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New licensing law streamlines bureaucracy
By Meng Yan (China Daily)
Updated: 2004-07-01 08:47

Fan Xingliang, 50, had not taken an exam for almost three decades. But the governor of Huangyuan County in Northwest China's Qinghai Province, took a test last week on the Law on Administrative Licensing.

Residents checking government documents chat with a staffer at Shandong Province's Jinan Administrative Service Centre, where almost 300 types of applications for administrative approval can be processed. [newsphoto]

"The test paper was not that difficult since I had a month of training," Fan said. "But the real test on how to translate the law into concrete actions is awaiting us all."

Millions of civil servants like Fan have taken similar tests on the law prior to its implementation date.

In Central China's Hunan Province, the result of this test has even been taken as a major basis for the evaluation and promotion of local officials this year.

It is part of the governments' efforts to prepare its administrative bodies at all levels for the enforcement of the legislation.

Experts agree with Governor Fan that the real test for all the administrative bodies in China begins today when the Law on Administrative Licensing takes effect. And it will not be an easy one.

The primary test is on the idea of administration among government officials, said Jiang Ming'an, a professor with the Law School of Peking University.

In a market economy, Jiang said, the government should offer more service to the public.

But in reality, the administrative bodies have over the years formed a concept that administration equals management, which is merely fulfilled through licensing.

Administrative licensing, which refers to the formal granting of legal permission for individuals, corporations or other organizations to engage in special activities, is a major government function exercised by authorities at all levels. And most of the licensing items are business-related.

Over the years, hazardous expansion of licensed items, over-elaborate procedures, poor efficiency, and under-the-table, unfair or imprecise conditions for granting licences have seriously infringed upon the rights of individuals and corporations and hence hampered China's efforts to build a market economy.

The thought of administrative licensing immediately reminds people of the common red seals indicating official approval. The number of seals indicates the degree of difficulty in getting the licence.

It was once reported that setting up a local retail market needs 112 common seals while operating a local hennery requires 270.

Miao Wei, general manager of the automaker, Dongfeng Automobile, told President Hu Jintao during this year's NPC session that they sometimes have to wait for half a year to get government approval for a technical innovation project involving the import of foreign equipment.

Governments shifting function

The State Council began a nationwide campaign to rectify the situation in 2001. State Council commissions and ministries have given up the authority to administer more than 1,795 licensing rights, and have handed more than 100 items over to industrial associations and other intermediary agencies.

Last August the Standing Committee of the 10th National People's Congress, China's top legislative body, passed the Law on Administrative Licensing.

According to Li Fei, vice-director of the Legislative Affairs Commission under the NPC Standing Committee, the law, a set of comprehensive rules for the establishment and implementation of administrative licensing, has managed to balance the rights of citizens and the duties of government.

It is expected to greatly reduce the amount of administrative licensing.

The law states that only the NPC, the State Council and local people's congresses have the right to determine whether one activity needs an administrative licence. Departments under the State Council no longer have the right to do so.

Li said the now clearly-defined relationship between the government and the market will help the government abandon traditional management methods that bordered on direct interference in social and economic activities. The new law is aimed at more rational macro control and offers more social services.

As a result, social intermediary organizations and industry associations will play a larger role in the country's economic activities.

The governments have reduced many licensed items in preparing for the implementation of the law.

The Ministry of Public Security, for example, has cancelled its regulation that all recreation places such as karaoke outlets must gain approval from the ministry before they can open for business.

"Pre-operational supervision could hardly prevent any problems that might occur in the operating process. We have come to realize that administration means more than simple approval," said a ministry official who declined to be identified.

Li said simplified procedures to get an administrative licence will bring more convenience to citizens, corporations and other institutions.

Checking corruption

Li said that in addition to helping the government in its function-shift, the law will also help stop closed-door deals and trading money for power.

Overuse of licensing invites corruption because it creates more opportunities for kickbacks, said Ying Songnian, professor and director of the Division of Law of the National School of Administration.

Complicated procedures, poor efficiency, and underground, unfair or imprecise conditions for granting licences all contribute to the problem, he added.

That view was echoed by Wang Yongqing, vice-director of the State Council's Legislative Affairs Office.

Wang, a drafter of the law, said most of the corrupt officials now behind bars were involved in such acts.

"We gave top priority to how to prevent and check corruption in the issuing of administrative licences when we drafted the law, and the majority of its provisions were designed to achieve this goal," he said.


Jiang Ming'an warned that without sufficient preparation, the administrative bodies will face more troubles in the future. He expected a surge in the amount of administrative cases after the law comes into force.

He revealed that the Supreme People's Court started drafting a piece of judicial explanation on the application of the law in legal proceedings almost half a year ago.

Under normal circumstances, the supreme court will start preparation for a judicial explanation on a law after it has been implemented for some time.

Jiang said the early preparation by the supreme court indicated that it is trying to avoid the hurry-scurry scenario by the courts at all levels.

Considering the dramatic change administrations will face after the law is in place, lawmakers decided it should go into effect nearly a year later so that the administration would be better prepared for its enforcement.

The entire administrative system was mobilized to meet challenges the enforcement might bring about.

The State Council issued guidelines on implementing law-based administration in March.

The guideline set a goal for the government to realize law-based administration in about 10 years. It outlined six major principles for the governments, requiring them to administer according to law and in a reasonable manner. It says the procedures must be just and fair. It also requires the government to be highly efficient, honest, and offer more convenience to the people. It demands a balance between the rights and duties of the governments.

The State Council revised its working rules recently, demanding increased transformation of government functions and the establishment of a contingency system to handle public crises.

Public participation

Yu An, a professor with the School of Public Policy and Management of Tsinghua University, said the government is also facing the challenge of guaranteeing public participation in the decision-making process.

The law says that a hearing must be held prior to the establishment of an administrative licence, when there is a conflict of interest, to ensure transparency and fairness.

The law also grants applicants for a certain administrative licence and other interested individuals the right to demand a hearing.

It says the administrative organizations should inform applicants and interested individuals of their rights before making a decision on the administrative licence.

Introduction of the hearing system into the administrative licensing process will better ensure the interests of all related parties are fully considered, Yu said.

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