Part 1

　　Necessity and Urgency to Establish an Indicator System for the Measurement o f Government Performance

　　I. Major Role of Government in China's Economic Development and Social Progress

　　Unlike the Western countries, after a long historical evolution, a socio-economic system has been formed in China, which is based on independent and dispersed small-scale peasant economy and is politically centralized. Historically, in order to effectively govern the huge empire with a vast territory, the central government or even the emperor himself directly appointed all the officials above county level. Governments and officials at different levels played very important roles in economic and social management. Measurement of local officials' performance was usually conducted by superior governments, while governmental departments at the same level had the rights and obligation to report failures (for example, in the Qing Dynasty, key superior officials were asked to appraise their subordinates and colleagues and to submit their comments and remarks to the Emperor and Libu (Ministry of Personnel) . This is the so-called "performance evaluation".)

　　Since 1840, China's economy and society began to introduce modern thinking from western countries. However, China did not successfully establish a modern market-oriented economy that is guided by the principle of "laissez faire" as in West countries like European coutries and U.S. Instead, during the process of Westernization Movement a hybrid economic system was formed in which "officials co-exist with traders and traders do business under official supervision". Key economic sectors, such as railway, post and shipbuilding etc., were operated and controlled by bureaucratic merchants (i.e. Jiangnan Shipyard and Hanyang Steel Works etc.). Private enterprises took leading position only in sectors like textile, food processing and local specialties etc. Also, influenced by the semi-colony social system, mining, telegram and railway industries were partially controlled by foreign companies. Until the age of Republic, this hybrid system stayed almost without any change .

　　In 1949 when the new China was founded, its national economic system was in a chaotic state. Either the "soft" systems or the "hard" infrastructures and basic industries were underdeveloped. In order to build up a modernized economic system that could compete with Western powers, during 1952-1957 the newly established Chinese government introduced 156 complete plants of modern basic industrial projects from the former Soviet Union and established a set of economic management systems similar to former Soviet Union's system of planning economy from 1958. In addition to providing public services such as system and security, the government also was actively involved in economic development to plan and implement industrial projects, to construct enterprises, and to develop plans of demand and supply.

　　At the same time, grass-root government organizations were established in even villages and urban communities (communes and brigades in countryside and neighborhood committees in cities). It can be seen that this kind of government structure is the strongest in history, under which the role of the government in economic society was extremely expanded. Within this structure, measurement of lower level governments' performance by higher-level governments played a critical role. As political considerations prevailed at that time, the measurement was often based on political standards.

　　Since 1979, China started the process of reform and opening-up to the outside world. Unlike the former Soviet Union and East European socialist countries, China adopted an approach of step-by-step reform that focuses on economic development as the first priority. The reform in political structure has also been step by step. Although governments' financial power has seen greater changes, the leadership relations between and within central and local governments didn't dramatically change. Anyway, the focuses of performance measurement have been greatly changed. The former slogan "guided by politics" was changed into "centering around economic construction".

　　Back in 1993, the Chinese Communist Party decided to establish a socialist market-oriented economy in China. However, constrained by historical inertia and the need of China's actual situation, Chinese government has performed significant interferences in China's economy, particularly in the area of resource distribution. National and local governments regarded economic development as the central task and have proposed a lot of famous slogans targeting this central task, such as "development is the absolute principle" in 1992. These slogans reflect the chronicle evolution of the thought "one central task and two main points" by Deng Xiaoping, which is written in the Constitution of the Communist Party of China, and is consistent with the basic demand of China's actual situation and steady economic development.

　　Since 1998, guided by the reform policy – "properly manage large-sized enterprises and ease control over smaller-sized ones", China's central government took control of "the important sectors involving the interests of the state and the people" through central enterprises directly affiliated to the State Council, while eased control over other sectors, allowing private economy free development opportunities and access to the market. Still, the government controlled the critical basic industrial sectors, and it still had strong controlling power and influences over economic activities by pricing and quota of rare resources.

　　The above facts suggest that, historically, particularly since 1949, government has played a critical role in economic and social activities. In addition to providing public services like system development and public security, the government takes charge of distribution of resources and social wealth. Up to now mostly government departments, especially the local governments directly take part in economic activities. This is greatly different from Western countries.

