Sources with the Standing Committee of the National People's Congress (NPC) revealed that the draft legislation, proposed by the State Council, was given first approval by the top administrative body in July. It has to be endorsed again by the committee before taking effect, according to the nation's Legislative Procedure Law.

The system of administrative licence -- formal legal permission to conduct business or business-related activities -- was rarely used in China when it practiced a highly concentrated planned economy.

More licensing started when China began to implement its opening and reform policy some two decades ago, according to Zhang Chunsheng, vice-director of the Legal Affairs Commission of the NPC Standing Committee.

However, Zhang said the problem now is that administrative licence has been overused.

There are some 3,000 items that require licensing at the national level and that figure is about 2,000 at the provincial level, NPC statistics indicate.

Overuse of licensing is a seed- bed of corruption because it creates more opportunities for kickbacks, said Ying Songnian, professor and director of the Division of Law of the State Administrative Institute.

Over-elaborate procedures, poor efficiency, and underground, unfair or imprecise conditions for granting licences also stand out, said Ying, who serves as a member of the NPC Internal and Judicial Committee as well.

Last year the State Council began a nationwide campaign to rectify the situation. Over 1,000 licensable items are expected to be axed.

"Reductions in (required) administrative permission will create a greater arena for investors and inject more vigor into the national economy," said Ma Huaide, a professor of administrative law at China University of Politics and Law.

The draft legislation consolidates the fruit of this campaign.

"The reform in administrative licence is revolutionary for the administrative body," Ying said.

Ying added that it is a must to have national legislation, which is not only in line with the situation in China, but also consistent with international practice so that reform is thorough. He urged the creation of open and transparent legislation.

"Open rules are the best antiseptic and prerequisite for justness," Ying said. "The rules as to what items need administrative licence and how to get the licence should all be open to the public."

( People's Daily August 2, 2002)