Bureaucrats must not be allowed to hold back reform of approval process

Hu Shuli says that while delegating powers will benefit the economy, the law should be revised to discipline government officials who flout rules

PUBLISHED : Thursday, 23 May, 2013, 12:00am
UPDATED : Thursday, 23 May, 2013, 4:19am

Reforming China's administrative approval system has become increasingly urgent; it is key to reducing the government's role in the economy. In the short time since the new leadership took over, the State Council has held two executive meetings and cancelled or delegated away 133 items that required administrative approval.

On May 13, Premier Li Keqiang called for less political power in the economy to promote creativity among market players. He said China could no longer rely on stimulus policies, and it should also look at market mechanisms to aid growth.

To keep officials focused on reform, we need to specify the scope of their duty

The economic situation is tough. Reforms to the administrative approval process can provide both temporary and permanent solutions to problems, but how can the public be assured that reforms are real this time?

During China's time as a centrally planned economy, the administrative approval system was one of the government's main tools to manage the economy and society. The history of China's reform and opening up is, in fact, the history of how government simplified policies and delegated powers.

Since the Administrative Licensing Law came into force in 2004, six rounds of reform have been implemented with the result that more than 2,000 projects no longer need administrative approval. They accounted for more than 50 per cent of the total projects at the beginning of the reform. This process has taken several terms of government and more than 10 years; the determination to deepen reform is evident. However, reforms have been less effective than expected, with some local governments finding ways around the changes. Indeed, the situation is like a tumour that is difficult to heal.

One Chinese People's Political Consultative Conference member said that a business owner he knows had to pay 53 visits to various centres and get 108 chops before approval was finally granted for his investment project. The entire procedure took 799 working days. It's clear that administrative approval procedures have become formidable obstacles to China's economic transformation and sustainable development. They undermine the position of businesses in the market, distort the functions of the market and encourage corruption.

The new central leadership has developed a clearer policy direction and has kept its early promises about implementing specific measures to cut back on the number of projects that require pre-approval.

Thus, hopes have been revived, but leaders must remember that success rests not only on their willingness to push on with reform but also on their ability to refine the relevant laws and ensure a sound supervisory mechanism is in place.

Under the existing Administrative Licensing Law, authorities have much scope to exercise their own discretion. Various ministries and local governments have their own rules and regulations. And currently, the law does not apply when an administrative institution or department has to approve matters related to personnel, finance and external affairs in the units directly under its management, or in another institution. This has become an excuse for them to avoid the law. Therefore, it is necessary to revise the law as soon as possible, to ensure that officials comply and that those who flout any laws can be disciplined.

Sunlight is the best disinfectant, as the saying goes. The government should disclose publicly how the formalities of administrative approval are decided. Officials attending the State Council executive meeting last week said transparency should be increased so that people could see how such reform was to be carried out, while decisions about which matters did and did not require administrative approval, and the reasons for the cancellation or delegation of authority, would be open and subject to scrutiny by the media and the public. In this regard, officials should not regard the media as the opposition. Their positive attitude towards media scrutiny should be seen as a sign of their good faith in reforms.

Reform is not a once-only exercise. As Premier Li said: "What the market can do, we should release more to the market; what society can do well, we should give to society. The government should be in charge of and manage well the issues that it ought to govern."

Last week's meeting focused on four aspects: strengthening market supervision, innovation in providing public services, optimising administrative approval procedures, and strengthening overall management. If we want to keep officials focused on reform, we need to specify the scope of their duty and their accountability.

Reform of the administrative approval system has been a slow process, primarily due to a lack of effective checks on power.

This type of reform affects many vested interests. However, now that the targets have been set, everyone needs to see that it is the "real thing".

Only by doing so can we ensure that the reform push doesn't run out of steam.