REVIEW ON LEGISLATION AND RELEVANT INSTITUTIONS OF PRIVATE PARTICIPATION IN PUBLIC SERVICES IN CHINA

Guan Bohao

TABLE OF CONTENTS

I. REVIEW ON LEGISLATION OF PRIVATE PARTICIPATION IN CHINA

A. Laws

B. Administrative Regulations

C. Department Rules

D. Local Decrees

E. Local Rules

II. APPLICABLE SCOPE OF PRIVATE PARTICIPATION IN CHINA

A. Municipal Public Facilities

B. Transportation Infrastructure

C. Social Undertaking

D. Environmental Protection

E. Source of Energy

F. Education

G. Medical Service

H. Culture

I. Assistance to Extremely Poor People

J. Pension Service

III. MONITORING MECHANISM OF PRIVATE PARTICIPATION IN CHINA

A. Review of Entity Qualification

B. Review of Legal Texts

C. Review of Obligations Performance

D. Review of Service Quality

E. Evaluation of Service Effects

Since the beginning of the 21st Century, the private economy has become an active force in China’s economic development and plays an increasingly important role in China’s economic development. At the same time, some public services started to try private participation in order to achieve the goals of improving administrative efficiency, reducing administrative costs, and protecting public interests. Under such a big background, complete laws, regulations and legal mechanism are the key to ensure the effective implementation of private participation. In recent years, China has formulated relevant laws, administrative regulations and rules on private participation at central and local levels, involving different levels and different fields, which provide directions and guidance for the promotion of private participation in public services as well as initially build a basic legal framework for private participation. In addition, related departments have established a specific supervision mechanism for private participation, covering every aspect of it. This is to eliminate any violations of laws and regulations in the process of bidding and agreements performance, and to strictly evaluate the quality of public services after private participation, so as to achieve the positive meaning of private participation.

I. REVIEW ON LEGISLATION OF PRIVATE PARTICIPATION IN CHINA

A. Laws

1. The Distribution of Laws on Private Participation in Public Service. — In China, laws related to private participation in public service are the Government Procurement Law, the Tendering and Bidding Law, and the Budget Law. The Government Procurement Law mainly regulates government procurement, as its name indicates. It makes detailed and accurate rules on entities, procedure, contracts and legal liability. In the implementation of private participation in public service, the Government Procurement Law is effective because some public services are funded by the government administrative system. In this situation, the Government Procurement Law must be applied. The Budget Law makes specific rules on division of revenue and expenditure, budget planning, review and approval, budget implementation, budget adjustment and budget supervision. In some situations, the government needs to purchase services, which is decided by financial resources of the government, and the rules made by the budget law on government financial resources and government budget expenditure are the prerequisites of private participation in public service. The Tendering and Bidding Law is the basic law on tendering and bidding. It contains rules regarding tendering, bidding, bid opening, bid evaluation and bid winning. In the private participation in public service, the government is responsible for selecting among different bidders. The Tendering and Bidding Law is good to adjust this relationship. The Government Procurement Law, the Budget Law, and the Tendering and Bidding Law have been enacted in China for a long time, and they already existed before the wide implementation of private participation in public service. However, because they are related to expenditure of government, they were able to be applied to the private participation in public service. It can be said that the three laws only play a subsidiary role in the private participation in public service, because they are not able to adjust each relation in the private participation in public service. Instead, they only have effects on individual parts in the private participation in public service.

2. Deficiency of Substantive Law and Complete Procedure Law. — Law takes the supremacy in the Chinese legal system. The initial source of Chinese law is the codes enacted by the National People’s Congress and the Standing Committee of the National People’s Congress. From a legal perspective, legislation on private participation in public service lacks substantive law and complete procedure law. At present, the Government Procurement Law, the Budget Law, and the Tendering and Bidding Law are procedural rules on private participation in public service. They are only applicable to individual parts but not the whole process, which do not have substantive rules on private participation in public service. Moreover, there are no substantive rules on private participation in public service at the legal level. The deficiency of substantive and procedural rules on private participation in public service in China is a serious problem, because it makes private participation in public service exist in the administrative law enforcement and local public administration. This is not consistent with the rule of law. In some situations, the volition and benefits of the administrative system cannot be compatible with the unification of the rule of law in the country. Similarly, local administration is not always compatible with national public administration sometimes. As is known to all, China has the concept of local protectionism, which means local governments take protective measures to protect local interests. Obviously, local protectionism is harmful to the unification of the rule of law. Under no circumstances could local interests be equal to the country’s overall interests. The private participation in public service is not only the issue of local administration, but also a revolution in national administration. Based on this, the issue of the deficiency of substantive and procedural rules on private participation in public service should be solved.

3. Implementation of the Principle of Legal Reservation. — Article 8 of the Legislation Law of China stipulates: ‘The following matters shall only be governed by laws: (i) Matters concerning state sovereignty. (ii) The formation, organization and functions and powers of the people’s congresses, the people’s governments, the people’s courts and the people’s procuratorates at all levels. (iii) The regional ethic autonomy system, the special administrative region system, the self-government system of people at the grassroots level. (iv) Criminal offences and penalties. (v) Compulsory measures and penalties involving deprivation of a citizen’s political rights or restriction of personal freedom. (vi) The establishment of any category of tax, determination of tax rates, tax collection administration, and other basic taxation rules. (vii) Expropriation and requisition of property not owned by the state. (viii) The basic system of civil matters. (ix) Basic economic rules and basic rules on treasury, customs, finance, and foreign trade. (x) Litigation and arbitration systems. (xi) Other matters which must be governed by laws developed by the National People’s Congress and its Standing Committee.’

Pursuant to this regulation, the eleven matters listed above can only be regulated and enacted by law; the administrative code and local legislation other than law cannot make any regulations on such items. This is called the principle of legal reservation in legal theory: ‘The principle of legal reservation requires that administration must be authorized by law to do administrative act. The principle of legal reservation is required to be the legal authority of doing administrative act, so it is also called law-based administration principle.’ Legal reservation affirms legislative authority, as well as assembles related legislative power properly. Currently, the issue principle of legal reservation in private participation in public service has not been deeply discussed. We notice that private participation in public service in developed countries with rule of law has very large depth and width. For example, some states in the US admit private participation in prisons. On the contrary, in China, private participation in prisons has obstacles in law; the principle of legal reservation explicitly confines the establishment of criminal system in the pale of law. For this reason, the principle of legal reservation exists in the private participation in public service, and there remains adequate room for research in China. For instance, matters related to finance, customs, banking, foreign trade and civil rights are not able to be privatized. Certainly, if China enacts law on the matters mentioned above, there will be no obstacles. Meanwhile, pursuant to the principle of legal reservation, the administrative system and local government cannot carry out private participation in public service in related fields. 

B. Administrative Regulations

1. The Most Superior Regulation Currently. — Administrative regulation is the administrative code enacted by the State Council. Scholars define it: ‘it is a kind of rule that is enacted by the highest administrative organ of the state (the State Council) pursuant to the Constitution and laws, whose legal status and legal force are only inferior to the Constitution and laws.’ It is the second level administrative regulation that is only inferior to law. As mentioned above, substantive law and procedure law on private participation in public service are deficient. At present, the highest administrative norm on private participation in public service is the administrative regulation. As we all know, the Legislation Law of China has clear rules on the legal level, which forms a pyramid structure with several levels, from laws to government rules. Administrative regulations have specific rules related to the private participation in public service. In 2015, the State Council formulated the Plan for Implementing the Reform Pilot of the Negative List System of Market Access, the Regulations on the Administration of the Confirmation and Recordation of Enterprise Investment Projects, and the Guiding Opinions on the Reform of the Paid Use System of All Natural Resources Assets of the Whole People. Some of them are substantial administrative regulations, some of them play the role of administrative regulations, or have equally important position with administrative regulations, and some of them are even higher than administrative regulations. These regulations clearly affirm the issue of private participation in public service. For now, the administrative regulation is the supreme level source of the administrative law, because other inferior rules need to make further rules pursuant to the spirit of these administrative regulations.

