This article reports on the completion of the first stage of China’s reform of its public institutions (sometimes referred to as public service units). The first stage involved eliminating certain categories of public institutions such as those in the administrative and business categories, leaving most of the public service institutions intact. The main goal of this reform is to create a more innovative management system for public institutions and strengthen their public service nature as a way to promote the development of the public service sector (which also includes social organizations), and improve the quality of public services.