Social Sciences in China, 2016

Vol. 37, No. 1, 57-74, http://dx.doi.org/10.1080/02529203.2015.1088623

A Review of Institutional Reform over the Past 30 Years from the

Perspective of Change Management*
Zhou Zhirena and Xu Yanqingb
a
School of Government, Peking University
b
School of Politics & Public Administration, Hainan University

党中央决定成立全面深化改革领导小组，负责改革的总体设计、统筹协调、整体
推进、督促落实。这意味着变革管理被提上重要议事日程。从变革管理角度系统梳理
和审视改革开放以来国务院七轮机构改革历程，国务院机构设置变革呈现出明显的渐
进和稳健特征，职能转变是历次改革的核心和亮点。政府职能转变呈现出明显的两段
论特色：第一阶段的重点是政府经济管理职能的转变；第二阶段的重点是加强和改善
宏观调控，强化社会管理和公共服务职能。但就方案设计而言，近10年来有关职能转
变的目标和措施等具体性方面明显不足，具体措施及其成效与三轮机构改革方案之间
的关系难以确立。因此，“机构改革是否也需要改革”成为新的实践命题，需要从战
略定位、推进方式、公共责任、总体设计等方面进行思考。

关键词：机构改革 职能转变 变革管理

The Leading Group for Deepening Reform Comprehensively has been set up on the
decision of the CPC Central Committee to be in charge of the overall planning of reform,
taking a balanced and coordinated approach, advancing reform as a whole and supervising
its implementation. This means that change management has become an important item
on the agenda. Systematically reviewing and examining the course of the seven rounds
of institutional reform introduced by the State Council since 1978 from the perspective
of change management, we find that the reforms have advanced gradually and steadily,
with functional transformation as the core feature and key to each round of reform. The
transformation of government functions exhibits a marked two-phase character. The first
phase focuses on change in government functions relating to economic management, while
the second focuses on enhancing and improving macro-control systems to strengthen social
management and public service functions. However, in terms of program design, the goals

*　This project is supported by “A Whole-of-Government Perspective on Research into Chinese

Government Inter-Departmental Coordination Mechanisms,” a 2012 program of the National Natural
Science Foundation (No. 71173004), It is a research achievement of the Peking University Co-
innovation Center for State Governance.
© Social Sciences in China Press
58 Social Sciences in China

and measures of the past 10 years’ functional transformation have clearly not been specific
enough to establish a clear relationship between the three rounds of institutional reform
programs and the concrete measures and their effects. Therefore, the question of whether
institutional reform itself needs reform has become a new proposition for practice, one
that needs to be reviewed in terms of strategic orientation, mode of implementation, public
responsibilities and overall design.

Keywords: institutional reform, functional transformation, change management

I. The Problem and Our Research Framework

Since reform and opening-up, the Chinese government has conducted seven rounds of large-
scale institutional reform, each of which has been of great interest to the scholarly world
and has produced a vast amount of research literature.1 However, a review of this literature
shows that no consensus has yet been reached on the research scope or basic framework of
this topic. Research on such core issues as functional transformation needs to be deepened;
there is little agreement even on basic facts and developmental trends. One example is the
conundrum of whether the process is stuck in a vicious cycle of “downsizing—expansion—
more downsizing—more expansion.” A couple of scholars think this applies only to the first
few rounds of institutional reform; regarding it as an attribute common to all of them equates
to “an exaggerated assessment of consensus.”2 A few researchers acknowledge the existence
of a vicious cycle but read the overall trends differently: despite the cycle of “downsizing—
expansion,” each expansion is smaller than the one before, yielding ground to reform, and
the total number of agencies is falling over the long run.3 The great majority take the cycle as
given and bend their efforts to providing a theoretical exposition and devising a solution.4 This
paper shows that overall, successive rounds of reform have displayed incremental and stable
features in terms of numbers of agencies; neither sweeping downsizing nor a “vicious cycle”
has occurred. Where research is premised on a “vicious cycle,” the questions it addresses are
built on sand and its conclusions are slanted. The backwardness of theoretical research has
led to rashness in practice, with some NPC deputies and CPPCC members still calling for the
vicious cycle to be broken.5

1　Using “government institutional reform” as the key word to search the journal database at www.
cnki.org, we found 14,100 relevant papers for 1982 to 2013, over 90 percent of which discussed on
institutional reform of different levels of the Chinese government.
2　 Zang Leizhen, “Vicious Cycle: An Exaggerated Common Evaluation of Chinese Institutional
Reform,” p. 123.
3　Mao Shoulong and Li Wenzhao, “A Review and Prospect of Chinese Government Reform,” p. 279.
4　Using the key words “the vicious cycle of streamlining-expansion” to search the journal database at
www.cnki.org, we found 69 relevant papers for 2008 to 2013.
5　Hua Xin, “NPC Deputies and Members of the CPPCC: Preventing Institutional Reform from Falling
into a Vicious Cycle of ‘Streamlining-Expansion.’”
 Zhou Zhiren and Xu Yanqing 59

