2. The reform of local governments is part and parcel of overall government reform. Local governments directly interact with businesses and the public, and the rights and interests of market players and the public are realized, safeguarded and developed mainly through the local governments. The local governments have a very important role to play in the whole system of government, accounting for over 90 percent of civil servants and around 85 percent of eventual fiscal expenditures in China. It is particularly true for primary-level governments, which belong to the "last one kilometer", as we often say. Whether the reform of government institutions meets its goal as expected and whether government functions are genuinely transformed depends, to a large extent, on local governments. During our recent field trips and seminars in different localities, we have found that many entrepreneurs are looking at the local governments to deliver what the central government has already committed in power delegation. According to them, the effects of streamlining administration and delegating power at the central level will be greatly compromised if the local governments fail to proceed with corresponding reform in a timely fashion. I assured them that the central government has made up its mind, and that so long as the central government can set a good example of effectively doing what is required, the local governments will surely act to meet the requirements of the central government. Under the current circumstances, streamlining administration and delegating power is a very important means to stabilize growth. And to stabilize growth is also for the sake of ensuring employment. With administration streamlined and power delegated, some powers of administrative approval will be cancelled or delegated, which will energize the market and make the businesses and society more creative, thus generating more jobs. If only the head turns and the body stays put, the transformation of government functions and the institutional reform may become a "fake reform" or a "feinted attempt". Since last May, positive results have been achieved in the new round of efforts to streamline administration and delegate power in various localities. Yet, due to restraints of local and sectoral interests, there have been cases where powers have been wrongly or inappropriately delegated, or where only lip service has been made with no real action. In some places, only the complex powers that involve big responsibilities have been delegated, with the "more valuable power" still retained by the government. In others, there have been exaggerations. They easily claim to have delegated approval power for more than 100 items, yet few of them involve any significant power. I want to stress that in the course of reform, the local governments must take a holistic perspective and bear in mind the overall interests. They should not be narrowly preoccupied with their own local interests, still less are they allowed to play tricks or conduct reform as a mere formality. We must ensure that streamlining administration and delegating power must be effectively delivered and serve its purpose.
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