Wu Guangqiang

WHAT if a business has to spend eight years going through so-called "administrative examination and approval" before it finally gets the green light? One thing is certain: as Zhu Rongji, former Chinese premier, quipped when citing China's prolonged entry into the WTO, "Our hair has gone grey." Some businesses even have to close shortly after opening because their methods have become obsolete during the lengthy bureaucratic process.

While working for a large State-owned company, Li Rongrong, former director of the State Assets Administration Committee, personally went out of his way to get a new project approved. He called it an "agonizing experience" where he had to wait in endless lines and spend much of his organization's PR budget before getting the hundred or so stamps of approval on his heavy bundle of papers. "Even State-owned businesses have to go through the ordeal, what happens to the non-State-owned ones?" enquired an exasperated Li.

Stories like Li's can go on for days. In Sichuan, to get approval for a hydropower station, a team led by a deputy manager of the company took five years to get all the stamps. But sadly, they had to go over some of the procedures again because these items had already expired by the time they got approval.

Though China has made remarkable progress in slashing unnecessary items of administrative examination and approval, cutting from over 4,000 to the current figure of 2,000, this is still stunningly high. Given the fact that governments at all levels have their own items, the obstacle is huge enough to scare many investors away.

Furthermore, the truncated number does not necessarily mean more efficiency. Only insiders know what kind of tricks are held to hold onto power. Among others, they divided and subdivided major items into many minor ones before cutting some irrelevant and unimportant ones-normally free of charge. They never fail to keep the key ones and the ones that invariably change.

Over the status quo of China's reform in administrative examination and approval, the comment of Wang Yukai, secretary-general of China Research Society for Reconstructuring the Administrative Systems, may be representative: "This (administrative examination and approval) has become a freak in China's transition from a planned economy to a market one, which greatly increases costs of economic activities. Reforms in this regard so far have been more formal than concrete, unable to get to the root."

It has been the central government's policy to further push forward with reforms in administrative examination and approval and Chinese leaders have lately renewed their commitment to doing so. While addressing the APEC CEO Summit, President Hu Jintao pledged to "deepen the reform of administrative examination and approval system and to reduce government intervention in microeconomic activities." Premier Wen Jiabao on Nov. 14 stressed that the government should leave alone whatever that can be decided and regulated through market mechanism.

It's not an overstatement that much of China's corruption comes from the administrative examination and approval system. Powers of administrative examination and approval have been used by many officials as a means of rent-seeking. Up to now, over 80 provincial-level officials have been found guilty of graft, all of whom had powers of administrative examination and approval.

In recent years, the visible hand is gaining the upper hand of the invisible one. Gigantic State-owned businesses are growing even more colossal. With overwhelming monopoly, these giants are taking liberty to charge exorbitant fees and offer poor services.

The National Development and Reform Commission (NDRC) recently confirmed that it had launched an antitrust investigation against China Telecom and China Unicom on broadband access. If it stands, the two behemoths might be faced with a huge fine.

While China needs the visible hand to rein in the inherently greedy capital force, the overindulgence of it will surely stifle the Chinese economy and even threaten institutional reform. In this sense, to strengthen the invisible hand is to offer new hope to China's future. But will vested interest groups give in so easily?

(The author is an English tutor and a freelance writer. He can be reached at jw368@163.com.)