2. Existing in Three Spaces. — Article 65 of the Legislation Law of China states: ‘The State Council shall develop administrative regulations in accordance with the Constitution and laws. The following matters may be governed by administrative regulations: (i) Matters requiring the development of administrative regulations to implement the provisions of laws. (ii) Matters within the administrative functions and powers of the State Council as set out in article 89 of the Constitution.’ The regulation makes it clear that administrative regulations have three regulated spaces: the first is to implement matters regulated by the administrative law. As an organ of the National People’s Congress, the State Council undertakes the function of implementing the volition of the National People’s Congress by formulating administrative regulations. The second is to exercise administration matters. Article 89 of the Constitution delegates wide administrative functions to the State Council, such as ‘directing and administering economic affairs and urban and rural development’; ‘drawing up and implementing the plan for national economic and social development and the state budget’; ‘directing and administering the affairs of education, science, culture, public health, physical culture and family planning’; and ‘directing and administering the building of national defense’. A scholar has indicated that the functions of the State Council have 20 aspects. The matters mentioned above are the functions of the State Council, and the State Council has the power to enact administrative regulations within the scope of the functions. Third, the State Council is able to enact related rules in accordance with the authority of the National People’s Congress. This is equal to delegated legislation in some countries. There is no concept of delegated legislation in Chinese legal context, and there is only authorized legislation. If the National People’s Congress finds a matter needs to be adjusted, and the opportunity to enact law is not ripe, the State Council is then able to enact related administrative regulations.

What is the relation between the administrative regulations on private participation in public service and the three spaces above? The author holds that both administrative regulations on private participation in public service and guide opinions made by the State Council exist in the three spaces above. In other words, the State Council carries out some private participation in public service by implementing laws relating to government procurement, environment, and resources. Some are the inherent administrative functions of the State Council, like the State Council plays a role in municipal public service and private participation in public service in education. The National People’s Congress can delegate the State Council to enact related administrative regulations. In theory, the National People’s Congress is able to delegate the State Council to enact related rules on private participation in public services.

3. Related Examples. — Currently, the contents of administrative regulations and decrees formulated by the State Council on private participation in public service are very wide, such as the Regulation on the Implementation of the Government Procurement Law, the Regulation on the Implementation of the Bidding Law, the Guiding Opinions on Advancing the Construction of Sponge Cities, the Guiding Opinions on Promoting the Urban Underground Utility Tunnel Construction and the Circular on Guiding Opinions on Promoting the PPP Mode in the Public Service Fields. In this circular, the State Council emphasizes: ‘Promoting the PPP mode in the public services is an important reform measure to transform government functions, inspire market vitality and build new economic growth points. By focusing on the increase of supply of public products and services, the wide application of the PPP mode in public service fields of energy, transportation, water conservancy, environmental protection, agriculture, forestry, science and technology, low-cost housing projects, medical treatment, sanitation, elderly care, education, culture, etc. is of strategic significance for generally stabilizing growth, boosting reform, adjusting structure, benefiting livelihood and preventing risks.’

This opinion of the State Council is extremely important, and it explicitly indicates the direction of private participation in public service in China. As the superior administrative code, it provides adequate basis for the enactment of inferior law. 

C. Department Rules

1. A Majority of Agency Rules Are Jointly Formulated. — Agency rules are central government rules, which are enacted by functional agencies and direct agencies of the State Council. Functional agencies and direct agencies of the State Council play a very important role in the administration of the Central Government. They have divisions in function, but they have relatively strong administration authority in their own scopes of functions. Currently, administrative law norms on public service at central level are mainly agency rules. There is a phenomenon that these agency rules enacted by the single agency are relatively few, while a majority of them are jointly enacted by several agencies. For example, the Ministry of Finance and the Ministry of Housing and Urban-Rural Development formulated the Interim Measures for Performance Evaluation of Special Funds for Urban Pipeline Network Funds; the Ministry of Finance, the Ministry of Housing and Urban-Rural Development, and the Ministry of Water Resources issued the Notice on Launching Pilot Work of Central Finance Supporting the Construction of Sponge City in 2016; the Ministry of Finance and the Ministry of Transport jointly issued the Guiding Opinions on Promoting Government Procurement Services in the Field of Transportation; the Ministry of Finance, the Ministry of Land and Resources, the People’s Bank of China, and the China Banking Regulatory Commission jointly issued the Notice on Issues concerning the Regulation of Land Reserve and Capital Management; the Ministry of Finance and the Ministry of Water Resources jointly formulated the Measures for the Management of the Funds for Farmland Water Conservancy Facilities and the Conservation of Water and Soil; the Ministry of Finance and the Ministry of Transport jointly formulated the Implementation Opinions on the Promotion and Application of the PPP Mode in Toll-road Field; the Ministry of Finance and the Ministry of Environmental Protection jointly formulated the Implementation Opinions on Advancing the Cooperation between the Government and the Social Capital in the Field of Water Pollution Prevention and Treatment; the Ministry of Finance, the Ministry of Civil Affairs, and the State Administration for Industry and Commerce jointly issued the Interim Measures for the Administration of Government Purchase of Services; the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, and the National Development and Reform Commission jointly issued the Notice on the Bonus for the Construction of New Energy Vehicle Charging Facilities; the Ministry of Finance and the Ministry of Environmental Protection jointly issued the Interim Measures for Fund Performance Evaluation of River and Lake Ecological Environmental Protection Projects; the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Water Resources jointly issued the Opinions on the Implementation of Encouraging and Guiding the Participation of Social Capital in the Construction and Operation of Major Water Conservancy Projects; the People’s Bank of China, the Ministry of Civil Affairs, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission jointly issued the Guiding Opinions on the Financial Measures Supporting the Accelerated Development of the Elderly Care Service Industry. This demonstrates that agency rules on private participation in public service are still in the stage of exploration and trial. Several agencies jointly promulgating rules can make the enactment of rules more compact and improve the scale of implementation. Meanwhile, joint enactment also has some disadvantages because it is not helpful to make each functional agency or direct agency assume liabilities in pursuing the private participation in public service. The Central Government strongly emphasizes the function division of functional agency in China in recent institutional reform. The Decision of the CPC Central Committee on Deepening the Reform of the Party and State Institutions stipulates: ‘Transforming government functions is an important task to deepen the reform of the party and state institutions. Defects in systems and mechanisms restricting the market from playing a decisive role in allocating resources and the government from playing a more effective role shall be adamantly removed; centering on boosting quality development and building a modern economic system, the government functions of economic regulation, market regulation, public administration, public services, and ecological and environmental protection shall be heightened and improved, the functions of government institutions shall be adjusted and optimized, government efficiency shall be fully raised, and a service-oriented government to the satisfaction of the people shall be built.’

Situations like function duplication and overlapping are not allowed, and it is essential to break down the drawbacks of function ambiguity. Jointly enacting government rules on private participation in public service obeys the reform direction of function division. Thus, each function agency and direct agency should be independent and positive in enacting rules on private participation in public service.

