A new law enacted by China's top legislature aims to remove much of the red tape associated with running businesses, and remove loopholes for corrupt officials to make money from issuing licenses and franchise rights.

The Standing Committee of the National People's Congress adopted the law on administrative licenses Wednesday, which embodies the principle of rigorously restricting the power of government bodies, and will facilitate the country's uphill battle against corruption.

The law of 83 articles in eight chapters, with a decree by President Hu Jintao, will take effect as of July 1, 2004.

The new law covering the government's right to grant franchises, permits or certificates to businesses and individuals "will have an unprecedented impact on the relations between government bodies and common citizens," Professor Ying Songnian said. Ying, a member of the NPC Civil Affairs Committee and dean of the department of law of the State Administrative College, helped write the draft's first version.

The State Council, or the Chinese cabinet, has found that its commissions and ministries used to empower themselves with as many as 3,000 kinds of special rights in granting franchises or permits.

"On the one hand, the government bodies were managing many things that they couldn't manage or should manage," Ying said.

He noted that government officials had found the right to granting franchises and permits very profitable for their departments, and themselves.

"Government bodies are enthusiastic about expanding their power because they can collect fees from those who want the franchises or permits, and this is a major source of government corruption," Ying said.

It was not strange to see a prospective entrepreneur become discouraged by too many visits to government departments just for permission to open a small restaurant.

Ying went on to say that the State Council launched its massive reform measures in 2001 after it discovered a large number of problems in a survey for the legislation. So far, commissions and ministries of the State Council have given up rights to administer 1,195 franchise rights, and handed 82 items to industrial associations and other intermediate agencies.

However, the legislation adopted Wednesday will ensure that such administrative reform continues in the right direction, lawmakers and legal experts said.

Under the new law, commissions and ministries of the State Council will no longer have the right to empower themselves with franchising rights, and fee collection practices will be abandoned.

A vital feature of the new law highlights "higher efficiency and convenience for ordinary common people," said Wang Yongqing, deputy director of the Legislative Affairs Office of the State Council.

The law simplifies the procedures for administrative licenses and abolishes unnecessary restrictions against applicants, and makes the government administration the last option only after all other means have failed.

A government license should only be required by a citizen if his business is related to national or economic security, public interest, personal rights and property of other citizens, exploitation of rare natural resources and the distribution of limited public resources, according to the law.

To avoid the misuse of power by government bodies, franchises for the distribution of limited resources should be granted through bidding, auction or competition, it notes.

The law says that the people who want to start a business or other enterprise will be required to go to far fewer government agencies for approval. Even if approval from different government bodies is required to get one thing done, for instance opening a restaurant, these bodies may also set up a special office dealing with restaurant certification so applicants do not have to go to different places.

"We shouldn't cost people too much effort, time and money, even if it means more work for the government," said Wang Yongqing, the official with the Legislative Affairs Office of the State Council.

Such stipulations are also in compliance with the rules of the World Trade Organization and are needed by China in accommodating itself to an ever more globalized economic structure, he acknowledged.

The Chinese leadership has declared that "power should be used for the people, passion should be tied to the people and interests should be sought for the people."

The new legislation can be seen as a new landmark for the Chinese leadership in enforcing its political manifesto, legal experts said.

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