China Center for Contemporary World Studies

Institutional Reform and System Improvement from the Perspective of Building a Society under the Rule of Law | 02-16-2015 | By:Ding Yuanzhu visitors:1980

Abstract: A society under the rule of law must be built up to achieve the rule by law. Fairness and justice must be upheld to build a society under the rule of law. Fairness and justice are the starting point and objective for comprehensively deepening reform. Acceleration of reform of public institutions and official administration improvement is a must for a society under the rule of law based on fairness and justice. Reform of public institutions concerns social organization’s development and social community’s maturity.  Official administration directly influences social values and standards. If public institution reform-based social community restructuring is deemed as the skeleton of a society under the rule of law, the value reconstruction based on official administration reform will be the soul of a society under the rule of law. Both are necessary elements for a society under the rule of law.

Key words: society under the rule of law, fairness and justice, reform of public institutions, public servant system


A society under the rule of law must be built up to achieve rule by law. The upcoming 4th Plenary Session of the 18th CPC Central Committee will bring forward rule by law for discussion, prioritize rule by law in the modernization of national governance system and capability. This will be a new innovation of the CPC in national and political governance in the new historic period and produce profound influence to the comprehensive deepening of reform. According to the Meeting of the Political Bureau of CPC Central Committee on July 29, 2014, to confront the new missions under the new situation, the Party should better consider the domestic and international patterns, better maintain and leverage the important strategic opportunity for our development, better arrange social forces, balance social benefits, adjust social relations, streamline social conducts to make our country prosperous and orderly during the profound reform, and realize economic development, clean politics, thriving culture, just society and good ecology. To achieve our strategic goal of peaceful development, we must give a better play of the leading and restricting function of rule by law.

Fairness and justice must be upheld to build a society under the rule of law. Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform (short for the Decision hereinafter) proposed requirements on fairness and justice from three aspects: first, to deepen the reform comprehensively, we will put the promotion of social fairness, justice and improvement of people's lives as the starting point and ultimate goal; second, we must deepen social structural reform by centering on safeguarding and improving the people's wellbeing and promoting social fairness and justice; third, we will deepen reform of the judicial system and make the people to feel fairness and justness in each judicial case.

The relationship between fairness, justice and comprehensively deepening reform, and the logic connotation of historical evolution, are construed through putting the promotion of social fairness and justice as the starting point and ultimate goal and deepening social structural and judicial system reforms by centering on promoting social fairness and justice. Just as the description of Nobel Economics Prize Winner Amartya Kumar Sen in his work The Idea of Justice, each normative theory on social justice winning support and advocacy requires equality for some objects, especially equal freedom, equal income or equal treatment to each people. Fairness and justice are major issues in modern historical evolution and difficult to be avoided for any development and reform. In social field, fairness and justice, reflected in income gap and social justice, should be carefully treated and handled because “the connection between inequality and social revolt are quite close and bi-directional.”

I. Fair justice and just fairness

One of the overall goals of deepening the reform comprehensively is to improve and develop socialism with Chinese characteristics which requires the persistence to socialist public ownership and market economy and the realization of their proper combination. To deepen the reform comprehensively, we shall work in following aspects. First, narrow the income gap and improve allocation system. To design income allocation system requires consideration on vested interests, China’s practice and humankind’s history and challenges through the past two centuries. Indeed the work needs great wisdom. Second, bold exploration. Fairness and justice often involve basic evaluation to social evolution and judgment to history of thought. We should have a corresponding knowledge base and a profound, inclusive and historical epistemology. Third, to have an in-depth study of the wealth gap and allocation system will confront the problems on ownership, market mechanism, social insurance, governmental function and social participation. Thus, social innovation in tactics and skills are needed .