2. The System Is Relatively Compact and Complete. — Government rules on PPP projects are relatively compact and complete in the legislative system, and most of them have standard texts. See the Interim Measures for the Financial Management of PPP Projects as an example. It is a government rule that specially regulates private participation in public services. The legislative technique of this rule is very fastidious, which completely meets the requirement of the rules on enacting procedure of regulations. It enacts specific articles with seven chapters: general provisions, project identification and argumentation, management of project government procurement, management of project financial budget, management of project assets and liabilities, supervision and administration, and supplementary provisions. The rules on each matter are strict; for example, the chapter on project government procurement has eight articles, and each article has very specified contents. Article 17 stipulates: ‘In a review of a contract on a PPP project, whether there is substantial change in the contents of the contract shall be examined by contrast to the project implementation plan, report on cost-effectiveness assessment, report on financial tolerance capacity argumentation, and procurement documents, and mainly examine whether the contract meets the following requirements: (i) The contract shall specify the rational allocation of project risks between the government and private capital party according to the risk allocation plan in the implementation plan and ensure the effective transfer of the risks to be assumed by the private capital party. (ii) The contract shall contain the agreement on the specific output standards and performance assessment indicators and specify the connection between the payment of a project and the performance assessment results. (iii) The contract shall comprehensively consider the scope of cost accounting and the cost variation factors during the full life circle of a project and set the project base cost. (iv) The contract shall rationally measure and determine the subsidies or the collection and pricing basis for the project in light of the basic standard costs of the project and the financial internal rate of return of the capital fund of the project, with reference to the final accounting of the project. The operational risks other than the income basis of the project shall be assumed by the project company. (v) The contract shall contain rational agreement on the adjustment period, conditions, and procedures for the subsidies or collection and pricing of the project, as the basis for the implementation of subsidies or collection and pricing adjustment by the competent industry department and the public finance department during the cooperation period of the project.’

This provision provides the examination of contracts for private participation in public services, which emphasizes basic auditing principles, such as value for money, and auditing procedure. Generally speaking, department rules emphasize on the precision of system in the legislation strategy of private participation in public services.

3. Selectivity in Rule Making. — In the legislation process of China, people usually use two approaches to summarize different directions of legislation process. One is the approach of unified legislation. The so-called unified approach is to enact a unified norm in related fields or legislative entity. This unified norm of conduct adjusts the relatively comprehensive administrative matters, and makes the adjusted and regulated contents unified and concentrated through unified legislation. It is able to save the costs of legislation as well as avoid omissions in regulatory matters. The other is the approach of decentralized legislation. The so-called decentralized legislation is to make different rules on existing problems or even making rules selectively. The legislation on administrative procedure in China is decentralized legislation. China has not enacted unified administrative procedure law, but enacted procedure law on regulating individual administrative acts. Obviously, the department rules on private participation in public services are not unified legislation, but decentralized legislation. Even though several agencies legislate jointly, the legislation is often selective. Up till now, there is no administrative code on systematically regulating private participation in public services at the level of department rules. All of the existing department rules are made on related specific problems or individual fields. It is no doubt that selective legislation increases the costs of legislation as well as leads to the omissions of related regulatory matters. For example, the matters regulated in the Guiding Opinions on Accelerating the Construction of Small Towns with Beautiful Characteristics formulated by the National Development and Reform Commission are rather narrow, whose adjust scope is rather specific. In fact, it is possible to enact unified department rules on private participation in public services to absorb this narrow matter. 

D. Local Decrees

1. Relatively Small Quantities. — Local decrees are administrative norms formulated by the people’s congress at or above the municipal level, whose regulatory matters are clearly stipulated in article 73 of the Legislation Law of China. It mainly regulates matters in two aspects. First, the matters to be regulated in the execution of laws and administrative regulations, which may be specified in accordance with the actual situation of the administrative region in the execution of laws and administrative regulations. Second, local administration matters. Moreover, such matters only exist in this administrative region, which are specific matters in this administrative region. Because local decrees exist in local areas, the Legislation Law of China requires that local decrees cannot make duplicate rules on matters stipulated by superior laws. Scholars have not made a thorough study on how much regulation space the private participation in public services leaves for local decrees. Current local legislation shows that the number of local decrees on private participation in public services is very small, which does not add up to 20 all over the country. The reason for this legislation situation is that privation of public services is only an attempt of administrative legislation. Because the government of local prefecture-level cities has the power to make local rules, the legislative power to privatize public services as an attempt may be more secure in the government administration system. There is a logic relation between local rules and local decrees, which is that relatively immature matters are regulated by local rules while relatively mature matters are regulated by local decrees. This is able to provide reasonable explanation for small quantities of local decrees on private participation in public services.

2. Relatively Large Regulatory Efforts. — Although the number of local decrees on private participation in public services is relatively small, each local decree on private participation in public services has made relatively large regulatory efforts. Currently, each region adopts the way of giving concession to relevant entities to set up the contents of local decrees. For instance, the Decree on the Franchise Management of Municipal Public Utilities in Qinghai Province, the Decree on the Franchise Management of Municipal Public Utilities in Hu’nan Province, the Decree on the Franchise Management of Municipal Public Utilities in Shanxi Province, the Decree on the Franchise Management of Urban Operation in Beijing and the Decree on the Franchise Management of Municipal Public Utilities in Xinjiang Uygur Autonomous Region. We are able to find the regulatory efforts from the names of law because these decrees are tightly connected to the concession of private entities. Set the Decree on the Franchise Management of Municipal Public Utilities in Shanxi Province as an example, it has 6 chapters and 40 articles in total, which has strict and specific contents on franchise permit, rights and obligations of franchisee, supervision and management and legal liability. As a local decree, its legal text is far more than that of the local rule. It uses strict legal words to describe related contents, and legal words are especially typical in the third chapter on rights and obligations of franchisees. The regulations on legal liability are even stricter. Article 37 stipulates: ‘One of the following situations shall be ordered by the competent department of municipal public utilities to make corrections within a specified time limit; if there are illegal gains, the illegal gains shall be confiscated and a fine of more than 1 time but less than 3 times the illegal gains shall be imposed; if there is no illegal gain, a fine of more than 100 thousand yuan but less than 300 thousand yuan shall be imposed; if losses are caused, compensation for losses shall be made according to law; if a crime is constituted, criminal liability shall be investigated according to law: (i) engaging in franchising without obtaining franchise; (ii) transferring or transferring the franchise right in disguised form or setting up a guarantee with the franchise right; (iii) transferring, leasing or mortgaging facilities and equipment for franchising; (iv) engaging in franchising activities beyond the scope of the franchise contract; (v) failing to construct municipal public utilities in accordance with urban planning and refusing to make corrections within a time limit ordered by the competent municipal public utilities department; (vi) municipal utilities, equipment, drawings, maintenance, renovation records and user files not handed over in accordance with the contract at the end of the business period.’ Among them, the establishment of fines has great strength, and this cannot exist in local rules because the power to impose fines in local rules is limited.

3. Local Decrees Should Be the Trend of Legislation on Private Participation in Public Services. — Private participation in public services is not an unimportant issue in administrative rule of law, but an issue related to the mode of administrative rule of law and the transformation of social governance mode. This issue should be treated strictly even if it is approached at local level, and it should reflect the spirit of rule of law. There is no doubt that the legislation procedure of local rules is far briefer than that of local decrees. The enactment of local decrees is approached by the local people’s congress, which needs a bunch of legislation procedures including hearing and expert demonstration. Such strict legislation procedure guarantees the strictness of local decrees in terms of technology and norms. In current situation, a large number of regulations on private participation in public services are in the form of local legislation. This leads to a selection, making local rules or making local decrees? To be sure, it is a better choice to regulate private participation in public services through local decrees when there is a mature opportunity.