A review and examination of the past 30 years of institutional reform is of immediate

significance. Reviewing the course of reform and summarizing the positive and negative
lessons of the past 30 years will help future reform to be more effective. The Third Plenary
Session of the 18th CPC Central Committee emphasized “pay more attention to implementing
systematic, integrated and coordinated reforms” and resolved to set up the Leading Group for
Deepening Reform Comprehensively to be in charge of designing reform on an overall basis,
arranging and coordinating reforms of different sectors, pushing forward reforms as a whole
and supervising the implementation of reform plans. This means that change management has
become a major agenda item. What we call change management involves exploring ways to
improve the corresponding systems and mechanisms, so as to control and manage the whole
process of reform in a scientific way.6
A review of the process of institutional reform from the perspective of change management
is of theoretical significance. Overseas research indicates that institutional reform that
eliminates or amalgamates divisions and reduces the number of public servants is a popular
option, but is often the least successful in terms of effectiveness.7 This research also shows
that although differences in strategic design, planning and implementation have a great
impact on the final results of reform,8 change management commonly lacks systematic and
scientific design. Enthusiasm for the “quick fix” has underlying political causes. Large-scale
institutional reforms get quick results which dazzle the public and society. However, their
enthusiasm cools down as quickly; politicians’ attention moves on, and they lose interest
in the deep-seated structural problems that follow on institutional reform. Western scholars
attribute this inherent bias in the political process to the “shortsightedness effect,” originating
in the relatively high “time discount rate” of the political role.9 The Chinese political
system, being quite different from the Western one, has in theory the potential advantage
of forestalling such political shortsightedness. Therefore, the theoretical significance of the
course of Chinese institutional reform from the perspective of change management research
can be summed up as follows: given China’s political system and national conditions, any
study of successful Chinese experiences or setbacks and negative lessons will offer unique
theoretical interpretations, and establishing an effective Chinese change management model
and a wealth of experience with Chinese characteristics will become a theoretical treasure
house in the relevant international fields.
The study of institutional reform from the perspective of change management requires an

6　Change management is seen as “a structured approach in an organization for ensuring that changes
are smoothly and successfully implemented to achieve lasting benefits.” In a word, change management
makes change happen effectively. (See the explanation in Wikipedia and also http://www.mindtools.
com/pages/article/newPPM_87.htm).
7　Guy Peters, “Government Reorganization: A Theoretical Analysis,” pp. 199-217.
8　Ibid.
9　Ibid., p. 60; Charles Wolf, Markets or Governments: Choosing between Imperfect Alternatives,
RAND Note, p. 36.
60 Social Sciences in China

analytical framework. Building on the relevant policy process theories, we have constructed
an analytical framework for change management with many links and observation dimensions.
The first link is the strategic design of reform. Its observation dimensions include: (1) The
reform’s adaptability to the environment. How are we to identify new challenges? How can
we find the inherent logical relationship between the core issues to be resolved and the leading
direction, and between the general direction and ways of dealing with challenges or solving
problems? (2) The reform’s strategic orientation. This includes not only the orientation of
institutional reform as part of national economic and political institutional reform, but also
the relative position of different elements of institutional reform. (3) The reform’s strategic
objective. This includes not only the clarity of the objective, but also its consistency with the
general direction of reform. (4) The means by which the reform is promoted. This includes
not only interest entities’ arrangements in terms of guidance, balanced planning, design
and oversight, but also such macro-systemic arrangements as reform processes and public
participation.
The second link is the design phase of reform. Its observation dimensions include: (1)
Concreteness of objectives. The objectives in different fields of reform should be clear or
quantifiable and should be inherently consistent with the strategic objective. (2) Reform
programs must be systematic, holistic and collaborative. (3) Design of the reform process
design must be detailed. It should include such factors as timelines, responsible persons or
supervisors, key points, indicators, success criteria, etc. (4) Means by which the reform is
promoted. This refers to the relevant interest entities and their relationships and to different
aspects of institutional arrangements in the reform process.
The third link is the implementation phase of reform. Its observation dimensions include: (1)
Participation of target groups (the bodies to be reformed). (2) Performance of the authorities
or departments in charge of the reform. (3) Reform process monitoring and feedback. Do
important time frames, key work points and event indicators occur in accordance with the
plan? (4) Monitoring of efficiency during the reform process.
The fourth link is the evaluation phase of the reform or systematic evaluation of its
outcomes. Its contents include: (1) Did the reform realize its expected goal? If so, to what
extent? Were there any unexpected and dysfunctional results? How can the advantages and
disadvantages of the reform be evaluated in a scientific way? (2) Diagnosis and explanation of
cases where the reform fell short of the expected objective or had extremely negative results.
(3) Cost-benefit analysis of the reform. (4) Inspiration and lessons of the current reform for
future reforms.
Studying each round of institutional reform within this framework and analyzing the
relevant research results will offer some conclusions and stimulate further thought.
The institutional reform of government is a complex systemic project involving the three
topical fields of functional transformation, institutional set-up and staffing establishment,
each of which can constitute an independent research topic. What is more complex is that the
 Zhou Zhiren and Xu Yanqing 61