　　II. Urgency to Establish an Indicator System for Measurement of Local Government Performance

　　As mentioned above, the government has been playing outstanding and critical role in China's economic and social activities. And greatly different from West countries, supervision of local governments' performance is largely conducted by superior governments. Accordingly, it is necessary to develop an indicator system for measurement of performance by governments and government officials at different levels. The design of such a system shall be closely associated with the main task of local governments.

　　It is reasonable to say that such indicators used for performance measurement can be traced back to ancient time in China. In the ancient time, the main tasks of local governments and local officials were safeguarding social stability, solving disputes, collecting taxes, providing relief, protecting trade caravans, building and maintaining water conservancy facilities, national defense and other various kinds of public services. Accordingly, performance measurement then was related to these tasks. Another important criteria was the maintenance of harmonious relations with local public. If a higher-level official accused his subordinate of having "poor public relationship", the official would have a just reason to dismiss him from his position.

　　Between 1949 to 1979, or from the foundation of the New China to the beginning of reform and opening up, the political environment had been giving political considerations the first priority; consequently, performance measurement mainly focused on politics, and economic development had been always getting less priority. Still, this was not to consider politics only and to completely neglect economy. In a planned economy, it was also an important political task to fulill economic plans formulated by superior governments, including material supply and allocation. In fact, economic tasks were politicalized.

　　After the reform and opening up to the outside world, Deng Xiaoping put forward the principle of "one central task and two main points". The so-called one central task means to focus on economic development as the central task. From then on, economic achievements became an important criteria against which the local governments and officials were appraised.

　　But in the broader context, China's economy was underdeveloped and its people had lived in poverty for long time, and public understandings of economic development were biased. Many regarded economic growth (then evolved into growth rate of GDP) as the only indicator of economic development. In fact, from the economic perspective of development, what we must avoid is the Latin America Phenomenon "growth without development". Irrationally rapid GDP growth, too much attention on growth rate, and neglected quality of economic growth would lead to increased social inequity, uneven social wealth distribution, more social conflicts, and sharper social stratification, with most of the people unable to enjoy the benefits brought about by the economic growth or even falling into worse situation. In the domain of economics, there is a wide gap between growth and development. Economic development is not limited to growth rate; it goes beyond many non-economic factors such as social equity, human's living quality, social development level and harmony between human and the nature.

　　To blindly pursue growth rate would inevitably result in overheated increase of resource demand, and will exert increasing pressures on the ecological environment; in turn, the degraded environment will undermine the foundation of social development and economic growth and will cause even more losses to the people.

　　The above described was exactly the situation in China years ago. The principle "Development is the absolute principle" and the principle "give priority to efficiency with due consideration to equity" were narrowly understood, and the biased understanding finally evolved into the trend "GDP is the top priority". As a result, economic growth rate became the major indicator to measure the performance of governments at different levels or to determine whether a government official could be promoted.

　　Under these circumstances, governments at different levels turned a blind eye to actual local situations, developed industrial projects posting great risks to resources and environment, and devoted major efforts to carrying out municipal construction. Nowadays, industrialization and urbanization are the major targets aimed by governments at different levels in China. Industrialization has brought about VAT income to the local government, while urbanization has caused price rise for land, bringing about large amount of value-added income to the government, the owner of land. However, the processes of industrialization and urbanization have caused rapidly increased demand for resources, including land, minerals and energy, leaving many farmers with no land at all, and cause accelerated deterioration of the ecological environment and sharpened the social conflicts and the conflict between human and the nature.

　　There is no doubt that, focusing on economic development as the central task did have its advantages, as the governments at different levels have played active roles in promoting rapid economic growth, and had pushed the previously poor and backward China closer to a well-off society in a short period of 20-plus years. But some problems arise with the concept of "GDP is the top priority"; this is because that so far GDP is the most comprehensive system available to measure performance of economic activities in current statistical indicator system.

