The passing of the Law on Administrative Licences yesterday may help outline the government's role more clearly.

The law authorizes only the State Council and legislative bodies to decide on which affairs need licensing, while ministries and other cabinet departments are excluded.

By providing strict classification on licences and a supervision on local governments' performance in granting licences, the new code keeps a tight rein on the use of licensing, which used to be a key symbol of the government's power.

It is an answer to the public's long-standing call for a cutback in complicated government approval formalities and further freeing up of the market.

Many may have the unhappy memory of being required to obtain scores, or even hundreds of stamps from various government offices in order to open a small company.

The current approval system does not bar ministries and local governments from creating licensing items, resulting in large numbers of unwarranted approval procedures that have exhausted applicants.

In some places, a multitude of stamps are invented by local officials, which have in many cases degraded into means of extortion.

The misuse of licensing power is not merely a matter of image to the government.

Keeping a hand on so many issues on the business and social fronts, the government can hardly fulfil the pursuit of efficiency and a smaller size, not to mention its commitment to the World Trade Organization, which requires administrative permission in member economies be conducted in a transparent and standard way.

With a strict limit to the scope of licensing, the new law liberalizes both the market and the administration.

It will take some time to sort out unwarranted licensing items and regulate the performance of grassroots civil servants. This may be the reason the law is set to be effective next July.

Beyond the technical plane, the change the code is going to bring will be profound and lasting.

The restriction of licensing highlights the notion that the government has no power to empower itself.

It will be a catalyst in moulding the administration into a service-oriented institution rather than an all-powerful ruler.