relevant research must take into account the intricate relations between institutional reform
and the economic and political system; the interaction of the three components of functional
transformation, institutional set-up and staffing establishment; and government functions at
different levels together with the organization’s vertical configuration and their interaction,
etc. It would be hard to bring all the factors in a particular round of reform into the analytical
framework of change management and doubtless even harder to cover all of the seven
rounds of institutional reform over the past 30 years. Therefore, we have had to be selective.
First, we have chosen to study the two fields of functional transformation and institutional
establishment; public service staffing does not fall within the scope of this study. Second, we
focus on the central government level, paying more attention to functional transformation and
the State Council’s reform of the institutional establishment. Last, we discuss several major
issues and offer recommendations for deepening the reform of the administrative system from
the perspective of change management.
The remainder of the article is structured as follows. The second section, which focuses
on an examination of the State Council’s changes to the institutional establishment, draws
the basic conclusion that “Overall, the change in the total number of institutions appears
incremental and steady” and introduces the proposition that “functional transformation is the
core feature and the key”; the third section reviews the developmental path of government
functional transformation and its major effects and sums up some features of change
management; and the fourth section offers some thoughts and recommendations on immediate
major issues from the perspective of change management.
Before proceeding to our main argument, we need to clarify the core concept of “institutional
reform.” A review of official documents shows that the implications of this term have varied
considerably over the past 30 years. On this basis, we can understand institutional reform in
three senses. Institutional reform in the narrow sense refers only to institutional streamlining
or structural adjustment; institutional reform in the broad sense is a general designation for
the seven rounds of reform; and institutional reform in the intermediate sense is relatively
complex, including not only functional transformation, changes in institutional set-up and staff
reduction (in the three rounds of reform from 1988 to 1998) and reductions in staff and in the
number of institutions (1982), but also functional transformation and institutional structural
adjustment (from 2003 to 2008). In order not to confuse readers, we deal with this concept in
three ways: we generally use “changes in institutional establishment” to replace institutional
downsizing and structural adjustment; in discussing a particular round of institutional reform,
we adopt the connotations used in that reform program; and elsewhere, we use institutional
reform in the broad sense as a general designation for the seven rounds of reform.

II. Chronological Survey of the State Council Institutional Establishment Reform

Compared to functional transformation, change in institutional establishment is highly

62 Social Sciences in China

visible and quantifiable and can be reviewed from the perspective of change management
relatively easily. Existing documents show that most research findings confirm the strategic
planning of changes in the institutional establishment and identify with the systematic nature
of their design and the specificity of their objectives. Very little scholarly attention is paid
to implementation, which is generally rolled in with evaluation of effects. Up to 2003, the
focus was on breaking the vicious cycle of “downsizing—expanding” and the implementation
pathway and rationale for the abolition or merger of economic management departments.
From 2008, the focus was on organic integration under a system of “super-ministries” and on
overcoming the simplified “aggregation” approach where organizations were joined in name
only.10 Generally speaking, the cost-benefit analysis of institutional establishment reform was
not on the academic horizon, mainly because of the lack of systematic information on costs
and benefits. Although such change is high visible and quantifiable, an accurate estimate of
its benefits is not so simple. As a result, we have the conundrum mentioned at the beginning
of this paper. Does a vicious cycle exist? As the tendency for changes in the number of
institutions is the factual basis of evaluation and reflection, the remainder of this section will
focus on a discussion of the changes in the institutional establishment of the State Council.
We first show the changes in institution numbers in the first three rounds of reform.11
During the first round, in 1982, institution numbers fell by nearly 40 percent, from 100 to 61.
However, the number increased to 73 in the following years. In the second round, in 1988,
the number decreased from 73 to 66 but increased to 86 in the following years. During the
third round, in 1993, it fell from 86 to 59. During the next four rounds of reform from 1998, it
remained roughly stable with a slight decline. We can see the conclusion that “root-and-branch
institutional streamlining is stuck in a vicious cycle of downsizing—expanding” is based on
data from the first three rounds of reform, so the numerous research studies on a “vicious
cycle” missed their target.
We would like to stress that the above data do not reflect the overall picture of institutional
reform, even if only the first three rounds of reform are in question, because the statistical
specifications and criteria for calculation do not mesh. This is partly because of the statistical
classification of institutional types. Statistics on institutional numbers in the successive
rounds of reform variously use concepts such as “work departments (gongzuo bumen),”
“administrative organs (xingzheng jigou)” and “constituent departments (zucheng bumen).”
According to the current classification, “work departments” is the general term for all organs