　　Among a series of consequences resulted by "GDP is the top priority", the most significant are the deteriorating ecological environment and shortage of resources supply. Problems with unharmonious economic and social development become increasingly prominent. As the results, the residents' living quality is degrading in some areas; the achievements in economic growth are being compromised by the losses caused by environmental pollution and ecological destruction; and people's health is being affected. For example, in 2003, in only 41.7% of the 340 large and medium cities across China air quality reached the required standards. In nearly 60% of the large and medium-sized cities light or heavy air pollution is common, and 27% of these cities were heavily polluted. With regard to the surface water of the seven major water systems in China, only 38% reached the Third Class standard, 62% was under Class Four and the useless poor-quality water under Class Five accounted for 29.7%. Combining the comprehensive statistics in different aspects, it is roughly estimated that two thirds of the economic growth in 1990's was realized at the cost of the depletion of ecological environment. Today, the interactions between economy and environmental protection strongly suggest that the degraded ecological environment has become a significant burrier to economic growth.

　　From the perspective of development, China is now at the stage of speeded industrialization and urbanization. Questions arise: will these processes inevitably lead to serious social conflicts and heavy pressures on the ecological environment? If we stick to current mode of development, the answer would be "yes". As a big country with a large population, insufficient resources and fragile environment, China cannot realize the expected modernization with present development approach, which would result in the collapse of the development chain and bring about social, ecological or environmental disasters. Is there an optimum way by which we can realize sustainable development while keeping a sound mutually beneficial relation between ecological environment and development?

　　Whether or not China can realize sustainable development remains is a big question. To settle a wide range of economic and social conflicts including employment, China has to focus on economic development as the central task and realize rapid growth of economy. Therefore, future development will have to face even heavier environmental pressure. It is an important task for the government to seek a new pattern of development that puts equal importance to economic growth and environmental protection.

　　Therefore, the 16th National Congress of the Communist Party of China put forward the grand objective to establish an overall higher-quality well-off society in China by 2020. Core of this objective is the equal emphasis on both rapid economic growth and sustainable development.

　　Chinese government has devoted its attention to realizing overall economic, social and ecological development. In 1996, former Premier Li Peng attended the UN Conference on Environment and Development held in Rio d Janeiro and announced that China would take sustainable development as a basic policy guidance in future economic activities. From then on, sustainable development became an irreversible trend in China. Later, the third generation of central leadership with former General Secretary Jiang Zemin at the core put forward a new development concept – the scientific approach of development. Currently, the fourth generation of central leadership with Hu Jintao as the present General Secretary put forward a basic concept, which is to establish a socialist harmonious society that realizes both rapid economic growth and harmonious economic, social and ecological development in the process of modernization.

　　Performance measurement by superior governments largely determines the political life and promotion of key leaders of the governments at different level. Therefore, indicators used for measurement of government performance are like a conductor's "baton" that manipulates government works. In order to change the bias existing in the measurement of government performance that focuses on economic growth rate, it is vital to establish a new indicator system for measurement of officials' performance, which is consistent with the concept of scientific approach of development and harmonious society. This may stimulate the government to shift its focus from the present simple economic growth to a more comprehensive approach, sustainable development. With the use of the new indicator system, it is expected that sustainable development will become the focus of the measurement of government performance in the future and that the state will realize strategic transition in the national development.

　　III. Green GDP accounting

　　With regard to the issue of local government performance measurement, some experts put forward the concept of green GDP. According to their design, green GDP considers ecological and environmental factors in GDP accounting system so as to remove the original limitation of GDP – only reflecting the growth of economic flow but neglecting changes in ecological and environmental stock. Green GDP should be an improved design. If realized, it would really simplify the performance measurement of local governments.

　　Analysis conducted by this task force suggest that, at present the feasibility of green GDP accounting system is not sound in China. As a single means used for performance measurement, it has some inherent shortcomings.

　　The most important shortcoming of green GDP accounting as a single means for performance measurement is: although it considers the factors of economic growth and ecological environment, it does not consider factors of all aspects of social development, while promoting social equity and social development is one of the critical tasks of local governments. The performance of local governments cannot be embodied by a single indicator. Therefore, China needs a measurement indicator system considering all aspects of government performance to compare and measure all aspects of local government performance.