II. Fairness, justice and people’s well-being

To play the decisive role of market in resource allocation, and at the same time, to realize social fairness and justice, are the core for deepening the reform comprehensively. Thus, we shall ensure the publicity of social policies to the maximum and avoid the disturbance of interest groups. Scientific and technological research and development have no value orientation themselves. Those engaged in scientific and technological research and development can work according to the value neutrality principle. In market economy, the principle of profit maximization is followed to absorb technology. This is one of the reasons that humankind has made enormous and rapid progress over the past several centuries. However, social development and social policies are two different issues. The application of social policies involves the interests of these policy-makers. To some degree, the policy-makers themselves can benefit from or suffer loss from the policies. So, it’s difficult for them to obey the neutrality principle during policy-making and implementation. This surely causes the equality in social development, and even produces the phenomenon of “the more developed the economy and technology are, the more unequal the society will be.” “If market is influenced by the rich or market players, inequality will occur between them and cause market failure, and produce different motivation to different interest groups.” To deal with the malfunction of social policies and social security, volunteer governance model appears. Non-profitable departments attend social wellbeing and social security. However, how to ensure the commonality of policies is still a great topic to guarantee the realization of fairness and justice in social policy-making field.

III. Fairness, justice and social system reform

Fairness and justice involve the social life and common benevolence. The modes for allocation of social goods should be designed at the top level. In addition to the allocation of wealth, social goods include income and fortune, obligation and rights, power and opportunity, public position and honor. In a just and fair society, these social goods should be allocated to every deserved   social members in a legitimate mode instead of under the control of some individuals or groups. For instance, in a fair and just society, officials who serve for the public can win social fame, stable income and welfare, and even feats and honor after retirement for their achievements . Officials, during their service period, should not pursue honors and benefits from enterprises, education and scientific research fields. In the social system reform, the principle of fairness and justness stresses the vital values in people’s social life, such as justness and rights, obligation and consent, honor and virtue, morality and law. Fairness and justice require a kind life and a common kindness, the shared values supporting the kind life.

Fairness and justice involve market system reform, so ownership reform and market economy should be combined for the top-level design. In 2006, at the donation ceremony of Bill Melinda Gates Foundation, Warren Buffett said, “market economy is helpless for narrowing the gap between the rich and the poor.” As for the widening of the income gap in the U.S., Kermit Gordon explained, “in some sense, modern American society is double-leveled. The political and social systems offer extensive power distribution and announce all citizens are equal. But, the economic system is built on market-based income, thus great differences in living quality and material well-being between citizens appear.” So, we need to consider the adjustment of holistic interest adjustment and measures when giving play to the decisive role of the market in resource allocation.

Fairness and justice involves welfare maximization. Thus, efforts should be made in further improving social security and social welfare system. First, continuing exploring endowment insurance reform for public servants and institutional employees and striving to break the dural-track pension system. Reforming the dual-track pension system is to change the interest layout, or “cut the flesh of the butchers themselves ”, as Premier Li Keqiang said. Second, striving to achieve equalization of basic social security. The core of equalization of basic social security is to guarantee social groups including low-income groups to afford social insurance and basic living necessities. As for preventive social insurance, such as endowment insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance, each competent social member should establish the account, and employers, individuals and country assume their responsibilities respectively. Third, attention should be paid to the differences in basic social insurance. We should do our best in realizing the coordination and unification of differences between urban and rural areas, between different regions, between different departments and between individuals. Fourth, we shall enable social policies to cover all citizens as the basic livelihood guarantee and further improve people’s livelihood. Efforts shall be made in improving social assistance system, fiscal and financing systems. On the basis of jurisdiction management, the central government and provincial government will further improve social relief and aid fund adjustment system to supplement the fund shortage in central and western China, old revolutionary base areas and regions inhabited by ethnic groups. We shall accelerate the reform of payment methods, means and systems, gradually apply the “factor method”-based transfer payment methods. As for the arrangement of transfer payment, we should calculate standard expenses for social aids and standard income of regional finance based on comprehensive factors of population, economy, finance and expenses, set up transfer payment items and indexes based on objective indicators and define standard expenses.