10　Zhang Chengfu and Yang Xingkun, “Ten Misconceptions and Questions in the Construction of
the Super Ministry System”; Dong Ruifeng, “The Super Ministry Reform has Made Progress But No
Breakthrough; Departmental Functions Need Reintegration”; Shi Yajun and Yu Jiang, “Super Ministry
Reform: Anticipation, Reflection and Prospects—Based on a Survey of the Reform of Five Super
Ministries”; Shi Yajun, “Advancing the Realization of Three Fundamental Changes in the Implications
of the Super-Ministry Reform.”
11　Xinhua News Agency, “Structural Streamlining and Functional Transformation: On Several Rounds
of Government Institutional Reform since the Founding of the PRC.”
 Zhou Zhiren and Xu Yanqing 63

under the State Council, and is made up of administrative organs plus agencies directly
under the State Council (e.g. Xinhua News Agency). According to the Organic Law of the
State Council, the State Council’s “administrative organs” are classified into four groups: the
General Office of the State Council, its constituent departments and commissions, directly
subordinate agencies and administrative bodies. Academics have based their descriptions of
the changes in the four rounds of reform since 1998 on the figures for “administrative organs”
but used the figures for “work departments” for the first three rounds, thus exaggerating the
degree of institutional downsizing. For example, in 1982, according to official statistics, the
number of institutions was reduced from 100 to 61, with the biggest reductions occurring
in directly subordinate agencies. We found that at that date, these agencies were divided
into the following types: (1) agencies that became economic entities, such as the four major
state-owned banks; (2) organizations directly under the State Council, such as Xinhua News
Agency; and (3) advisory and coordinating organs, such as the Finance and Trade Group of
the State Council. This covers roughly 25 institutions, none of which fall within the scope of
today’s “administrative organs.” In other words, when we make the statistical specifications
consistent, institution numbers for 1982 fall from 75 to 61 instead of from 100 to 61.
Another aspect of statistical calibration involves the mode of implementation of the
reform. Institutional downsizing is realized in two ways: by abolition or by amalgamation
or transformation. “Transformation” means making the original ministries and commissions
into economic entities or public agencies. The Ministry of Food and the Sixth Ministry of
Machine Building were turned into economic entities in the reform of 1982 and the Ministry
of Nuclear Industry became the China National Nuclear Corporation in the reform of 1988.
According to preliminary statistics, a total of 10 ministries and commissions were transformed
during successive rounds of institutional reform. This is clearly different from abolition or
amalgamation. In the former, the organization and staff continued to exist (e.g. departmental
heads became general managers), as did their functions (state enterprises that had been
transformed continued to exercise administrative functions for a long time). These reforms
reflected progress in institutional orientation, but clearly do not fall under “downsizing.”
If such transformed institutions are excluded from the number of downsized bodies, State
Council institutional change would present a different picture: in the first round of reform
(1982) the number of entities fell from 64 to 52; in the second (1988), it fell from 63 to 61;
and in the third (1993), it fell from 62 to 56.
The above facts lead us to conclude that: (1) Due to differences in statistical method,
mainstream media data are not comparable to official data and do not reflect the overall
picture of changes in the institutional establishment; (2) If the statistical specifications are
unified in terms of categorization and the mode of implementation of reform, successive
rounds of reform can be characterized as incremental and stable in terms of institutional
numbers, with neither a drastic downsizing nor a “vicious cycle” of downsizing—expanding.
How then are we to evaluate the progress and contributions of previous rounds of institutional
64 Social Sciences in China

reform? The key is not the number of institutions but structural adjustment. Functional
transformation lies at the heart of previous institutional reform and is the key to such reform.

III. The Evolutionary Path and Effects of Government Functional Transformation

Research on functional transformation presents many more difficulties than research on

changes in institutional establishment. Government functions include such fields as economic
regulation, market supervision, social management and public services, each of which relates
to a series of major themes and requires a multi-disciplinary synthesis. Unlike changes to the
institutional establishment, functional transformation is not highly visible or quantifiable.
This section explores functional transformation in four parts. First, we identify the two main
phases of functional transformation and indicate the progress of the first phase. Second, we
focus on the second phase and discuss the key tasks, main measures and important features
of functional transformation. Third, we demonstrate some concrete measures and effects of
functional transformation revolving around enhancing and improving macro-control systems
to strengthen social management and public service functions in the past decade. Lastly, we
draw conclusions from the perspective of change management.
Since the institutional reform of 1988, when the proposition that “transformation of
government functions is the key to institutional reform” was first put forward, the ensuing
functional transformation of the following six rounds of reform had a relatively clear two-
phase character. The first phase focused on transformation of government functions in relation
to economic management and mainly involving separating government functions from
enterprise management and transforming the government’s mode of economic management,
while the priority of the second phase was to enhance and improve the macro-control system
in order to strengthen social management and public service functions. Academics agree on
the basic developmental path of functional transformation but differ on the timelines of the
two phases. Some believe the second phase started in 1998,12 but most consider it started in
2003.13 Because the abolition and merger of specialized economic departments occurred on
the largest scale in 1998, we regard the institutional reform of 2003 as the starting point of the
new phase.
In the first phase of functional transformation, the “historic contribution” of the 1988
reform lay in putting forward the idea that “transformation of government functions is the key
to institutional reform” for the first time and identifying the idea of “encouraging different
government departments, especially economic management departments, to shift from micro-
to macro-management, from direct to indirect management, from departmental to enterprise