　　Again as to the feasibility, the biggest issue raised with green GDP accounting system is how to price the ecological and environmental resources. It is still in the process of exploration and cannot be operated in practice.

　　A technical problem with Green GDP is that, the traditional GDP is the accounting of the flow of economic growth, while green GDP accounting system is trying to review the change in stock of ecological and environmental resources. It remains a question if the two systems can be aggregated. The GDP accounting is based on the market price system, but the value of ecological damnify has no a market price, different people who have different income are different willing to pay. In fact, it is more feasible to aggregate the changes in ecological and environmental stocks with the changes in Genuine Wealth.

　　Based on above considerations, the task force did not adopt green GDP accounting system as the single indicator for local government performance measurement. Presently the task force had given up the exploration in this area and turned to the study on establishing a systematic and feasible performance indicator system covering all major aspects of local government works.

　　Now China is improving its present indicator system for the accounting of national economy and is gradually shifting towards a new set of statistical indicators and methods. One of the benefits will be that many statistics of indicators unavailable in the past or at present can be easily obtained in the future. Therefore, the indicators we designed are not limited to those that can be collected today but include those that we expect to be able to obtain in the future. Hopefully our efforts would provide some necessary recommendations for the statistics departments to expand current scope of statistics. Moreover, we will put forward some new indicators for consideration in the future as a part of the policy recommendations in our report.

　　Part Two

　　Principles of Indicator system design

　　At present, various types of indicator systems for performance measurement are implemented in China's administrative and management systems. To summarize, these indicator systems can be divided into two large categories.

　　The first category is comprehensive indictor systems for performance measurement by superior governments (such as the indicator system for performance measurement by the Central and local Organization Department of the CPC). The second category is indicator system used for specific measurement of sector administration (such as indicator system used to judge achievement of standards set up for ecological provinces, cities and counties).

　　This report will explore the indicator system for use by the central organization departments of CPC (central government) to appraise local Party committees (local governments). This should be identified as within the first category.

　　Performance measurement of key government leaders made by the Central Organization Department of the CPC and local Party's leading bodies usually follows some traditional standards including political standard, personal virtue, competency and performance etc., which would be adjusted according to the different focal points of the CCCP in different historical periods. The task of this report is to work out an indicator system that could guide local governments, particularly provincial governments to shift the priority to local sustainable economic and social development. Therefore, the indicator system to be explored should be able to adjust the structure of government performance. Factors related to sustainable development will be weighted higher and other factors will be weighted lower in the indicator system of government performance measurement.

　　China's political, administrative and management systems have unique features. Concerning economic and social activities, the Party and the central government take separate but sometimes overlapping charge of administration and management. Tasks of local governments vary, depending on different geographical characters, ecological environment and level of economic development in different area. Therefore, during the process of indicator system development, we must take the differences in the clients and their types of performance into account.

　　1. Clients

　　The indicators for performance measurement will be used by the central organization department of CPC and the central government to appraise the performance of local governments. Therefore, the clients at the first level would be the Central Organization Department of CPC and the central government

　　Under direct management of the Central Organization Department and the central government are provincial Party leaders and governments. In between provincial and county levels are the municipal Party committees and municipal governments. In current system of city administrating county, Party committees and governments at city level are under direct leadership of provincial Party committees and governments. The central committee of the Party and the central government usually administrate through provincial Party committees and provincial governments of city activities rather than direct approaches. Clients of the measurement indicator system are provincial Party committees and provincial governments. In cases that certain cities enjoy provincial-level status in the state economic plan, the appointment of city-level leaders usually needs approval from the CCCP and will be registered there. Therefore, major clients of the performance measurement clients at the second level are provincial Party committees and provincial government. The measurement of county government is not considered in this study.

　　2. Subjects of measurement

　　This study is a research on indicators for local government performance measurement, thus the subjects of measurement are local governments. However, as the most prominent character of China's organization system is the control of the Party over officials, the Party committees at different levels exert significant influence to the strategies and decision-makings in economic development, and even have the power of recommendation and veto. Therefore, this performance measurement indicator system will be also applicable for higher-level Party committee to appraise the performance of lower level Party committees. But these indicators are just for reference in measurement of the Party committees' performance, and will not consider the Party's political connotation.