In China, acceleration of reform of public institutions and official administration improvement is a must for a society under the rule of law based on fairness and justice. Reform of public institutions concerns social organization’s development and social community’s maturity. Official administration directly influences social values and standards. If institutional reform-based social community restructuring is deemed as the skeleton of a society under the rule of law, the value reconstruction based on official administration reform will be the soul of a society under the rule of law. Both are necessary elements for a society under the rule of law.

IV. Institutional reform and statutory body establishment

(I)The misunderstood social security system reform of public institutions

The Regulation on the Personnel Management of Public Institutions (hereinafter called the Regulation) was promulgated and implemented as of July 1, 2014. The regulation arouses high attention of social circles and news media and causes some misunderstanding. After carefully reading, we may find it is just a regulation on personnel management of institutions. It brings forward “institutions and its staff should attend social insurance and the staff enjoy the social insurance treatment according to the law;” “staff of institutions qualifying national retirement conditions should retire;” and “institutions enjoy the social benefits according to national regulations.” But when and how the institutions and its staff will attend social insurance are not defined. So it is rather hasty to have the conclusion that all institutions and its staff will attend social endowment insurance system as of July 1, 2014. However, the regulation defines the direction of the social security reform of institutions, i.e. institutions and its staff will attend social insurance system, and gradually gear into the system for enterprise’s social insurance and resident’s social security. Comparing with the contents of Social Insurance Law of the People's Republic of China (hereinafter called the Social Insurance Law) adopted by the NPC in October, 2010, such as “The endowment insurance measures for civil servants and staff governed analogically by the Civil Servant Law shall be formulated by the State Council” and “the basic endowment insurance premiums payable during the period in which the premiums are deemed to have been paid before the employees of state-owned enterprises and public institutions participate in the basic endowment insurance shall be assumed by the government,” the Regulation further defines basic stipulation in the Social Insurance Law, i.e. public institutions and their staff shall participate in the endowment insurance. But, the question is not completely solved. In fact, it is just a regulation without comprehensively implementation. Only the pilot operation was made in several regions and cities. We cannot make the conclusion that the social insurance system will be implemented in public institutions.

The 3rd Plenary Session of the 18th Central Committee of the CPC clearly stated “to carry forward the endowment insurance system reform of governmental organs and public institutions. ” The 2014 Governmental Work Report further requires that the provincial, municipal and county governmental organization reform will be generally completed and public reform of public institutions be continued. We will establish a unified basic old-age insurance system for both rural and non-working urban residents and improve the way it is linked with the old-age insurance system for working people. We will reform the old-age insurance system for government bodies and public institutions, and encourage the development of enterprise annuities, occupational annuities and commercial insurance. We will improve the system of unemployment insurance and insurance against workplace injury. Herewith, government bodies and public institutions are parallel while in the Social Insurance Law they are separated, indicating endowment insurance of civil servants not to be isolated from other departments. Moreover, the government work report integrates various insurance system, highlighting the state’s resolution to further unify social insurance system.

(II)Re-examining nature and characteristics of public institutions

Public institutions undertake the public service functions to maintain public interests. Most countries or regions have similar organizations with different names. Public interests need institutions to protect. Public interests are complicated. Organization forms to realize public interests are diverse. In the U.S. and Hong Kong SAR, enterprises are involved in public services, including water and electricity supply, traffic management, road maintenance and postal services. But it does not apply completely competitive operation. Franchised operation is carried out for some services. Social Insurance Law parallels SOE and public institutions due to their responsibility for public services and public interests. The issue may be simpler if we can analyze reform of the public service supply system from the perspective of greater public services rather than public institutions and determine the formation and operation of institutions based on the nature of public services rather than concern about the nature of public welfare or non-public welfare. The key for simplifying the issue is contingent on the ideological emancipation.

