Abstract
This study aims at exploring the institutional background and economic consequences of revenue-generating of Chinese public agency. Being triggered off by the reform of public agency finance system in 1980, revenue-generating activity as self-financing behavior has been prevailing and the measure of doing it has been diversified in the context of the economic transition. While some of revenue-generating activities have contributed to economic gains, most of the activities involve the abuse of public powers and have led to negative welfare consequences. Among other consequences, inequitable income distribution has been a severe one.