　　After adopting the policy of reform and opening up, in order to fulfill the roles of key cities in regional economic development, China developed the system of affiliating county under the administration of city since 1986. A city at prefecture level actually establishes a level of government because it has the power to organize a municipal people's congress. As a result, there are actually five levels of governments. Power is structured like a pyramid. The measurement of the local governments by the central government must be adapted to such a power structure and each level of government should not exceed its own duties and meddle in other level's activities. Therefore, subjects of the measurement indicator system are the provincial level governments and municipal governments under direct administration and management of the CCCP and the central government.

　　3. Comparability

　　To ensure a just performance measurement, the indicators shall be comparable. To be comparable can be understood as being unified. That is to say the measurement of government performance should have common criteria, really reflect the degree and effect of governments' efforts, and minimize effects caused by governments' subjective factors. Constrained by the complicated situation in China and the huge regional differences, it is apparently not easy to address the issue of comparability. This indicator system will solve this issue among areas with adjustment to weights of indicators to allow the comparability between different areas and different development stages.

　　3. Which aspects to be appraised

　　In the light of the problems existing in China and the governments' functions and roles, a proper indicator system government performance measurement should be consistent with the scientific approach of development in political, economic, social and environmental domains alike. It should be also in line with the requirement of "Five Comprehensive Considerations". However, this report is not an exclusive study of government performance measurement; rather, it aims to provide recommendations for departments concerned with establishment of indicators for measurement of officials' performance from the perspective of coordinative economic and environmental development. Therefore, this study will set up limited targets, limiting the indicators within the scope of the topic study.

　　4. Levels of indicators

　　For either availability of data or the operability of the measurement itself, it is necessary to limit the indicators to certain level, such as certain representative macro indicators. It is improper to select very specific indicators. If not, the administrative cost would increase, and results might be biased due to unavailability of data.

　　5. Indicators' inter-restriction

　　To avoid frauds in data, one of criteria for data selection is indicators' inter-restriction. For example, financial income and turnover of financial income are a pair of inter-restriction indicators, and unemployment rate and relief expansion are another pair of inter-restriction indicators.

　　6. Objectivity

　　Indicators shall be quantified, and qualitative indicators shall be as less as possible. This is to ensure the objectivity in officials' performance measurement. Public opinions are in deed an objective reflection of government performance, thus the indicator "degree of public's satisfaction" generated from public survey can be selected as a quantitative indicator.

　　7. Scientific indicators

　　Indicators shall be objectively verifiable and shall be able to measure the link between performance and outcomes of the performance.

　　8. Measurement schedule

　　Duration between two measurements should not be too long. Measurement shall be conducted regularly on an annual base rather than once in a term of employment. To fulfill this, selected indicators of performance measurement should be easily monitored in a continuous manner over time. There are examples of such indicators, such as monthly-recorded and quarterly-recorded indictors, as well as the daily monitored indicator of environmental quality. Such indicators shall be the first choices.

　　Part Three

　　Indicators System for Government Performance Evaluation

　　I. Framework of the indicators system

　　The indicators system can be divided into two categories: scoring indicators and vetoing indicators. The scoring ones mean that these indicators can be added up according to their relative scores. The vetoing ones refer to those control indicators. Once those indicators exceed the limits, the local government may be involved in some great troubles. As a result, the local government should put emphasis on solving these problems. In our indicators system, the vetoing indicators are mainly associated with social equity and ecological environment. The purpose to adopt such indicators is to embody the requirements of harmonious society and sustainable development. When serious social problems or ecological environment problems occur, the local government must resolve them. Otherwise, it would be warned or laid off.

　　The indicators system has three levels: the first is the general target, the second is corresponding objectives and the third is concrete indicators.

　　In the first level, three general aspects are included such as economic development, social development, and ecological and environmental development, which are assigned the same weight so as to embody the basic target of harmonious socialist society–overall and harmonious development of economy, society and ecological environment. 　　

