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UPDATED: July 16, 2007 NO.29 JUL.19, 2007
Socialism Based on Rule of Law
During the transition to a market economy, the traditional faith in credit disappeared and the new credit management system is yet to take shape. This is why the public service units, which were nonprofit-oriented, began to cast their eyes about for money they could get their hands on
 
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In April, the Ministry of Public Health announced the shutdown of the National Committee for Oral Health (NCOH). Corruption, it seems, has once again raised its ugly head. This organization, which is not an agency under the government, but has some government affiliation, allegedly has

raked in millions of yuan in illegal profits for the past 18 years by making unauthorized approvals for oral health care products. It is widely believed that the situation involving NCOH reflects the lack of government credit management because of the loopholes in the overall system. Commenting on NCOH dissolution, Professor Li Shuguang from China University of Political Science and Law believes that, while to reform public service units within a short period of time is important, the final solution is to set up a system that is based on the rule of law.

Gov't. needs credit management

In modern politics, the government is an institution that offers public products and services. In some sense, it depends on credit for survival and its credit is built on its capability of public service supply, as well as the quality of services and relevant products. It is these things that decide whether the government has a good credit rating or not. Thus, government's credit demands management too. In the market economy, the process of exercising governance is also a process of credit management. A government without credit will be punished, because the market has remedial mechanisms, such as an official accountability system.

As a matter of fact, even in the planned economy era, government's credit was subject to management too, but the management method was different from that geared to the market economy. Under the planned economy, although it was able to interfere with the economy on a large scale, the government was disconnected from economic interests. Its interference with the economy was done out of the belief of "serving the people" until ultimately everything would be returned to the people. Why was this interference possible? Because the government maintained a distance from economic interests. Although there was no explicit requirement to exercise credit management, the government at that time had faith in credit, meaning it would never take advantage of any financial gains. Thus, under the planned economy, even without the concept of credit management, the government was still able to maintain credit.

During the transition to a market economy, the traditional faith in credit disappeared and a new credit management system has yet to take shape. This is why the public service units, which were nonprofit-oriented, began to cast their eyes about for money they could get their hands on. It is against this background that the NCOH scandal came into being.

In essence, the NCOH should be a market watchdog, but in reality it totally transcended this role and made huge commercial profits by taking advantage of its special role. However, it made these profits by selling government credit as a commodity.

It is especially alarming that while not managing its own credit, the government turns a blind eye to its subsidiary and associated institutions selling their credit. Such an indifferent attitude will undoubtedly lead to the mistrust of the market, society and all consumers in the government, who will all have little faith in the rules set by the government and credit managers.

Focus on rule of law

China has an immature market economy. In the period of economic transition, without a government of good credit, the market economy is doomed to collapse. Thus, a messy market economy must be transformed into one based on the rule of law, which demands a government of good credit. To set up such a government, the following procedures are inevitable: First is to transform the construction-oriented government that interferes with the economy into a service-oriented government. On this basis, a responsible government is to be set up. Thus, once problems occur, someone must be accountable. Only when a responsible government has been established can we expect to see a government based on the rule of law.

Therefore, China still has to overcome several obstacles before it successfully transforms its government into one operating by the rule of law. Only by removing these obstacles can China have a government of good credit. This process will be characterized by the increasingly strengthened and improved

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