eye on their managements.

Another option is that the government could offer payment to the social institutions for each citizen under their care.

The government could also offer low-interest loans or guarantees for loans to the social institutions that offer public services.

Apart from the financial aspect, the government could also support the social institutions by offering training programs for their employees, setting up a platform for the exchange of information, and encouraging qualified people to work as volunteers.

The author is a researcher with the Academy of Macroeconomic Research affiliated with the National Development and Reform Commission

(China Daily 04/11/2008 page8)