E. Local Rules

1. Mainstream of Local Legislation on Private Participation in Public Services. — Different from local decrees on private participation in public services, the number of local rules is very large. It can even be said that current legislation on private participation in public services is mainly local rule. The main reason why local rules play an important role in regulating private participation in public services is that local rules are pretty specific and flexible in terms of regulatory matters. Article 82 of the Legislation Law of China states: ‘the people’s government of a province, an autonomous region, a municipality directly under the Central Government, a districted city, or an autonomous prefecture may develop rules in accordance with laws, administrative regulations, and the local regulations of the province, autonomous region, or municipality. The following matters may be governed by the rules of local governments: (i) Matters requiring the development of rules in order to implement the provisions of laws, administrative regulations, and local regulations. (ii) Specific administrative matters of the administrative region. The rules of a local government as developed by the people’s government of a districted city or an autonomous prefecture in accordance with the provisions of paragraphs 1 and 2 of this article shall be limited to the matters on urban and rural development and administration, environmental protection, and historical culture protection, among others. The existing rules of local governments that fall outside the aforesaid scope of matters shall remain effective. Except for a city where the people’s government of a province or autonomous region is located, a city where a special economic zone is located, and a relatively large city as approved by the State Council, the time for the people’s government of a districted city or an autonomous prefecture to begin developing rules shall be the same as the time determined by the standing committee of the people’s congress of the province or autonomous region for the city or autonomous prefecture to begin developing local regulations. Where a local regulation shall be developed but the conditions for developing the regulation are immature, the local government may first develop rules to satisfy the urgent need for administrative management. Where the rules have been implemented for two years, and it is necessary to continue implementing the administrative measures prescribed in the rules, a request for developing a local regulation shall be submitted to the people’s congress or its standing committee at the same level. Without any basis in laws, administrative regulations, or local regulations, no rules of a local government may set out any requirements that impair the rights or increase the obligations of citizens, legal persons, and other organizations.’

This article essentially divides rules of local government into two types. First, the rules made by local people’s governments above larger cities. They are able to make rules on implementing matters of superior laws, and make rules on specific administration matters in the administrative region. Second, rules made by some cities at prefecture level. Regulatory matters of these rules are limited to some extent, which include matters such as urban and rural construction and management, environmental protection, history and culture protection. The rulemaking procedures of these two types of rules of local government are relatively brief, which can be passed by the government executive meeting. There is no need for strict legislation procedure like local decrees. At the same time, rules of local government are directly connected to the administration power of local government. In other words, local governments can make related local rules according to the administration power of local government. Specificity, simplicity of procedure and pertinence of norms make local rules have great advantages in regulating private participation in public services. This is the basic reason for its mainstream position in legislation.

2. Wide Range of Adjustment. — Local rules have very wide adjustment range in private participation in public services. In 2015, the People’s Government of Inner Mongolia Autonomous Region formulated the Opinions of the People’s Government of Inner Mongolia Autonomous Region on Promoting the Implementation of Government-Social Capital Cooperation in Public Service, which makes very detailed rules on the cooperation between government and social capital in the field of public services. It includes the mode, guiding ideology, principles, developing goals, project promotion field, project implementation basis, project promotion methods, project supervision measures, financial policy support, and organizational guarantee of government-social capital cooperation and so on. For instance, the requirements of project promotion methods have such a provision: ‘the autonomous region should establish a pool of government and social capital cooperative projects, actively strive for central investment, strengthen cooperation with social capital, and attract financial institutions to invest and finance. Regularly recommend projects to relevant state ministries and commissions, social capital and financial institutions, and screen and implement demonstration projects in autonomous regions. Project management applies rolling reporting and regular promotion. Reserve projects mainly contain new projects with complete procedures for examination and approval, government-built and self-managed stock projects, and enterprises with strong public welfare. Introduction projects are mainly based on stock and convertible bonds. Stock projects are transformed through operating modes like Transfer-Operate-Transfer, Reconstruct-Operate-Transfer, etc., new construction projects are operated in modes like Build-Operate-Transfer, Build-Own-Operate, etc.’ This is a code that is equivalent to the local government rule and regulates private participation in public services. In a single administrative law, norms have such detailed provisions, and it can be seen that its range of adjustment is very wide. It should also be pointed out that local government rules or the implementation plans equivalent to government rules made by a large number of local governments on private participation in public services are comprehensive and suitable for all areas of private participation in public services. For example, Panzhihua City has made the Promotion Plans for the Pilot Work of Panzhihua Municipal Government and Social Capital Cooperation (PPP), which is very complete. It is not only applicable to urban public administration and municipal facilities management, but also to all areas related to government and social capital cooperation. At present, local government rules in various localities have basically adopted this model in legislative technology.

3. Specific Contents. — Private participation in public services is a specific issue in administrative management, which involves many details and specific contents, and even a lot of things on the operational level. The contents of government rules made by some local governments are especially specific, and have strong operability. The Interim Measures of Zhejiang Province for the Promotion of the Comprehensive Awards and Funds for the Promotion of Government and Social Capital Cooperation Modes has made relevant provisions on the issue of subsidies for funds in government and social capital cooperation, and there are provisions regarding specific quantities of subsidies. For instance, article 2 stipulates: ‘The comprehensive award fund is designed to support the construction of PPP demonstration cities and counties in our province, promote the signing and construction of PPP projects, and guarantee the quality of PPP project implementation. (i) For the PPP demonstration cities and counties determined by the provincial department of finance, the provincial finance shall award 5 million yuan to encourage the demonstration cities and counties to try first and give play to the demonstration effect. (ii) For the projects listed in the provincial recommendation project bank, if the contract is signed, the provincial finance shall give a comprehensive award for not exceeding 0.5 percent of the total investment amount of the project, and the highest award shall be 5 million yuan. If the project is contracted and started construction, the provincial finance will give an award of no more than 0.1 percent of the total investment of the project. The highest award shall be 1 million yuan.’ 

The Measures of Benxi Municipality for the Administration of Municipal Public Utility Franchise provides the concept of the franchise operation of Benxi City, the authorization of the franchise, the supervision of the franchise price, and the scope of application of the franchise, whose text is also very standardized. Article 37 stipulates: ‘The maintenance of municipal public facilities shall comply with related laws and regulations on roads, greening, sanitation, and property management; station setting and pipeline renovation shall be subject to the overall arrangement of the city planning department. When emergency repairs are required, the franchise enterprise may first implement the repair work, inform the relevant departments at the same time, and re-approach the relevant procedures within 3 days to restore the repair site and related facilities in time.’

4. Local Contents Are Similar. — Local government rules involve local administrative matters, and each local legislation should reflect local characteristics. In other words, local government rules in one place should not be homogenized with similar government rules in another place. However, currently the legislation of local government rules on private participation in public services has a strongly obvious homogenization tendency, government rules on private participation in public services in one place are completely applicable to another place, and they are usually very similar in texts. Take the Measures of Tieling Municipality for the Administration of Municipal Pubic Utility Franchise and the Measures of Benxi Municipality for the Administration of Public Utility Franchise as an example, some provisions are completely the same in contents such as the provisions on the relevant liabilities of the franchise authorities. The situation of such similar legislation is not individual, but a general phenomenon nowadays. There are objective reasons for this, because China is a unitary country, and it emphasizes the relevance of institutions. For instance, if the Central Government sets up administrative agencies, local governments will set up corresponding administrative agencies, but the powers of the Central Government and local governments are not clearly defined in some places. Because the locals are subject only to the Central Government, this makes them lose their individualized characteristics in terms of legislation choice, administration content choice, administration methods choice, etc. Subjectively speaking, local governments have not made legal norms on private participation in public services fully based on the characteristics of their own administrative regions. It should be said that the legislative similarity of local government rules in this aspect is essentially a waste of legislative resources as well as a problem that needs to be thought at all levels in China. 

