Abstract: Due to the developmental traits of China’s local authorities, their ability to acquire financial resources for developing finance contradicts with their duty to regulate and administer the financial market. Aside from undertaking the role of financier, regulator and supervisor, some of the Financial Service Offices are obligated to be both the trustees of local state-owned financial assets and supervisors of local state-owned investors, which makes the Financial Service Office a contradictory hybrid that concerns multiple interests and diverse values for undertaking different roles. Subject to that, the effect of financial regulation and state-owned financial management has been undermined, which deviates from the original intention of the system’s design. The realistic demand for comprehensively improving financial management performance requires the functional transformation on the target positioning of the financial management functions undertaken by the Financial Service Office, that is, it requires us to primarily adjust or appropriately separate the functions of financial regulation from local state-owned financial assets management undertaken by the Financial Service Office.