　　Table 1 Indicators System for Local Government Performance Evaluation　　

　　II. Illustration of Indicator System

　　1. Indicators for Economic Development

　　Indicators for economic development consist of four aspects: economic growth, people's livelihood, income distribution and growth efficiency. Economic growth indicators aim to evaluate local government's performance in economic growth. In China, we should still pay much attention on economic growth because many issues such as employment, improvement of living standard and social welfare are solved by economic growth. However, there is another issue existing in economic development, people's livelihood,which is not necessarily improved along with the economic growth automatically. Therefore, it is necessary to evaluate local government's performance in improving people's living standard. In addition, income distribution is a prominent issue, since the economic development will not be realized successfully if the binary urban-rural structure and income gap become larger and larger with the economic growth.

　　There are two indicators to assess economic growth: GDP growth rate and fiscal revenue growth rate. The former represents the extent of economic growth, while the latter, a relatively high credible indicator, represents government administrative capability as well as economic growth.There are altogether threepeople's livelihood indicators: weighted income growth rate, per capital urban housing area and per capital rural housing area. Even though there are many factors reflecting urban living standard, we believe that the people's living standard depends fundamentally upon their income. In addition, weighted growth rate of urban and rural income is accountdby ourselves, and the weight is assigned according to the urban and rural population proportions. We really hope the government pay more attention to increase the income of the majority, especially i the farmers' .Meanwhile, considering that housing problem is the most focused issue inpeople's life, per capital housing area in both urban and rural areas are chosen as evaluation indicators.

　　Income distribution is another key issue in economic development. Only the equality of income distribution is achieved, the majority of people can enjoy the benefits of economic growth. Here are three indicators to evaluate social distribution: the ratio of per capital income between urban and rural areas reflects the level of urban-rural interaction, urban survey unemployment rate reflects the employment and equality problem in urban areas, and the percentage of rural poverty population gives expression to the issue of distribution equality in rural areas.

　　Generally speaking,people's livelihood indicators and income distribution indicators have complementary effects on economic growth, which lead local governments not only to care about GDP growth rate, but also to those issues related to living conditions and social equality.

　　As for the growth efficiency, our evaluation system only includes two indicators: energy productivity and water resource productivity. The reason why to choose those two indicators is that energy and water resources are most scarce resources in China.

　　2. Social Development

　　The social development indicators consist of three aspects: infrastructure, governmental and public service, public and social security. Infrastructure measures the capability to provide social service; Government public service and public security reflect the ability of local government to guarantee resident's basic security, including food and drug security, safe production, social stabilization as well as public security; and social security shows how much the local government pay its attention to the public life security.

　　There are altogether six indicators separately reflect the educational, medical, informational, social security, transportation and other aspects, which are the rate of urban access to gas, the rate of qualified sanitation of drinking water in township and rural areas, the popularization rate of 9-year compulsory education, hospital beds per thousand people, the per capital highway length per square kilometer, and per capital paved road area in urban areas.

　　The government public service and security is a major social issue in recent years. There are four indicators to evaluate this aspect: safe production, rate of exposed criminal cases, rate of solved criminal cases, and public satisfactiondegree. Meanwhile, one vetoing indicator, group accident, is included here. Once the group accident occurs, the local government will be denied completely. The indicator for safe production is also a vetoing indicator, which is used in line with the evaluation indicator of the General Administration of Supervision and Management for Safe Production. Rate of exposed criminal cases and rate of solved criminal cases are used to evaluate the security situation in certain area. The public satisfaction degree is obtained by survey.

　　Social security is an important aspect of government work, and two indicators are adopted here: coverage rate of urban social insurance and coverage rate of rural medical insurance.

　　3. Ecology and Environment

　　The evaluation indicators for ecology and environment are very important part to reflect the scientific development view, which consist of ecological, environmental andcircular utilization indicators.

　　Ecological indicator is to evaluate an area's ecological change, composed of vegetation coverage rate and soil degradation rate. The vegetation coverage rate, which is also one of the most important indicators to evaluate ecological environment, reflects an area's coverage of grassland and trees. The soil degradation rate shows an area's treatment of soil and water losses and desertification, including the change rate of soil and water losses, desertification and stone desertification.