12　Zhu Guanglei and Yu Dan, “Construction of a Service-oriented Government is the New Phase of
the Transformation of Government Functions: Retrospect and Prospect of the Process of Transforming
Government Functions.”
13　He Ying, “A Review of and Reflection on 30 Years of Chinese Government Institutional Reform”;
Zhu Qianwei, “The Logic of Reform: Retrospect and Prospect of Institutional Reform.”
 Zhou Zhiren and Xu Yanqing 65

management and from ‘control’ to supervision and service.”14 If we say that the reform of
1988 put forward macro-level guiding principles and took the first step in the reform of
specialist departments of economic management, the reform of 1993 made a major step
forward in separating government functions from enterprise management and in departmental
orientation. The “historic progress” of the 1998 reform was the abolition of almost all
specialist industrial economic departments.
Although, in the second phase of functional transformation, the overall direction of the
three rounds of reform was always to enhance and improve macro-control and strengthen
social management and public service functions, the emphasis and the major measures of
functional transformation underwent a continuing process of in-depth development. And how
are we to see the effects of functional transformation? Revolving around the general direction
of “enhancing and improving macro-control systems to strengthen social management and
public service functions,” we have selected some major measures over the past 10 years and
their effects.
In terms of macro-economic control, one could say that the 10-year process has been a
demanding one with many ups and downs. Macro-control involves nearly every economic
field. In agriculture, the government has published a series of No. 1 Central Documents on
agricultural issues since 2004; in industry, developmental plans for a variety of occupations
have been introduced; and in the real estate market, macro-control seems to take the form of
constant innovation with highly debatable effects.15 Of course, it is macro-control targeted
primarily on economic stability that got the most attention.16 The State Council’s “Ten
Measures to Expand Domestic Demand and Promote Economic Growth,” issued in November
2008, is undoubtedly the most powerful control measure adopted so far.
As the reform of 2013 made reforming the administrative approval system the “breakthrough
and starting point” of functional transformation, we shall further describe below the course of
the reform’s development over the past 10 years. It took the forms of abolishing, transferring
(to industries or intermediate social organizations) and delegating approval (to a lower level
of government), etc. We can sum up these three forms in terms of the decrease in the number
of items needing approval: over the five rounds of reform, 789 fewer items needed approval
in January 2002, 488 fewer needed approval in May 2003, 492 fewer needed approval in May
2004, 186 fewer in October 2007, 184 fewer in July 2010 and 314 fewer in September 2012.17
Below are the major measures taken over the past 10 years to strengthen social management

14　China Administration Society, ed., A Brief History of Chinese Administration (1949-2000), p. 403.
15　“A List of State Council Regulatory Measures (2003 to 2013)”; Gu Yunchang et al., “Wherein Lies
the Difficulty of Regulating the Real Estate Market.”
16　Zhang Junwei, “Retrospect and Prospect of Macro-Control since 2003”; Chen Dongqi et al.,
“Experience, Problems and a Theoretical Exploration of Macro-Control over the 30 Years since Reform
and Opening Up”; Qi Peixiao, Hao Xiaoyan and Shi Jianwen, “A Summary of the Experience and
Problems of Major Chinese Macro-Control Measures over the 30 Years since Reform and Opening Up.”
17　http://www.scopsr.gov.cn/xzspzd/.
66 Social Sciences in China

and public service functions aimed at guaranteeing and improving the people’s well-being.
The Regulations on the Agricultural Tax were repealed from January 1, 2006, ushering from
the stage the 2000 year history of the imperial grain tax and its successors18; the outline of
China’s Eleventh Five-year Plan introduced “building the new socialist countryside” as an
important governance program in March 2006, under which public services became the
focus for the construction of the new countryside; the “Rural Compulsory Education Tuition
and Other Fee Exemption Program” was rolled out nationwide in 2007; the State Council
approved the outline of the Eleventh Five-year Plan on Health Care Development in May
2007, requiring the establishment of a basic health care system for urban and rural residents; a
State Council document issued in August 2007 formally established a Minimum Subsistence
Security system for urban and rural residents; and in September 2009, the State Council issued
“Guidance on Launching Pilot Programs for the New Rural Social Endowment System”
requiring the accelerated establishment of a social security system that would cover urban and
rural residents so as to gradually solve the problem of providing security for the aged in rural
areas.19
On the basis of the above facts, we can draw the following conclusions from examining
the functional transformation process from the perspective of change management. First, the
transformation of government functions experienced two phases of development, in which
it realized a shift from all-round government to limited government and from a control-
oriented government to a service-oriented government (2003-2013).20 This represented a
strategic choice by the central government based on an assessment of the current situation
and reflected a strategic planning capacity that was up to date and widely acknowledged
by society. Second, at the design link, the specific measures in the relevant functional
transformation programs all used terms such as “strengthen,” “enhance,” “improve” and
“decrease.” They were thus actually an announcement of key tasks and the direction of effort,
with no quantifiable targets or schedules; their implementation was wholly dependent on the
functional departments. Third, over the past 10 years a great deal of effort has been put into
economic regulation, market supervision, social management and public services, achieving
remarkable progress. However, it is not easy to identify the relationship between these results
and the programs of the three rounds of reform, for the following reasons: (1) The Five Year
Plans have been more important as a vehicle and means of functional transformation; they
are clearly superior to the successive rounds of institutional reform in terms of the specific
nature of their targets, their systematic programs and their detailed progress. (2) The policy-
makers for important macro-control measures were the CPC Central Committee, the State