Experience from developed countries and regions indicates when realizing public interests and providing public services, the nature of organizations should be determined based on types of public services, including non-profit organization or non-competitive enterprise. The statutory body is a result brought about by the Industrial Revolution and the change of government’s functions. As early as the 16th century, the British government established the similar institutions through legislation. Up to the early 20th century, it had further empowered some public independent institutions to provide a large number of public services. Afterwards, the statutory body was spread to other countries and regions gradually.

Deepening reform of public institutions involves reform of system of public services. We may have to take into consideration public institutions engaged in public services together with non-competitive enterprises. To some extent, they have the same nature. In the international community, both of them can be included in the bodies for realizing public interests as they undertake functions of maintaining public interests, realizing public goals and making a replacement for the government. They only have different operating methods and management modes. In this sense, it seems to be undisputable that the public institution and SOE adopt the same social security system. It is contentious how we understand the supply method of public interests and services and how to be free from traditional planning ideas and thinking ways.

(III)Governmental bodies and public institutions should not be restricted artificially

On the base of paying attention to public interests and classification, we should consider the reform of public institutions and SOE reform in general. The combined operation of reforms in public institutions and governmental organs is feasible. The reforms in the two sections should not be isolated. Both the Resolution of the 3rd Plenary Session of 18th CPC Central Committee and the 2014 Governmental Work Report require accelerating the social insurance system reform in  governmental organs and public institutions.

Internationally speaking, both legal institutions and government undertake public service mission but run in different modes. Comparing with governmental organs, legal institutions are more flexible in leveraging public resources, absorbing various professionals and applying financing means and operation modes to improve service quality and achieve public service goals. In addition, legal institutions have no policy-making functions while governmental organs have. In their routine operation, legal institutions enjoy great freedom, follow the accountability system and run in a fairly transparent and open system.

Governmental organs can realize public benefits through flexible and diverse modes. Public institutions are established under such system. To give a better play of governmental function is to enable government to maintain fairness and justice and realize public benefits in case of market failures. To maintain and realize public interests requires not only government’s own efforts but also government’s policy-making role to motivate the public to complete with enthusiasm and creativity. Now, local governments are carrying forward the State Council’s opinion on governmental procurement of public services. Governments will be able to purchase public services from social organizations, enterprises and public institutions. So, it is a must to further speed up reform of public institutions. Meanwhile, upon the public demands under the new situation, we’ll set up corresponding institutions to highlight major national and social benefits, solve sharp contradictions and problems and boost sustainable development of economy and society.

Government transfers its accountabilities and functions to legal institutions through legislation, indicating its role change from a rower to a steersman. Through the change, government is only responsible for policy-making and direction guidance while legal institutions perform functions and policies. Legal institutions will insist on its mission, make greater efforts in specialization and professionalism, better maintain public benefits and solve contradictions and problems through improvement of internal management and service efficiency. The reason for the high attention to the social insurance of public institutions is the severe segmentation of China’s social insurance system and the differences in social insurances between urban employees, urban residents and rural residents. The insurances within the social insurance system have diverse forms, such as accumulation, semi-accumulation and others. The accumulation system is related with personal income. The difference in personal income further causes the gap in pension payment and treatment. Urban employee endowment insurance reform has been carried out for years while governmental organs and public institutions’ endowment insurance reform never starts. This gives an impression to the society: governmental organs and public institutions are special groups, and even some people believe that some officials utilize their power to delay the reform to pursue private interests. Moreover, governmental organs and public institutions have offered stable welfare and salary for a long term, absorbed thousands of undergraduates to attend the public servant admission examinations. So, it is no wonder that media utilize the hot topics to catch eyeballs.

