Supervised administration units, such as the agency overseeing Shenzhen's social security fund, will merge with related government departments to create a more streamlined and cost-efficient structure. At the same time, units offering commercial services will be spun off as businesses with a clear ownership structure, the Southern Metropolis News reported.

About two billion yuan of the city's 90 billion yuan in assets is expected to be hived off into independent commercial entities. Authorities hope to make big administrative savings by cutting financial support to about one-third of public institutions and 10,000 civil servants.

China Development Institute vice-president Guo Wanda said if the Shenzhen reforms were successful, they could be the forerunner of change for the mainland's 1.3 million public service units, with their 29 million workers.

'Public service unit reform is the crucial third stage of public sector restructuring, following changes to state-owned enterprises and government departments. Shenzhen is the first city to offer an exact timetable for when and how it will proceed,' Mr Guo said.

'All the agencies and their assets will be examined, sorted and their services standardised. The process will make fair and clear which units should be cut and which we should keep.

'Some public service units actually produce commercially competitive products. But they can't establish a functional corporate governance structure and are therefore plagued by economic inefficiency. Now they will be more efficient to offer services to the public as enterprises.'