18　Xinhuanet, “Total Abolition of the Agricultural Tax: A New Feat of Agricultural Reform.”
19　On the eve of the 17th CPC National People’s Congress, the selection of “Ten Major Policies
Benefiting the People” was organized by News Department of the People’s Daily Online and the
Institute of Political Science of the Chinese Academy of Social Sciences. For the results, see http://
politics.people.com.cn/GB/30178/6503455.html.
20　He Ying, “A Review of and Reflection on 30 Years of Chinese Government Institutional Reform.”
 Zhou Zhiren and Xu Yanqing 67

Council and the relevant functional departments. (3) Given the major events witnessed over
the past 10 years, such as deflation, local overheating and the global financial crisis, macro-
control has adopted alternative policy settings and fiscal and monetary policies that are active,
stable and moderately tight. Countervailing measures that fall under the rubric of “enhancing
and improving macro-control” mean that principles identified in the reform program are
not directly related to specific regulatory measures. (4) The major measures of functional
transformation do not coincide with the timing of the three rounds of institutional reform.
Institutionally, the Five Year Plans and the institutional reform programs are out of kilter
in terms of time. The introduction of some major measures (e.g. the 4 trillion investment
pro-growth program and the major policies for the people’s benefit) did not conform to the
schedule of the three rounds of institutional reform. The reform of the administrative approval
system, the “breakthrough and starting point” of functional transformation, also exhibited a
normalized character with little relationship to phased institutional reform. These issues have
deep implications for change management.

IV. Future Prospects: Does Institutional Reform Need to Be Reformed?

Following the above analysis and discussion, this section will offer some thoughts on the
future of institutional reform. A key question here is whether institutional reform itself needs
to be reformed.
1. The strategic orientation of changes in institutional establishment in the reform of the
administrative system
Administrative reform involves a very wide range of fields, but these can be simply
classified into three types: optimization of functional structure; institutional reform (including
staffing establishment); and reform of operational management. Having executed seven
rounds of large-scale reform with decreasing room to maneuver, how should we position
changes in the institutional establishment within the reform of the administrative system as a
whole?
Strategic positioning primarily involves the relationship between strategic positioning and
functional transformation. In theory, organizations and public servants are physical vehicles
for the performance of given functions, so function plays the decisive role in institutional
establishment. In practice, whether in the subjective consciousness of the reformer or in
many years of practical experience, functional transformation undoubtedly occupies pride
of place in reform. The problem is that we have long used “institutional reform” as the
watchword of administrative reform. Functional transformation has become a component
of such reform, a component that was only placed on an equal footing with reform of the
institutional establishment in 2013. It is a contradiction in terms to hold high the banner of
institutional reform while emphasizing the key central position of functional transformation.
Can it be replaced by “reform of the administrative system,” thereby diluting the “institutional”
68 Social Sciences in China

character of reform and drawing public attention to the more important transformation, that of
government functions?
At the same time, strategic positioning involves the relative positions of institutional reform
and operational management reform. In developed countries today, administrative reform
stresses operational management, which aims to increase efficiency, returns and quality
through scientific, standardized and detailed management. In China, the emphasis in previous
years has been on institutional reform, and reform of operational management is not yet on
the agenda. “Opinion on Deepening the Reform of the Administrative Management System”
of the Second Plenary Session of the 17th Central Committee of the CPC proposed to improve
administrative operation by “realizing the fundamental transformation of the administrative
operation mechanism and the mode of government management in a way that is standardized
and orderly; open and transparent; and accessible and efficient.” This in fact introduces the
major theme of deepening administrative reform in the new situation, i.e. achieving a balance
between institutional reform and reform of operational management.
2. Ways to promote institutional reform and functional transformation
A review of previous rounds of reform shows that institutional reform is definitely high
profile and has a phased character. “High profile” means that it enjoys high-level treatment in
which upon receiving the imprimatur of the highest authorities, it is implemented in a unified
fashion. “Phased” means that on the succession of each new administration, institutional
reform becomes a compulsory item on the agenda. If we presuppose the rational strategic
positioning of reform of the institutional establishment, do we need to make corresponding
adjustments to the way reform is implemented?
Should institutional establishment reform continue to enjoy pride of place? We think not.
If we look at international practice, we can see that large-scale restructuring, especially that
involving amendments to the corresponding laws, such as the “super ministry” institutional
reforms introduced in Britain by the Heath government in 1970 and by Japan’s Hashimoto
government in 2001,21 has to be reviewed and passed by the legislature. This is not necessarily
the case for all restructuring: New Zealand’s “super ministry” reform of the Ministry
of Business, Innovation and Employment, for example, integrated the functions of four
previously independent ministries, affected over 3,120 civil servants, and decreased internal
divisions from 25 to 8. Although it was seen as a massive and thoroughgoing institutional
reform, it was not brought in by the legislature.22 In China, the relevant laws are general
and abstract. Although the institutional establishment of the State Council has taken on a
completely different appearance following several rounds of reform, it has never contravened