To speed up the social security system reform for governmental organs and public institutions is to reform the pension system for governmental organs and public institutions inherited from the planned economy. From this point, the top-level design of pension system is to further improve incremental reform while deepening accumulated reform, gradually combine the two reforms and build a unified pension system. We should realize the complexity of the endowment insurance system reform concerning public servants and public institutions. Russian President Putin said, “…If one selects to be a public servant, he selects the restrictions, the public supervision and the special requirements. It is the same in many countries. ” Meanwhile, “we shall establish public servant motivation mechanism, encourage public service departments to improve their business capability through floating salary, moral and material prizes.” We shall continue exploring the endowment insurance reform concerning public servants and public institutions, and strive to break the dual-track system. Especially, we shall break the Official-Oriented Standard in the endowment insurance system and must change the situation that governmental bodies and public institutions are exempted from the obligation of endowment insurance payment. The basic idea to solve the problem is “the old method for the old, and new method for the new.” The pension reform concerning governmental bodies and public institutions have never been carried out. The pilot of civil servant appointment might be a breakthrough for the reform. We shall gradually realize the social insurance participation of enterprise employees, urban and rural residents, governmental bodies and public institutions. On the basis of the unified basic social insurance system, we shall establish civil servant annuity as soon as possible, achieve the unification in basic social insurance and set up a social security system with characteristic annuity and welfare policies.

V. Difficulties in governance under the rule of law: official administration promotes resumption of original nature of civil servants

To clearly understand the relationship between government and market as well as that between government and society, we should begin with specific systems. Currently, civil servants have become a hot topic in the society. The treatment, salary and welfare for civil servants have caught great attention of the media. What should civil servants do and what should not? What should they enjoy and what should not? This is related to the perspectives to look at the civil servant system.

(I) Regard the civil servant system as institutional arrangement

In the Ancient Athens, the citizens gathered at the market to make decisions for public affairs. The government was just a party participating in the process. It was not independent from the citizens. However, today, it is seldom believed that government is just such a party. Actually, under certain institutional mode, it is one of the social roles. It's believed that the government is an independent entity that represents certain group of people. The correct understanding of governance includes that attaching importance to public interests does not mean that the power of government should be restrained. Instead, the government should share the common interests with other social roles, including media, social organizations, military organizations, religious organizations and commercial organizations, which are in conformity concerning some public issues.

The civil servant system, which is also called the civil official system, is a personnel arrangement made by the state government for execution of administrative power and administration of staff serving public affairs of the country. Different countries adopt different civil servant systems due to the difference in politics, history and culture.

Taiwan scholar Lee Yen-Ju said, "Government is a labor-intensive industry. All the activities of administrative organs rely on the promotion of civil servants. Therefore, effective management of human resources in civil services will promote the fulfillment of the missions of the government." It may be some improper to consider the government as an industry. We may call it a "department". In addition, "labor-intensive" also deserves deliberation. This is because, if we admit that government is a "labor-intensive department", we may need to rethink about the concept of "small government and great society" that we have been embracing in the past. Is this concept based on market or welfare? It needs in-depth research. Historical experience proves that, in the past more than 100 years, the public sector has been expanding to important social part. To have a full understanding of the functions and role of the public sector, we need to know that it is an essential sector that is independent from but interdependent with the economic sector. With the public sector, it is hard for the economic sector to have a sound and sustainable development. The expansion of the public sector in the past more than 100 years is an inevitable result of the malfunction of the market system and mechanism. The change of functions of local governments always results in the change of public services. Generally, this directly leads to the increase of employees at the local governments, especially at the organs for social services. From this perspective, a labor-intensive operation mode is needed.

