[8th ILO SSE Academy]: Legal Framework of SSE in China

Category: 
East Asia
Local Government
Class: 
Cooperatives
Social innovation
Governance

Presented at: 8th ILO SSE Academy

Organisation: Shanghai Jiao Tong University

Date: June 28, 2017

Presenter: Professor Xu Jia Liang

Contacts: xujial@sjtu.edu.cn

Summary

The current circumstances of public procurement in China are complex and interesting subject matter. The following presentation focuses on Shanghai as a pioneer for the developmental process of public procrement and the ways that the local government created parternships with local organisations. These contracting-out procedures are later adopted at the central governmental level. The presentation also lays out SSE-related laws in China. Furthermore, after introducing the nature of public procurement and legal framework, the presenation addresses various problems and complications regarding the aforementioned subjects. 

Presentation Details:

XU Jialiang explained how social economy and public procurement are developing together in China. Furthermore, presented the problems they have in the context of China and suggestions for their further development.

In China, only 'social welfare enterprises' and 'rural cooperatives' are recognized as 'social enterprises', and these social enterprises are included as part of the public procurement system.

Public procurement in China firstly initiated in 1995. Since 2010, Beijing and Guangdong began to purchase many services from NGO. Since then, more and more states and cities have introduced outsourcing procedures for public services, and in 2013 a special budget has been set up for procuring public services from the NGOs to the provincial government.

The characteristics of public procurement services in China are as follows.

  1. From local government to the central government (Bottom-up approach)

  2. From East to West (Developed areas first, then the underdeveloped)

  3. From ‘rule-oriented government’ to ‘service-oriented government’ (Changes in government functions)

  4. From limited service providers to increase in the number of service provisions (NGOs' participation in public service provisions)

Chinese law has multi-layers such as laws (national congress), regulations (central government), and normative documents (local governments & departments). The law on procurement of government was first passed in 2002, and in 2013, the government received the opinion and enforcement regulations and laws were promulgated in 2014. Such services were for government only, but in the same year, they were turned into other type of public services.

The law related to social enterprises is the Act on the Protection of Persons with Disabilities, which was enacted in 1990. In China, it is a fundamental law that governments and societies should commit to create employments by establishing welfare enterprises for the disabled and other welfare institutions such as blind massage facilities. These social welfare enterprises were issued by the ministry of civil affairs.

However, public procurement systems in China has shown the following problems. First, the government prefers 'incremental purchase' to 'stock purchase'. The second is the absence of an integrated platform for the purchase of services. The third is slow funding and the fourth problem is NGO's passive attitude. Lastly, it is a shortage of evaluation agencies and experts themselves. When it comes to social enterprises, the first problem is that there is no legal concept for social enterprises. There are social welfare companies and local cooperatives in China, but a considerable number of them have disappeared. This is because there is no law that protects their legal rights as an established legal entity. Another problem is that the boundaries of social enterprises aren’t clear. The range is wide and unidentifiable. As such, it is impossible to grasp a legal definition of social enterprises even though it is inbetween the NGOs and the enterprise. Therefore, it is difficult to identify how many social enterprises are in China.

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