　　There are four environmental indicators,to evaluate environmental quality change, pollutants discharge, and resource consumption, which are the change rate of final discharge of industrial solid wastes, the quality change of inland surface water, the percentage of environmental protection investment to GDP, and the up-to-standard rate of urban air quality.

　　As for the circular utilization, only one indicator, waste recycling and comprehensive utilization rate is adopted. This indicator measures an area's waste recycling level. In practice, we temporarily use a substitute indicator, the proportion of the industrial production value of waste gas, water and residue to the industrial value-added.

　　4. Vetoing Indicators

　　We design two vetoing indicators. One is group accident, including food and medicine safety, large-scale violent conflict and other accidents of responsibility causing major casualties. The other is the environmental accident, such as the leakage of poisonous and harmful substances

　　Part Four

　　Scoring Principle

　　We mainly consider the following three principles when scoring:

　　First: The general scoring principle is to put prominent emphasis on the harmonized development of economy, society and environment when examining local government's performance.

　　Second: The scoring result is not only to give a comprehensive evaluation of local government's performance based on indicator system, but also to mark out the dynamic changing trend of indicators at different levels.

　　Third: As for the indicator weight, the "equal-weight average" is basically adopted. Notably, the weights of some indicators are adjusted slightly. The corresponding weight values are given in brackets in table 2.

　　Table 2 Indicator Weight Illustration　　

　　In practice, the proportion of industrial production value of waste gas, water and residue to the total industrial value-added is temporarily used to substitute the circular utilization indicator. Vetoing indicators are only a kind of probable indicators, which means the whole government performance will be denied once they occur.

　　The public satisfaction degree of government service is obtained by survey.

　　The moving average value of indicators within three years is regarded as benchmarks. By doing this, the influence of abnormal value will be avoided. Then the indicator value of succeeding years is accountd based on these benchmarks. Finally, we get the yearly weighted average score for each region. Therefore, the weighted average indicators obtained from this method cannot only be compared vertically among themselves, but also be compared horizontally with other cities.

　　Part Five

　　　 Case Study

　　The Task Force chose four county-level cities nationwide to test the indicator system. We mainly considered such factors as economic development, geographical location, ecological environment and etc during the selecting process. These four cities can basically reflect the differentiation among areas of our country. They include not only metropolises, but also small and medium sized cities, not only cities in eastern developed area with rather good economies, but also resource cities in middle and western China. We have concealed names of these cities due to their request.

　　The empirical results indicate hat our indicator system is able to meet the requirement as we supposed by and large, and it can also stimulate the local government to pay more attention to social development as well as ecological and environmental protection, and to give more respect to social justice and life.

　　Because the tested cities were not able to provide all data, we encountered some problems. For example, some indicators were not included in the test, which resulted in the excessively big proportion of the existing indicators and some abnormal phenomena. However, if this set of indicators is put into practical use and all evaluated cities can provide complete and real data, all these abnormal phenomena will be eliminated.

　　At the same time, some problems has been found in the empirical analysis, which are,

　　First is the loss of indicators. A lesson can be learned, i.e. indicators of third level referred by every indicator of second level should be more than three. Only in this way can we avoid the situation that certain indicator has an unproportionate large weight. However, due to the availability of data, this problem still exists in today's indicator system.

　　Second is the availability of data. At present, data provided by statistical departments are not able to meet the requirements of indicator system. Some data are not available up to now. Some data are available in this city, while not available in other cities.

　　Third is the data quality. Problem still exists in the present statistical data quality. There is already a common sense on this point.

　　We believe that all these problems will be solved with the improvement of China's statistical institution.

　　Case study city 1　　

　　We can see from case 1 that the low score of this city mainly because serious problems occurred in the aspect of safe production. This result shows that our indicator system pays respect to individual life.

　　Case Study City 2　　

　　Case study city 2 is a rather normal case.

　　Case study city 3　　

　　Case study city 4　　

　　The high score of case 4 is mainly because of the extremely high score in the item of recycling. Its industry of utilization of waste gas, water and residue has experienced rapid growth since the base year, which makes the score higher. Meanwhile, because there is only one indicator to evaluate recycling , the indicator enjoys very high weight, which makes the score unproportionately high.