II. APPLICABLE SCOPE OFPRIVATE PARTICIPATION IN CHINA

How to select the scope of private participation in public services is directly related to the rule of law tradition and governance mechanisms in each country. The rule of law in developed countries has gone so far in this regard, and some countries have even implemented private participation in prison management. Some scholars pointed out: ‘Prisons are another area where there has been a diversity of approaches to the issue of what is considered to be within the capacity of the private sector to provide and what is the role of the public sector. In the UK, the model is more inclusive than has been the case for UK public hospitals and is more integrated than in some other countries in that the full range of prison and correctional services is left to the private sector entity to provide, including the management of prisons and their staffing.’ This is the situation in Britain, and there are similar situations in other countries: ‘Private providers have also been able to compete in most countries in the field of education for a number of years. What is happening is that some services that were thought to be the peculiar concerns of government, e.g., managing prisons or providing personal social services, are now considered appropriate targets for private-sector providers.’ The scope of private participation in public services in the UK and the US and other countries has become very broad. In comparison, the scope of private participation in public services in China is not so broad. China regards quite a few issues as national matters and believes that these matters involve traditional and non-traditional security. In order to safeguard the security of the country, the relevant areas dominated by public power cannot be easily operated by private entities, which are related to the traditional planned economy in China and the economy that emphasizes administrative high power and the tradition of rule of law. In addition, private participation in public services in China is still in the trial stage, and many areas with private participation are still only in experimental areas, which make the scope of private participation in public services in China not comparable to that of the US. The fields of private participation in public services mainly reflect in the following aspects.

A. Municipal Public Facilities

Municipal utilities refer to infrastructure and areas related to urban public services. The Notice on the Application for PPP Municipal Projects in the Municipal Public Sector made by the Ministry of Finance and the Ministry of Housing and Urban-Rural Development defines municipal public facilities as following aspects. First, urban water supply, which includes drinking water and other domestic water in the city. Second, urban sewage treatment and garbage disposal, which is related to the disposal of sewage and domestic garbage. Third, urban heating and gas supply. Heating and gas supply should be two different contents. Heating is related to urban heating while gas supply is related to fuel supply in urban residents’ lives. Fourth, urban roads and bridges. Fifth, urban public transportation infrastructures. Sixth, urban public parking. In recent years, the increases of private cars in China are so rapid that urban parking has become a difficult problem. It is reasonable to implement private participation in urban parking. Seventh, urban underground integrated pipe gallery. Eighth, the construction of sponge cities. Ninth, other fields of municipal public facilities. These are relevant areas of municipal public facilities defined by the central level, and there are also regulations on municipal public facilities in local legislation. For example, article 3 of the Measures of Hebei Province for the Administration on the Franchise of Municipal Public Utilities stipulates: ‘The scope of franchising in municipal public utilities includes: urban water supply, gas supply, central heating, sewage treatment, garbage disposal, public passenger transportation, and other industries directly related to public interest and the allocation of limited public resources. Franchising includes enterprises that have already engaged in the business activities of these industries, newly established enterprises, projects in construction and new projects.’ 

B. Transportation Infrastructure

Transportation infrastructure refers to traffic management and service matters related to public transportation. The Guiding Opinions on Promoting Government Purchasing Services in the Field of Transportation formulated by the Ministry of Transport provides detailed provisions on private participation matters of this scope. First, road service matters, ‘Including the construction and maintenance of rural road, operation and management of government toll repayment (debt) highway service area, regular inspection of highway, bridge and tunnel, the highway information services and other services.’ Second, waterway service matters, ‘Including public channel maintenance dredging, obstacle clearing and riverbed cleaning, remediation of building maintenance, maintenance and repair of navigation equipment (except navigation mark), inspection and maintenance of port public infrastructure, waterway information service and other services.’ Third, transportation service matters, ‘Including the operation management of road passenger terminal station, rural passenger ferry crossing service, operation management of urban passenger station hub, urban public transportation service, rural road passenger transportation service, operation management of taxi comprehensive service area, passenger transportation information service, cargo logistics public information service, information service and operation management of transportation service supervision telephone system, and other service matters.’ Fourth, affairs management matters, ‘Including road and waterway field surveys and statistical analysis, standard normative research, strategy and policy research, planning, project research, post-assessment of policy standards, post-assessment of major road construction projects, legal services, professional technical support in supervision and inspection, performance technical and auxiliary services such as evaluation, information construction and maintenance, business training, technical consultation and evaluation (review), major transportation policy publicity and public opinion monitoring, agency logistics services, and foreign affairs comprehensive services.’

C. Social Undertaking

Social undertaking is a general concept that includes theme parks, tourism-related projects and other social undertaking projects. The Catalog of Investment Projects Subject to Government Confirmation stipulates social undertaking as follows: ‘(i) Theme parks: especially large projects, shall be subject to confirmation by the State Council, and other projects shall be subject to confirmation by the provincial-level governments. (ii) Tourism: the tourism development and resource protection projects with a total investment of 50 million yuan or more within the national scenic areas, national nature reserves, or national key cultural relic protection sites, and the projects with a total investment of 30 million yuan or more within the world’s natural and cultural heritage protection areas shall be subject to confirmation by the provincial-level governments. (iii) Other social undertaking projects: the industry administrative department of the State Council and local governments shall determine at their discretion to subject the projects to confirmation or recordation according to the relationship of administrative subordination.’

D. Environmental Protection

Environmental protection covers a wide range of topics, including environmental protection of the air, natural resources, ecological resources, water resources, etc. In theory, all areas of environmental protection can be privatized, and they can all be governed by government and social capital cooperation. However, China only implements government and social capital cooperation in certain areas of environmental protection. For example, there are special regulations in the field of water pollution prevention and control. Article 5 of the Measures for the Administration of Special Funds for the Prevention and Treatment of Water Pollution formulated by the Ministry of Finance in 2015 stipulates: ‘The key areas of special fund support include: (i) water pollution prevention and control in key river basins; (ii) ecological environment protection of rivers and lakes with better water quality; (iii) environmental protection of drinking water sources; (iv) groundwater environmental protection and pollution restoration; (v) urban black and odor water remediation; (vi) cross-border and inter-provincial river water environmental protection and treatment; (vii) pilot project for comprehensive improvement of national land and rivers; (viii) other related matters that need support.’ It enumerates the prevention and control of water pollution, and the contents involved are relatively comprehensive. It is feasible to implement private participation in these areas. In some places, the private participation is applied to urban sewage treatment and garbage disposal. Sewage treatment and garbage disposal are considered as urban public facilities, but they are also environmental issues. It is reasonable to involve them in the scope of environmental protection. 

E. Source of Energy

There are specific provisions on energy projects in the Catalog of Investment Projects Subject to Government Confirmation, which include the following aspects. First, hydropower stations, ‘the projects constructed on transboundary rivers or rivers crossing two or more provinces (autonomous regions or municipalities directly under the Central Government), with a total installed capacity of 500,000 Kw or more in a single station, shall be subject to confirmation by the investment administrative department of the State Council, among which the projects with a total installed capacity of three million Kw or more in a single station or involving 10,000 migrants or more shall be subject to confirmation by the State Council. The remaining projects shall be subject to confirmation by the local governments.’ Second, pumped storage power stations, ‘shall be subject to confirmation by the provincial-level governments according to the relevant planning made by the state.’ Third, thermal power stations, ‘shall be subject to confirmation by the provincial-level governments, among which coal/gas-fired thermal power projects shall be subject to confirmation based on the construction plan prepared by the state under total quantity control.’ Fourth, steam power stations, ‘shall be subject to confirmation by the local governments, among which extraction condensing coal-fired thermal power projects shall be subject to confirmation by the provincial-level governments based on the construction plan prepared by the state under total quantity control.’ Fifth, wind power plants, ‘shall be subject to confirmation by the local governments based on the construction plan prepared by the state under total quantity control and instructed scale in annual development.’ Sixth, nuclear power plants, ‘shall be subject to confirmation by the State Council.’ Seventh, power grid projects, ‘the direct current projects with a voltage of ±500 KV or more involving power transmission crossing the border or covering two or more provinces (autonomous regions or municipalities directly under the Central Government), and the alternating current projects with a voltage of 500 KV, 750 KV or 1,000 KV involving power transmission crossing the border or covering two or more provinces (autonomous regions or municipalities directly under the Central Government) shall be subject to confirmation by the investment administrative department of the State Council, among which the direct current projects with a voltage of ±800 KV or more, and the alternating current projects with a voltage of 1,000 KV shall be reported to the State Council for recordation; the direct current projects with a voltage of ±500 KV or more not involving power transmission crossing the border or covering two or more provinces (autonomous regions or municipalities directly under the Central Government), and the alternating current projects with a voltage of 500 KV, 750 KV or 1,000 KV not involving power transmission crossing the border or covering two or more provinces (autonomous regions or municipalities directly under the Central Government) shall be subject to confirmation by the provincial-level governments according to the relevant planning developed by the State; and the remaining projects shall be subject to confirmation by the local governments according to the relevant planning developed by the state.’ Eighth, coal mines, ‘the coal development projects with newly increased annual production capacity of 1.2 million tons or more within the mining areas under state planning shall be subject to confirmation by the industry administrative department of the State Council, among which the projects with newly increased annual production capacity of five million tons or more shall be subject to confirmation by the investment administrative department of the State Council and reported to the State Council for recordation; and other coal development projects within the mining areas under state planning and general coal development projects shall be subject to confirmation by the provincial-level governments. A project of which the construction is prohibited by the state or which is included in the elimination and exit scope shall not be confirmed.’ Ninth, coal-based fuels, ‘the coal-based natural gas projects with an annual output of more than 2 billion cubic meters and the coal-to-liquids project with an annual output of more than 1 million tons shall be subject to confirmation by the investment administrative department of the State Council.’

