"Sometimes governments intervene in issues that fall outside of their authority, and this has increased transaction costs and weakened the role of the market in allocating resources," Li noted.

The remarks are in line with a decision on comprehensively deepening reform made at the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC), which convened in November last year.

According to the decision, the market will be given a "decisive role" in allocating resources.

Wu Hui, an associate professor of governance at the Party School of the CPC Central Committee, said that some government departments used to focus on the administrative approval process while ignoring their role as regulators during the course of operations and afterward.

Through simplifying the approval process, the government should be able to enhance its regulatory role, which is necessary as the market cannot be effective all the time.

Gradual progress

"With fewer items subject to administrative approval, the new government has shown its determination to facilitate market-oriented reform," said Nie Gaomin, Director of the Economic Structure and Management Institute with the National Development and Reform Commission, the country's top economic planner.

China's current administrative approval system is a product of the planned economy. It has long been blamed by the public for inefficiency and possible corruption. To create a smaller, cleaner, more efficient and services-oriented government, the country began reforming the system.

In 2001, the State Council set up a leading group tasked with pressing ahead with the reform. Since 2002, experts in fields such as economics, law and public administration have been invited to evaluate the necessity of administrative approval procedures item by item. The experts finally reached a consensus that nearly 70 percent of those procedures could be suspended.

During the following decade, the Chinese Government abolished or adjusted administrative approval requirements for 2,497 items, or 69.3 percent of the total, according to figures released by the State Council's Administrative Examination and Approval System Reform Office.

Meanwhile, local governments have abolished or adjusted requirements for 37,000 items, accounting for 68.2 percent of the total.

Through the reform, the government has reduced direct interference in economic activities and let the market play a bigger role in allocating economic resources, according to officials in charge of the reform. Meanwhile, the government has strengthened macroeconomic control and market regulation, and attached more importance to social management and public services.

Analysts believe that cutting red tape will be a breakthrough in achieving the transformation of government functions into creating a sound market environment and providing basic public services to boost China's economy.

Wang Yukai, a professor of public administration at the Chinese Academy of Governance, said that canceling administrative approval requirements is expected to encourage entrepreneurship and prevent the government from interfering in the market.

"This is reform that is within the government itself. It is difficult, but we have to do it to ensure a vigorous market environment," said Chi Fulin, Director of the China (Hainan) Institute for Reform and Development. "Reducing administrative approval procedures may be a minor step, but it could lead to major reforms in the country."

Yu Hui, Director of the Public Policy Research Department of the China Society of Economic Reform, pointed out that though a majority of administrative approval procedures have been scratched off, the underlying structure of the system remains intact. He said that some controversial administrative approval requirements do not have a clear legal basis.

Zhang Jianhua, Chairman of Hubei Chamber of Commerce in Wenzhou, a city in east China's Zhejiang Province known for its small and medium-sized businesses, suggested the government remove more administrative approvals rather than delegating the power to lower-level governments.

"It doesn't necessarily mean that enterprises will benefit from power delegation, since they still need to go through the whole approval procedure," Zhang said.

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