　　Part Six

　　Recommendations

　　Due to the big differences of basic conditions, current situations among different regions, it is very complicated and difficult to comprehensively evaluate local governments' performances. Based on our study, some recommendations on research directions and implementation schemes are given as follows.

　　1. To speed up the research and application of physical accounting system for resources and environment. The fundamental method to evaluate government's performance is to implement sustainable development accounting system of national economy. Theoretically, one sound method is green GDP accounting system. However, the evaluation of government performance based on green GDP is not practical up to now, even for a rather long time. Moreover, a complete accounting system for basic resource is not yet formed because the obstacle of theory and methodology for accounting for water resource, environmental deterioration and pollution accidents still not overcame. The Task Force therefore suggests that the accounting system of material flow should be studied and put into use as soon as possible, which is the basis of green GDP accounting system, as well as the basis of circular economy management and resource efficiency measurement.

　　2. The benchmark should be its own progress indicators when evaluating the performance of local government. k If the nature condition is relatively adverse and the economic and social development is backward in its administrative area , no matter how hard the government works, it is difficult to reflect its performance when compared horizontally with others. Nevertheless, when using its own progress indicators to evaluate the performance, it is obviously to be observed the real effects and achievements of local government. Although the absolute development level may be rather low, the performance of government is still good if it keeps going upward. So, different benchmarks should be defined according to the different situations so as to evaluate fairly.

　　3. It is not necessary to assign different weights of same indicators to different regions. For example, the governments in western areas worry that environment indicators will restrict their economic development, and therefore suggest assigning more weight to economic growth indicators and less weight to environment indicators. But their performances are not improved by doing that because our indicators mainly reflect the change of environment. For instance, it is more difficult for eastern areas to improve surface water quality than western areas, since eastern areas are located at the lower branch of rivers and their water quality is adversely impacted by the whole region. In addition, the discharge of pollution in eastern areas is more intense than western areas. Therefore eastern areas do not enjoy any advantage in terms of improvement of environment quality. On the contrary, it is easier for western areas to recover the environment quality than eastern areas. Moreover, it is our goal to promote sustainable development by means of developing circular economy and establishing saving-oriented society. If the weights of environmental indicators are reduced , the behavior that is 'pollution first and treatment second' will be encouraged, the resource recycling will be reduced, the pressures of pollution treatment will be increased, and the transformation of economic growth will be delayed. As a result, the ability of sustainable development of these areas will be eventually declined.

　　4. It is highly recommended to establish the information system of environment monitoring networks covering the whole country, as well as the system of resource consumption and recycle management, so as to make the government performance evaluation more scientifically reliable. At present, the environmental indicators and data are far beyond the demand for evaluating the local government performance. Although the environment data in state and province level are rather complete, the data in city or county levels is still imperfect. For instance, no one city has complete data of total water consumption, waste discharge and waste recycling.

　　Appendix one：

　　Questionnaire on Comprehensive Public Satisfaction for Local Government

　　Please mark the item that satisfies you with "√"

　　1. Are you more confident in future life when compared with five years ago?

　　□Very confident　　　　　 　 □Rather confident

　　□Do not care　　　　　　  　 □Less and less confident

　　2. What is your comment on the change of social security environment in your city?

　　□Much better　　　　　　　　 □Rather better

　　□Basically no change　　　   □Increasingly worse

　　3. Do you think that your living standard has been improved evidently within the five years?

　　□Improved greatly　　　　　  □Somewhat improved

　　□Basically no improvement　  □Declined somewhat

　　4. What do you think of the life environment situation in this city in the recent five years?

　　□Much better　　　　　　　   □Somewhat better

　　□Basically no change　　　　 □Somewhat worse

　　5. What do you think of the change of local social equality?

　　□Very equal　　　　　　　　  □More and more equal

　　□No distinct change　　　　  □Less and less equal

　　6. When you encounter difficulties, do you think your can get help from government?

　　□Definitely yes　　　　　　  □Probably yes

　　□Normally no　　　　　　　　 □Absolutely impossible