Govt Purchases of Social Services to Enhance Welfare

February 7, 2014
Editor: Tracy Zhu
Govt Purchases of Social Services to Enhance Welfare
In November 2013, the State Council announced the government would purchase public services from social organizations and private companies. []
Pipi (pseudonym), 9, was left homeless after his drug-addicted mother abandoned him in Wuhan, capital of central China's Hubei Province. His life was turned around after the city's Relief Management Station, a shelter that helps the destitute, intervened and enrolled Pipi at Wuhan Chenjiaji Primary School.

In addition to receiving clothing, food and shelter, Pipi also receives counseling at the station and is gradually rebuilding his life.

Wuhan's local government recently took over public service projects in the city, including the Relief Management Station. As part of its role as the purchaser of the services, the government plays a more active role in demanding better public services for relief organizations that help orphans and the homeless.

Increased Competition

The competitive mechanism plays an important role in the enhancement of the efficiency and quality of public services. The Relief Management Station in Wuhan improved its services to help people like Pipi by including rights protection and counseling as part of its broader goal to secure government backing.

The station even collaborated with the Wuhan Chuxin Social Work Services Center and employed social workers to provide better services. Part of the motivation for this move was that they stood to lose government support if their services were considered inferior to rival social organizations.

As the buyer of the city's public services, the Wuhan local government is also a watchdog to charity and welfare projects to ensure work is being carried out effectively and resources aren't being squandered.

The government's function has subsequently changed from previously being a provider of public services to being the sector's main supervisor.

This change is part of wider reforms altering the government's function and relationship with society.

In the past, the government was responsible for providing all public social services. This working mechanism was uncompetitive and typically resulted in low-efficiency and low-quality services.

The new mechanism makes the market play a decisive role amid increased competition, allowing society and especially the needy to reap greater benefits from social services.

Background of Reform

Details of the reform were listed in a document issued after the Third Plenum of the 18th Central Committee of the Communist Party of China (CPC) held in Beijing in November 2013. The plenum ushered in deeper market-oriented reforms in many fields, including social services.

Market-oriented reforms have played a vital role in China's economic and social development and allowed the country to become the world's second-biggest economy. However, now China faces many new challenges including overhauling its social services and strengthening its social security system. China's rapidly ageing society and growing income gap pose major hurdles to future social development.

The document released after the plenum stipulated that the market will play a decisive role in the country's economic and social prosperity. Former systems and working mechanisms considered to stand in the way of this goal were targeted for reform. It also stipulated that deeper market-oriented reforms will carry over to social services by increasing competition and accountability.

The function of provincial, regional and municipal governments should be reformed, the document stated, so that they adopt the roles of buyer and supervisor of projects to ensure they run smoothly and effectively.

Importance of Boosting Welfare

Questions have been raised by experts over what social services the government should take over, how these services should be sold and who will monitor the government to ensure it administrates services well.

Zhang Bin, associate researcher at the National Academy of Economic Strategy of the China Academy of Social Sciences (CASS), said choosing what services should be purchased is a crucial first step for government.

"The government should emphasize public welfare. Social welfare should be enhanced through in the wake of the takeovers. Although the government can outsource responsibility in various areas to lighten their burden, public welfare can't be enhanced this way. With limited financial capability and diverse social demands, the priority of purchased services should be put on those that improve social welfare," Zhang said.

Duan Ruopeng, a professor on public management at the Party School of the Central Committee of the CPC, argued that enhancing social welfare requires public consultation. "Only the common people know clearly what they need. If oriented to what the masses need, the government takeover of social services can deliver tangible benefits to common people," Duan said.

Regarding how social services should be sold, Ma Qingyu, a professor at the Chinese Academy of Governance, said that the Law on Government Purchase and Contract Law need greater clarification. The former defines what the government purchases too generally in terms of goods, projects and services. The latter pertains to commercial practices, which differ from government-purchased social services.

Some experts have urged a special law or regulation on public services purchased by the government to be issued. Zhang Baofu, vice director of the Tianjin Social Organization Management Bureau, and Ma have called on the central government to define the respective responsibilities of departments on finance, development and reform, civil service, supervision and auctions. They have also called for a trans-department coordination working mechanism to be established.

On the issues of transparency and holding the government to account, Duan said both were critical to avoid undermining the purpose of reforms. "If the relationship between the government and social services can't be regulated, it will be easy for the government to take advantage and allocate projects to their beneficiaries," Duan said.

(Source: Translated and edited by

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