The performance-based salary system is one of the four reforms for public institutions in China, namely, the personnel system, salary system, fiscal investment system and pension insurance system. The so-called performance-based salary system means "pay determined by position" for public institutions. Salary treatment will completely correspond to job responsibilities, employment situation and work performance. Those with "ranks" but without posts or positions can no longer enjoy benefits idly. The transformation from "pay determined by person" to "pay determined by position" will not only affect the benefits of a large number of on-duty employees of public institutions, but also involve their benefit levels after retirement. It is the biggest incentive to establish a personnel employment system for public institutions and encourage employed personnel to work hard.