Abstract: Delayed transformation of government functions is becoming a bottleneck to the further development of China,and the existing discussions mostly focus on the implementation of policy.In this paper,we regarded the government as a supplier of public goods,and investigated the history of the development of government functions from the view of the demand structure of public goods,especially emphasized the principle of public product demand structure determining the function of the government.The market is actually a product of the institution construction,is a typical public goods provided by the government;therefore,the government and the market are not in the same level of mutual substitution relationship,but the relationship between supply and support of the upstream and downstream.Secondly,in the early stage of the development of market economy,the government should provide developmental public goods,and promote the formation and development of the market mechanism.However,in a developed market economy,when the demand for survival public goods by weak is becoming more and more urgent,the government should construct a system of social welfare for them to make sure their opportunity to live.Therefore,an ideal structure of modern government functions should be a dual financial model that could balance survival and development of public goods.

Key words: government functions, public goods, fiscal system