21　Zhou Zhiren, “Origins of the Super Ministry System: Some Observations and Thoughts on the
British Reform Process”; Jia Yimeng, “The Super Ministry Reform: Experience and Food for Thought
in Japan.”
22　For more information, see Zhou Zhiren and Ren Jun, “Institutional Reform Needs to Be Reformed:
Some Food for Thought in New Zealand’s Super Ministry Reform Practices.”
 Zhou Zhiren and Xu Yanqing 69

the Organic Law of the People’s Republic of China on the State Council enacted in the
1980s and still in effect. That is to say, the present laws have never presented an obstacle
to institutional reform and there is no basis for the important qualification that such reform
programs need to be reviewed and approved by the legislature. Some people may think such a
process indicates the authoritative nature of the reform, but such thinking exists in theory, not
reality. The zigzag nature of previous rounds of institutional reform actually put the legislature
in an awkward position: they were able to demolish the “temple” but not to rebuild it, thus
seriously discounting their authority.
Another important issue concerning the reform of modes of implementation is dilution
of the phased nature of reform. Targeting the problem of the five year cycle of institutional
reform being “short term, temporary, none too stable and not joined up,” some scholars
have suggested lengthening each round of reform to 10 years.23 We would recommend that
with the re-positioning of institutional establishment reform in each new period and the low
profile of modes of promotion, reform should follow the gradualist principles of “adaptation
to conditions, small-scale supplementation, and making adjustments as they become ready”
adopted by developed countries. It is not always necessary to adopt a dramatic short-term
concentrated thrust, and still less is it necessary for reform to become a compulsory subject
for every new government.
3. The goals of institutional reform and public responsibilities
Administrative system reform is not a goal in itself but a medium for building a service
government. Ordinary people are not able to give an accurate assessment of changes in the
number of institutions and their staff or their administrative efficiency, nor will they have
much interest in it. Their requirements are plain and simple: How much does the government
spend and what does it do? What is the cost to taxpayers and what level and quality of
services do they enjoy? Therefore, reform should aim at a “final product” (service level
and quality) instead of an “intermediate product” (the main structures and forms of service
supply). New Zealand’s super ministry reforms put special emphasis on the “result-oriented”
principle24; this should be the basic principle of our future institutional reform.
Another issue is the relationship between the goals and departmental responsibilities.
Here we take Britain’s Department for Business, Innovation and Skills as an example of the
practice of developed countries. The department calls itself the “Department for Economic
Growth,” and is responsible for policies in such areas as knowledge innovation, national
skills, enterprise development, trade and investment, market supervision, etc. In its operational
planning for 2012-2015, all five areas of responsibility set up “priorities.” These were
specified in terms of 15 concrete actions, each of which had 2-4 specific measures or items,

23　Zhu Guanglei and Li Liping, “A Review and Some Recommendations: 30 Years of Government
Institutional Reform.”
24　For more information, see Zhou Zhiren and Ren Jun, “Institutional Reform Needs to Be Reformed:
Some Food for Thought in New Zealand’s Super Ministry Reform Practices .”
70 Social Sciences in China

including starting and finishing time as well as “input” and “output” indicators of performance
evaluation.25 By contrast, we looked through the “three decide” stipulations of the Ministry
of Commerce, whose main responsibilities are “being in charge of, shouldering, drafting,
guiding, promoting, organizing, implementing and supervising,” with “guidance” appearing
most frequently.26 Our impression is that Britain not only sets up result-oriented targets for
the recipients of services, but also makes explicit the relationship between departmental
performance and realization of goals, whereas we seem to be stuck at the stage of realizing
“service” by striving to “guide, examine and approve, and supervise” social entities.
4. Overall design, planning and coordination of reform
Defects in planning and overall design are considered to be a common problem encountered
by the several rounds of institutional reform. Wang Changjiang believes that innovation
should replace overall reform and departments should think in terms of specific operations;
making reform departmental is bound to bring about fragmentation.27 The Report of the 18th
CPC National Congress proposed to promote major reform in a holistic way and the Third
Plenary Session of the 18th CPC Central Committee resolved to set up the Leading Group for
Deepening Reform Comprehensively. This provides a solid organizational guarantee for the
overall design, planning and coordination of reform. The question is which fields this work
should focus on.
The first focus should be the overall thinking and integral design of functional
transformation, institutional reform and staffing establishment. In fact, functional
transformation and institutional reform actually relate to the question on three levels: the
first is the question of the borders of “public power” (the Party and the government); the
second is the internal disposition of public power, including Party-government relations and
those among the different areas of the legislature, the administration and the judicature; and
the third is the institutional and staffing establishment within government administrative
departments. Functional transformation plays the leading role in institutional reform. In order
to do so, it should not be a simple matter of administrative streamlining and decentralization
with a public service tinge, but a fundamental review of the positioning of governmental roles
centering on the scope of government intervention and the limits to government power. In
China’s national conditions, the review should not be limited to government in the narrow
sense but should start from the relationship of public power on the one hand and the market,
the public and society on the other.
The second focus involves the relations between the Party and government agencies. The
leading role of the Party is the distinctive feature and basic principle of the Chinese political
and administrative system. For this reason, Party-government relations and a rational Party

