Public Institution Reform in China from the Perspective of Fiscal Logic

Abstract

The differences between China and the western countries in political and economic systems also lead to the differences in fiscal functions, and public institutions in China is a representative example. Generally, public institutions in China are led by government departments and have strong dependence on fiscal funds, with an obvious official and civilian duality. Public institutions in China can be regarded as a unique financial phenomenon, which requires us to think about the reform of China’s public institution from the perspective of the fiscal logic. This paper constructs a fiscal logic model by integrating five influential fiscal paradigms in China, and systematically discusses the logical relations among such elements as public finance, public needs, human community, nation, public goods, public risks and fiscal risks. The human community is the logic starting point of the model, the human community generates public needs and forms nation. Public needs is the logical core of the model and the origin of public finance. The model enriches the connotation of public needs from the two aspects of affording public goods and preventing public risks, and shows the relationship between nation and public finance in China through national governance. According to the model, this paper analyzes the reform of public institutions in China from the two aspects of public needs and national governance. On the one hand, it emphasizes that the reform of public institutions should be based on public needs. The reform of public institutions should stick to the direction of public service. It presents the classification method of public institutions based on public risks, meanwhile it puts forward that the reform should avoid the monopoly risk of public service; On the other hand, the reform of public institutions should reflect national governance. We can better meet the goal of national governance by establishing multi-center public service mode, innovating fiscal supply mode and setting up capital concept.