The modern civil servant system was first adopted in the UK in the 18th century. In response to the economic changes and the growth of the British Empire, the Office of Works and the Navy Board were established. Each had its own system, but in general, staff were appointed through patronage or outright purchase. Examinations for the civil servants were introduced in 1829. In 1871, the United States established its civil servant system. Civil servants of the United States Federal Government include administrative, judicial and legislative personnel appointed by government departments, excluding those working for informal departments. Most of the US civil servants got their jobs through competition. However, there are exceptions in a few of departments, such as the Federal Bureau of Investigation and the Department of State. The civil servants at the state governments and local governments of the United States are employed in similar ways as that adopted for the employment of civil servants of the federal government. Usually, at international level, creation of conditions for local governments to provide job opportunities is considered very important. In accordance with Article 5 under the IULA World Wide Declaration Of Local Self-Government, "Conditions of employment and training opportunities for local government employees shall be such as to permit attractive career prospects. Central and/or other higher levels of government shall encourage and facilitate the introduction of career and merit systems in local government." Article 6 under European Charter of Local Self-Government said, "The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided." It means that high quality should be made the first qualification of civil servants of local governments and, for this, trainings, payment and vocational prospect should be taken into full consideration to make them confident with their jobs.

(II)Treat China’s civil servant system and related institutional arrangement from a rational perspective

In China, civil servant is an occupation enjoying a number of superiorities, such as job stabilization, good welfare and high social prestige. Civil servants usually refer to administrative staff at governments and paid by public finance. Some are called public servants, including those working for science research, education, health and cultural institutions that adopt a personnel management mode similar to that for civil servants. Government usually plays a typical role and occupies the core position, surrounded by public institutions and then the state-owned enterprises. China has about more than 7 million civil servants and more than 30 million employees at public institutions. In the 2014 state civil service examination, 1.119 million applicants had to compete for more than 19,000 jobs. Some people believe that becoming a member of a government organ, a public institution or even a state-owned enterprise is a way to enter the related "system" that provides corresponding guarantees for their employment.

The difference in treatment inside and outside the system should be viewed from a historical perspective. The reform of the Chinese economic system began with the reform outside the system. The household contract responsibility system was first adopted in rural areas. Then, the reform outside the system promoted the reform inside the system. Therefore, the dual-track system pattern was formed up. Not only the economic system and market system adopt such a pattern, the administrative system and the public institution system also adopt it. That leads to the differences inside and outside the systems. If China imitated the "shock therapy" of the former Soviet Union at that time, it might not have had such a development today. This is what we should know. However, it does not means that we accept the current status. The reform should continue. As required by General Secretary Xi Jinping, we should have full estimation and understanding of the hardship, complexity, relevance and systematicness of the task to comprehensively deepen reform. The good treatment and welfare, stable salary, integrated guarantee, improved retirement pension system, low intensity of work and abundant resources under control inside the system should be explained in the following aspects: first, they are the leftovers of the planned economic system and need further reform; second, it should be due to self reform by department allowed during a period in the process of the reform, which led to interests expansion in these departments concerned and excessive resources under control; third, some involve one-sided social perceptions, such as the low intensity of work. Actually, the staff of many government departments work under high intensity and pressure, though it is not widely known.

The treatment for civil servants, including salary and welfare, should be viewed from a comprehensive perspective. Concerning the endowment insurance system for civil servants and employees of public institutions and that for other groups of people, such as the urban employee endowment insurance system and the urban and rural resident endowment insurance, one of the hottest topics is the dual-track system, namely the integration of the endowment insurance system for civil servants and employees of public institutions and that for other groups of people. The core concept for such practice is originated from the "fairness of social security system". It is where the crux of the problem of the current civil servant system lies in. Concerning this problem, it should be aware of that we should not doubt the effectiveness of the civil servant system due to the corruption of some individual officials. Then, we should make careful study of the characteristics of the current civil servant system and then design the civil servant salary and welfare and social security systems based on the historical characteristics of civil servants and public institutions as well as the overall requirements for the development of the Chinese salary and welfare and social security systems.

The behaviors of civil servants should be viewed from objective and historical perspectives. Civil servant should be treated as an occupation similar to other occupations. The civil servants should set strict demands on themselves and should not require for special treatment. The other members of the society should treat civil servants as an ordinary group of people. This will promote the resumption of original nature of civil servants.