25　Department for Business, Innovation and Skills (UK), Business Plan 2012-2015.
26　See the Ministry of Commerce 11th and 12th Five-Year Plans on the development of commerce,
trade in services, foreign trade, the pharmaceutical circulation industry, etc.
27　Wang Changjiang, “Preventing Reform from Fragmenting.”
 Zhou Zhiren and Xu Yanqing 71

and government institutional establishment are especially important. The Report of the 17th
National Congress proposes to “give overall consideration to the set-up of Party Committees,
government, and the People’s Congress and the CPPCC,” which it saw as an important part of
institutional reform. Since the 17th National Congress, no major coordinated reform measure,
guiding principle or operational instruction has been released by the top-level decision
makers. Although some local governments have tried to set up Party and government agencies
in a coordinated way, most innovations have ended up in a quandary due to the absence of
support from above and some chronic institutional obstructions.28 The Third Plenary Session
of the 18th CPC Central Committee reiterated the coordinated reform of Party and government
organizations and the rationalization of different departmental functional relationships. The
decision to set up the Leading Group for Deepening Reform Comprehensively provides a new
momentum for solving this problem; we should take this opportunity to act.
The third focus is on the overall design of government responsibilities and institutional
establishments at different levels. The reason this problem has gained prominence is
China’s unique phenomenon of “isomorphism of responsibilities.” This refers to the high
degree of conformity of governments at different levels in terms of the allocation of vertical
responsibilities and government institutional establishments, so that “top and bottom line up,
right and left match up.” Governments at all five levels have almost same responsibilities
and similar institutional establishments and are strung together by vertical lines of command,
forming a pattern of intersecting “stripes and squares.”29 In practice, this leads to a disconnect
in the powers and responsibilities of upper and lower levels of government. Power is always
concentrated in the upper level, responsibility in the lower level. The centralization of
institutional and staffing establishments in higher level functional departments results in
a shortage of front-line personnel and an inflated over-supply of auxiliary city inspectors,
auxiliary police, auxiliary tax officers, etc. One reason for this problem is the existence of
too many vertical lines with too many resources and too many powers. Although the central
government has explicitly prohibited institutional establishments from covering the same
work, the expansion of institutions in some local governments results from commands and
pressures from above. We regard isomorphic responsibilities as a deep-seated problem, whose
solution requires not only a systematic and scientific analysis and classification of government
responsibilities at different levels, but also consideration of reform of the transfer payment
system and the constraints on functional departments’ resources and powers. These problems
concern the core interests of the relevant bodies and are highly complex. However, it is clear
that if they are not addressed, we will have difficulty in really deepening institutional reform
and functional transformation.
Lastly, on the basis of our review, reflections and forecasts for the seven rounds of

28　Huang Dongya and Chen Chuanmin, “A Follow-up Survey of the Efficiency of Local Super
Ministry Reform: The Experience of Shunde District, Foshan City, Guangdong Province.”
29　For more information, please see Zhu Guanglei, “A Critique of ‘Duty Isomorphism.’”
72 Social Sciences in China

institutional reform over the past 30 years from the perspective of change management, we
can perhaps raise this idea: when the costs of high-profile, large-scale institutional reform
approach or even exceed its real returns, maybe the reform of institutional reform really needs
to be put on the agenda.

Note on Contributors

Dr. Zhou Zhiren is Professor of Peking University’s School of Government and Researcher at the Peking
University Institute of Political Development and Governance. His research focuses on administrative
management and governance. His representative works include: Politics and Administration in the
Modernization Process (现代化进程中的政治与行政, in Festschrift of the Department of Political
Science and Department of Public Administration, Peking University [北京大学政治学与行政管理系
纪念文集], Beijing: Peking University Press, 1998); “Eight Relationships Should be Properly Handled”
(机构改革应处理好八种关系, Administration Research Information [行政研究信息], Chinese Public
Administration Society, May 24,1998, no. 17); “Theory of Conflict Politics and a Realist Perspective on
Democracy” (冲突政治论与现实主义民主观, in Symposium on Politics and Administration [政治与行
政学论丛], Tianjin: Tianjin People’s Publishing House, 1999); The Public Paradox and its Theoretical
Interpretation (公共悖论及其理论阐释, CASS Journal of Political Science [政治学研究], 1999, no.
2); “The Competitive Mechanism in Britain’s Public Service” (英国公共服务中的竞争机制, Chinese
Public Administration [中国行政管理], 1999, no. 5); and “New Ideas on Governance” (政府治理新理
念, Guangming Daily [光明日报], March 18, 2002). E-mail: [email protected].

Xu Yanqing is Associate Professor with the School of Politics and Public Administration, Hainan
University. Her research fields include theory and practice of administration, management of government
performance and crisis management. E-mail: [email protected].

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—Translated by Chen Yang from

Zhongguo Shehui Kexue (中国社会科学), 2014, no. 7
Revised by Sally Borthwick
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