F. Education

Government and social capital cooperation in education is also a way to expand educational resources. Since education itself is an obligation that government should fulfill, the issue of private participation in the field of education should be cautious. At present, China adopts the way to encourage social forces to develop education. The State Council promulgated the Several Opinions on Encouraging Social Forces to Establish Education in 2016. This is the beginning of private participation in the field of education, among which there is such a provision: ‘Social forces are involved in education. As long as they are not in the areas that are prohibited by laws and regulations and not harmful to the interests of third parties, social public interests, and national security, government shall not restrict. The government sets a negative list of access, listing prohibited and restricted school acts. All localities should reorganize the approval requirements and procedures for private schools, further simplify administration as well as decentralize power, and attract more social resources into the field of education.’

G. Medical Service

In 2015, the State Council promulgated the Several Policy Measures to Promote the Accelerated Development of Social Medical Treatment; this essentially recognizes the issue of cooperation between government and social capital in the medical field. It creates a good rule of law environment for the development of private hospitals or medical cooperation. In some respects, public hospitals are required to strengthen cooperation with private hospitals. Moreover, it provides a large number of concessions for private hospitals such as ‘involving eligible social medical institutions in the scope of medical insurance, and implementing the same policies as public medical institutions. The medical institution’s ownership nature shall not be used as a precondition for the medical insurance fixed point. It shall not refuse to include the social medical institution in the medical insurance fixed point for the reason of non-medical service capacity factors that the number of medical insurance designated institutions is full. Standardize all kinds of medical bills. Non-profit medical institutions use uniform medical bills, and for-profit medical institutions use invoices that meet requirements, both of which can be used as medical insurance fund payment vouchers. It shall refine the charges for different medical institutions and the use of bills and the settlement of medical insurance funds.’

H. Culture

The implementation of private participation in the cultural field is also an important area for the private participation in public services. In 2015, the State Council approved the Opinions on Effectively Implementing Government Purchase of Public Cultural Service from Social Forces issued by the Ministry of Culture and the Ministry of Finance. In this document, there is an annex listing the scope of public culture that government can purchase. It includes the creation and dissemination of public welfare cultural and sports products, the organizing and hosting of public welfare cultural and sports products, the protection, inheritance and display of Chinese excellent traditional culture and national folk traditional sports, the operation and management of public cultural sports facilities, etc. It stipulates free or low-cost services provided by private cultural and sports institutions, including: ‘(i) free or low-cost services to society provided by private libraries, art museums, museums, etc.; (ii) free or low-cost performances to society provided by private performing institutions; (iii) free or low-cost internet access to society provided by internet access services; (iv) free or low-cost services to society provided by private rural (community) cultural service centers (including bookstores); (v) free or low-cost services to society provided by private stadium facilities and private fitness institutions; (vi) free or low-cost services to society provided by other private cultural and sports institutions.’

I. Assistance to Extremely Poor People

Guaranteeing the basic life of extremely poor people in urban and rural areas is an important administrative function undertaken by Chinese government. After the founding of People’s Republic of China, the Chinese government implemented a providing five guarantees system in rural areas, and implemented a guarantee for people without identification papers, normal residence permits and income sources system in urban areas. In 2014, the State Council promulgated the Interim Measures for Social Assistance, which stipulates on public assistance provided for extremely poor people. For a long time, the assistance to the destitute personnel was borne by the government, and in 2016, the State Council issued the Opinions on Further Improving the Relief and Support System for the Poverty-Stricken Persons, which suggests that social funds and resources can be absorbed to provide relief funds for the poverty-stricken persons: ‘Encouraging social organizations such as mass organizations, public charities, social work service organizations, enterprises and institutions, volunteers and other social forces to participate in the assistance and support work for the poverty-stricken persons. Encouraging the use of government and social capital cooperation (PPP) model, adopting models such as public construction with private operation and private running with public assistance to support the construction of support service institutions. Strengthening the support for government procurement services and projects, implementing various financial subsidies, tax incentives and fee reductions and exemptions and other policies, guiding and encouraging charitable organizations, social work service organizations, and social security organizations such as pensions and medical services funded by social forces to provide professional and personalized services for poverty-stricken persons.’

J. Pension Service

Chinese government believes that China has gradually entered an aging society, and services for the elderly have become an issue that the government must attach great importance to. In the field of elderly services, government and social capital cooperation is also a developing trend. In 2013, the State Council issued the Opinions on Accelerating the Development of the Aged Care Service Industry, which emphasizes the main role of government in pension services as well as emphasizes attracting social resources to organize pension institutions: ‘Supporting social forces to organize pension institutions. All localities shall comprehensively consider all kinds of pension institutions according to the requirements of urban and rural planning and layout. In terms of capital, venues, personnel, etc., further reducing the thresholds for social forces to organize pension institutions, simplifying procedures, standardizing procedures, and disclosing information. Administrative licensing and registration authorities must verify the scope of their operations and activities, and provide convenient services for social forces to organize pension institutions. Encouraging foreign capital to invest in the aged care service industry. Encouraging individuals to organize family-based, miniaturized pension institutions, and social forces to organize large-scale, chain-based pension institutions. Encouraging private capital to integrate and transform corporate buildings, commercial facilities and other available social resources for pension services.’ In some places in China, there are also many measures to attract social funds in the field of pension services. For example, the People’s Government of Guizhou Province issued the Opinions on the Implementation of the Guizhou Provincial People’s Government on Accelerating the Development of the Aged Care Service Industry in 2014, which also has provisions on attracting private parties to intervene in pension services: ‘Supporting government and social forces to strive for special credit policy supports and comprehensive financial services of the pension service industry of the National Development Bank, set up various types of pension institutions and community day care places, and enhance the level of social pension service facilities. Financial institutions shall accelerate the innovation of financial products and service methods, and actively support the credit demand of the pension service industry by innovating credit types, increasing credit input, and expanding the scope of mortgage guarantees.’

III. MONITORING MECHANISM OF PRIVATE PARTICIPATION IN CHINA

How to deal with the relation in advance, interim, and ex post in the practice of Chinese rule of law has always been a hot issue of concern. The reason why this issue has aroused widespread concern in the academic field and practical departments is mainly because the relations among the three have not been dealt with for a long time. As far as an administrative law enforcement or administrative process is concerned, the relations in advance, interim and ex post of the matter are three organically connected links. It is a whole and cannot be separated. However, in the practice of Chinese administrative rule of law, some administrative entities mainly focus on the relation in the process, which emphasizes the exercise of administrative power and the intervention of administrative counterparts in the administrative process. Other administrative entities or the vast majority of administrative entities focus on the prior stage. We know that administrative examination and approval in China is the administrative way that administrative entities are most willing to apply. The so-called administrative examination and approval is that the administrative entity has set a number of prohibitions beforehand. If administrative counterparts need to acquire certain rights or qualifications in a certain aspect, they must obtain permissions from the administrative entity. Obviously, for the administrative entity, this is the most simple and labor-saving management way, which results in the generalization and even abuse of administrative permission in China. In the specific practice of rule of law, a large number of administrative entities simplify other management procedures by granting permissions to parties. That is to say, after the delegation of rights, administrative entities would no longer emphasize other follow-up tracking managements. Moreover, the afterwards management in Chinese administrative rule of law is seriously ignored, even some follow-up managements are only concentrated in the case of illegal or serious violations of law by the parties. In administrative law enforcement, the administrative entity is willing to apply the means of administrative penalty in addition to the means of administrative examination and approval. Administrative penalty is superficially an afterwards act, but a lot of illegal acts of the parties may still be in the process. Since the administrative penalty is a simple sanction that does not fundamentally solve the problems of the attraction or motivation of the party’s illegal acts, administrative penalty still cannot be fully considered as a follow-up monitoring. For this reason, we notice that many places have strengthened the follow-up supervision function of the administrative system in the implementation of PPP projects that is the monitoring function, which is the good news for the administrative rule of law in China.

Actually, in the administrative monitoring of private participation in public services, the administrative entity has a huge monitoring space and a huge power to monitoring. We can generalize the forms of monitoring into the following aspects: First, organizing the development of public goods and service quality standards. The quality of public goods and services is a key issue after the implementation of private participation. What kinds of standards private parties provide public services according to and what kinds of standards private parties provide public goods pursuant to are the issues to be first resolved. Administrative entities can make relevant quality standards. This monitoring can be counted as pre-monitoring, in-process monitoring or afterwards monitoring. Certainly, its operation is prior to the matter. Second, supervising the operators to perform the contracts and agreement obligations. The process of private participation has administrative contracts or relevant agreements, which include some obligations on private parties. There is no doubt that these obligations and rights complement with each other. Administrative entities have the power to supervise or monitor the situation of obligation performance in the agreements or contracts. Third, accepting the complaints to the operator by the public. The operator as a private party has the status of a public authority at the moment of providing public services. Because what the operator provides are public services, and if the public service does not meet the quality, clients or the relevant interested parties may have complaints. Once there is a complaint, the administrative system shall deal with it. Fourth, investigating and punishing the illegal acts of the operators according to law. Private parties are not the objects of the administrative management, which are not the same as the identifications of administrative counterparts in common sense, but as social individuals or the opposite parties with administrative entities, private parties may conduct illegal acts in operation. And the administrative system has the power to investigate and punish the illegal acts of operators (private parties). Fifth, providing relevant opinions or suggestions to the operators. The contracting of public services by the administrative system does not mean the end of the acts of the administrative system. It should also focus on the situation of the operation of private parties. If the administrative system finds that the operation has flaws, it can provide opinions and suggestions. Sixth, assisting the competent department of price in formulating the price plan. Some public products and services are chargeable. For example, in the management of tourist areas and scenic spots, operators can collect fees from the tourists according to certain standards, which involve the issue of price determination. The contract-issuing party should work with the department of price determination to determine the price plan. Seventh, reviewing the annual reports or other reports of operators. Operators or private parties should report the public services provided by themselves to the contractor on a regular or irregular basis. The administrative entity as the contract-issuing party should accept and review such reports. Eighth, submitting the operation reports or other materials of the private parties to the higher authorities. Private participation in public services exists in the governance mechanism of the administrative system. It not only reflects the relation between the contract-issuing party and the contractor, but also reflects the relation between the administrative system and the related social entities. Therefore, the higher-level administrative organs should regularly grasp the operation of private participation in public services, and the supervision departments have the power to report. Ninth, taking over public services in an emergency. Whether the private parties are definitely able to complete the tasks of providing public services according to the standards of quality and quantity after obtaining the service qualification is an issue that the administrative system must control. On one hand, the administrative system should take actions according to the service situations of private parties, the most extreme of which is to deprive the service qualification of private parties. On the other hand, when the quality of public services provided by private parties has relatively strong influences in society, administrative entities should provide relevant public services for clients instead, which is to temporarily take over the public utilities. This is essentially a kind of monitoring act. The aspects mentioned above are the main contents of the monitoring of public services.

Private participation in public services is an issue of mechanisms, the monitoring entities of which are diverse. Furthermore, as a diverse system, monitoring system should be on the way of socialization. That is to say, besides the monitoring of the government administrative system, other relevant departments and other social entities also have the obligations and rights of monitoring. This article mainly discusses the issue of monitoring in the administrative system, and does not specifically discuss the monitoring of other entities. 

A. Review of Entity Qualification

Entity qualification in private participation in public services is the most important issue. The private parties that are able to perform the public services functions must meet certain conditions such as having independent legal personality, having economic capabilities, having the abilities or experiences to provide services, having the technologies and methods to provide services, etc. For the monitoring of the administrative system, the first is to review the entity qualification of private parties, which is the most basic content and step of monitoring. Article 14 of the Decree on the Franchise Management of Municipal Public Utilities in Qinghai Province stipulates: ‘Those who participate in the franchise bidding shall have the following conditions: (i) the legal person registered according to law; (ii) having the corresponding registered capital, facilities and equipment; (iii) having good bank credit, financial status and corresponding compensation; (iv) having corresponding employment experience and good performance; (v) having a corresponding number of technical, financial, operation and other professionals; (vi) having feasible operation plans; (vii) other conditions stipulated by laws, regulations, and rules.’ These provisions very specifically make limitations on the entity qualification of private parties in franchise. This provides a very good basis for the monitoring of the administrative system. The administrative system should review the entity qualification of private parties in conjunction with each of the specific conditions listed above. 

B. Review of Legal Texts

Legal texts in private participation in public services are also very important. The monitoring of administrative entities involves the monitoring of legal texts. The Guides for the Operation of Urban Infrastructure PPP Models in Anhui Province makes very specific provisions on legal texts. First, legal texts overview, which stipulates: ‘The projects of the investment and financing on marketization of infrastructure design different types of legal texts at different stages, mainly including qualification documents, bidding documents, tendering documents, bidding evaluation documents and legal texts of project contracts. The above documents constitute the legal documents system for the implementation of the projects of the investment and financing on marketization of infrastructure. On the basis of correctly grasping the contents and formats of each document, it is of great significance to be able to scientifically and reasonably prepare and apply relevant documents to ensure the standardized operations and successful implementation of the projects.’ Second, legal texts of qualification review. It clearly stipulates the contents and formats of legal texts of qualification review: ‘From the perspective of practical operations, the core contents of the infrastructure investment and financing projects qualification review documents include project overview, qualification review application documents, qualification review application file formats, qualification review principles and procedures, and qualification review standards. The following is a list of general reference contents and corresponding contents of the qualification review documents, which should be flexibly applied in actual operations according to the specific characteristics of the project and the qualification review methods.’ Third, legal texts of bidding. It specifically stipulates the general constitution of legal texts of bidding, including bidding notices, bidding invitations, notices to bidders, the technical terms of the contract to be signed, etc., with substantial documents and relevant documents. Fourth, legal texts of tendering. It stipulates: ‘At the time of tendering, after passing the pre-qualification of the bidding project (if the pre-qualification method is adopted), the tenders shall formulate relevant documents in accordance with the requirements of the tendering documents. The document shall describe the bidder’s ability to complete the proposed bidding project, the quotation, and the situation in which the manpower, material resources, and financial resources are prepared for the bidding project. The tendering documents usually consist of tenderer’s letters, the power of attorney, the tenderer’s qualification documents, the joint tendering agreements (applicable to the consortium), the technical and management plans, the financial plans, the legal plans, the tenderer’s quotation documents, the tender bond and other parts.’ Fifth, legal texts of bidding evaluation. Relevant provisions on legal texts of bidding evaluation are very specific: ‘(i) The timing of the bidding evaluation work. The timing of the start and end of the bidding evaluation work is detailed. (ii) The evaluation method. According to the specific characteristics of the project, a scientific and reasonable evaluation method will be formulated. The bidding documents have already determined that the evaluation method should not be changed at will. (iii) The bidding evaluation committee. The bidding evaluation committee shall be assembled according to the requirements stipulated by law, and the number of bidding evaluation experts and the candidates of various professional experts shall be determined. (iv) The bidding evaluation committee secretary group and conference group. The bidding evaluation committee has a secretarial group and a conference group to fully support the work of the bidding evaluation experts and provide logistical support.’ Sixth, legal texts of negotiation, etc. It can be seen that legal texts in private participation in public services are very strict and formal. This could be one of the key aspects of monitoring in the administrative system. 

C. Review of Obligations Performance

In jurisprudence, rights and obligations are two interrelated and opposite aspects. Rights are beneficial to the parties, so the waiver of rights of parties usually does not cause troubles in law. In contrast, an obligation has a certain degree of compulsion, that is to say, once an entity has a legal obligation, it should faithfully perform the obligation. In the monitoring of private participation in public services, the monitoring of the relevant rights of the parties may be waived under certain circumstances, but the monitoring of the performance of obligations may not be waived. In the implementation of private participation in public services in China, legal rules in individual fields or some places have very specific provisions on the obligations of parties. This will help the administrative entity to monitor parties. For instance, the Decrees on the Municipal Public Utilities Franchise in Hu’nan Province clearly stipulates the obligations of private parties in the chapter on the rights and obligations of the franchisee: ‘The franchisee shall obey the following provisions: (i) preparing medium and long-term development plans, annual operation plans and emergency plans according to the franchise agreement, and reporting them to the competent department of municipal public utilities for the record; (ii) operating in accordance with the law and ensuring security, performing general services, and continuing services obligations; (iii) providing a sufficient number of qualified municipal public products or public services in accordance with the franchise agreement; (iv) providing municipal public products or public services in accordance with government-approved prices; (v) investing in the construction and upgrading related municipal public utilities in accordance with the urban plan and franchise agreement; (vi) completing the maintenance and repair of equipment and facilities, and ensuring they are in good condition and run properly; (vii) allowing other operators to connect to the public utilities invested and constructed by the franchisee, or the public utilities operated and managed by the franchisee according to the planning requirements, and the charges shall be implemented in accordance with the provisions of the competent department of price; (viii) accepting the supervision and inspection of the competent department of the municipal public utilities and other relevant departments on the quantity, quality, price and safety status of the municipal public products or public services provided by the franchisee; (ix) after the expiration of the operating period or the termination of the franchise agreement, the franchisee shall completely transfer the necessary archives and equipment, equipment for normal operation, and other assets to the municipal public utilities or their designated units in accordance with the provisions of laws, regulations, rules or franchise agreements; (x) performing other obligations as stipulated by laws, regulations, rules and franchise agreements.’ The provisions on each of the above obligations are specific, and each of the private parties with the obligations should perform them well. The administrative system must monitor the private parties in accordance with these provisions of the obligations.

D. Review of Service Quality

The situation of the quality of public services provided by private parties is not only a matter of legal scope, but also a social issue and even a political issue, because the public is not concerned about the issue of private participation in public services, but the issue of the quality of public services they receive. If public services provided by private parties are of a higher quality than those originally provided by the administrative system, this will cause the public to distrust the administrative system and not just distrust private parties. Therefore, the administrative system should mainly monitor the services quality of public services. We have noticed that some local legislations have identified the issue of quality of service as a matter of legal liability. In other words, if private parties fail to provide public services in accordance with stipulations, it may be possible to pursue legal liability in the future. For instance, article 38 of the Decrees on the Municipal Public Utilities Franchise in Hangzhou City stipulates: ‘If the franchisee has one of the following acts during the operation period, the competent administrative department of municipal public utilities shall order it to make corrections; if it refuses to make corrections, the municipal government may, by decision, revoke its franchise rights, terminate the franchise agreement, and implement temporary takeover: (i) transferring, leasing, mortgage or otherwise disposing of the franchise rights; (ii) failing to perform the general service obligation, or failing to meet the standards for the quality of products and services, seriously affecting the public interests; (iii) suspending business or closing the business without authorization; (iv) due to poor production management, major quality and safety production accidents and environmental accidents, which seriously endanger the public interests; (v) due to poor management, financial deterioration, serious losses, enterprises cannot operate normally, which seriously affects the public interests; (vi) due to the transfer of the company’s equity, which does not meet the qualification requirements of the franchise agreement; (vii) in the case of possible public interest, public safety, and public interests needs, etc., disobeying the unified command and dispatch of the government; (viii) other acts stipulated by laws, regulations and rules, and the franchise agreements.’ Connecting quality and its safety guarantee to legal liabilities will definitely benefit quality guarantee in public services. This also enhances the monitoring department’s awareness of monitoring the quality of public services and even specific monitoring techniques. 

E. Evaluation of Service Effects

Post-evaluation in administrative rule of law is a major progress in the development of China’s administrative rule of law in recent years. It has been mentioned above that China’s administrative rule of law mainly focuses on the examination and approval in the early stage, and post-evaluation has always been a weakness in the approach of rule of law, the situation of which has changed recently. In 2014, China made a top-level design for the rule of law, and the CPC Central Committee promulgated the Decision of the CPC Central Committee on Major Issues Pertaining to Comprehensively Promoting the Rule of Law (hereinafter referred to as the Decision). In the Decision, it requires relevant government decision-making to carry out corresponding post-evaluation, and establishes a review mechanism for accountability investigation of administrative decision-making, and the investigation mechanism is based on post-evaluation. It stipulates: ‘Establishing a system of lifelong accountability investigation and accountability investigation mechanism for major decisions. If there are serious mistakes in decision-making or delays in decision-making that cause significant losses and adverse effects, the legal liability of the executive head, other liable leaders and relevant liable persons shall be strictly investigated.’ This provision has reinforced China’s post-evaluation issues in the subsequent approach of the rule of law. The post-evaluation in the administrative rule of law is even more prominent. How to conduct post-evaluation is a technical issue. We have noticed that the Ministry of Finance has formulated the Operation Rules on the Integrated Information Platform for Government and Social Capital Cooperation on the issue of regulating government and social capital cooperation. This rule makes very complete provisions on the information platform of private participation in public services, such as the contents of the information platform, user management in the information platform, information management and application in the information platform, supervision and inspection of the information platform, and so on. Article 14 stipulates: ‘The finance departments at all levels can manage the PPP project information of the finance departments at the same level and below through the PPP information management platform. That is, the central level can manage the PPP project information of all provinces, cities and counties across the country and the provincial finance departments can manage project information of the province (district and city). Finance departments at the level of each city and county can manage the PPP project information of this city and county.’ Obviously, with the construction of the information platform of private participation in public services, the post-evaluation of the services effects will be fully guaranteed, because it will disclose the relevant contents, operation modes and effects of private participation in public services to the public. In other words, the evaluation on services effects is not only a matter of liability for the administrative system but also an issue of social mechanisms.