The Administrative Licensing Law was passed on August 27, 2003, by the fourth session of the Tenth National People's Congress Standing Committee with 151 votes in favor, 0 against, and 1 abstention, and came into effect on July 1, 2004. It is the first and currently the only standalone legislation specifically regulating administrative licensing in the world.
First Aspect: The Concept and Definition of Administrative Licensing
The concept and its application of administrative licensing have both theoretical significance and important practical value because it involves the regulatory objects of the Administrative Licensing Law. There are three main perspectives in academic circles regarding what constitutes administrative licensing:
1. Narrow Definition: Administrative licensing is a form of specific administrative action where an agency with statutory authority grants permission to citizens, legal persons, or other organizations to engage in certain activities after reviewing their applications according to law. According to this understanding, only when the licensing authority issues a license does it qualify as administrative licensing, which aligns with the definition provided in Article 2 of the Administrative Licensing Law.
2. Broad Definition: Beyond the narrow definition, administrative licensing includes both the issuance and denial of licenses. Since the applicant has submitted an application, the licensing authority may either grant or deny the license after review. Denial is also part of the administrative licensing process, as Article 38(2) of the Administrative Licensing Law indicates that administrative agencies must explain their reasons for denying a license.
3. Broadest Definition: Administrative licensing not only involves the issuance or denial of licenses but also includes subsequent supervision and management of licensed activities after issuance. This includes the content stipulated in Chapter Six of the Administrative Licensing Law concerning inspections and supervision, which extends the scope of regulation under the law.
In general administrative law theory, the second understanding (broad definition) is considered the mainstream viewpoint.
Parties involved in administrative licensing include administrative agencies or legally authorized organizations and administrative counterparts in administrative law theory, such as citizens, legal persons, or other organizations. In different stages of the administrative licensing system, the counterpart is referred to differently: as an applicant during the application stage and as a licensee after obtaining the license.
Key Elements of Understanding Administrative Licensing:
1. Administrative licensing is a specific administrative action targeting particular citizens, legal persons, or other organizations, making it a concrete administrative act rather than an abstract one.
2. Administrative licensing is an action based on application. The application from the counterpart is a necessary procedure and condition for granting the license.
3. Administrative licensing is a formal administrative action requiring adherence to specific legal procedures and formats.
4. Administrative licensing requires legal review before granting the license.
5. Administrative licensing is a beneficial administrative action, granting rights or qualifications to the counterpart to engage in specific activities.
Informally, administrative licensing can be understood as "you need government approval to proceed; without it, you cannot, and if you do, you risk being penalized."
Second Aspect: Non-Administrative Licensing Approvals
Non-administrative licensing approvals are listed alongside administrative licensing on government websites. They were first mentioned in the State Council General Office's notification issued on August 2, 2004, which explicitly listed 211 retained non-administrative licensing approvals. These types of approvals widely exist in the administrative approval work of governments at all levels and will continue to have space for survival and development over a long period. The administrative approval system gave birth to the administrative licensing system.
For example, on August 27, 2004, the Ministry of Finance released a notice retaining 33 non-administrative licensing approval items. On July 5, 2004, the Shenzhen Municipal Government announced the results of the clean-up of administrative approval matters, showing that out of 701 total administrative approval items across 37 departments, 239 were retained as administrative licenses, 265 were canceled (37.8%), and 197 were retained as other types of approvals. On June 22, 2006, the Shenzhen Municipal Government officially announced the "Provisions on Several Issues Regarding Non-Administrative Licensing Approval and Registration" through a government order, which took effect on July 1, 2006—the Shenzhen model. Recently, the State Council has made decisions regarding the fifth batch of cancellations and delegation of management level administrative approval projects [Guo Fa [2010] No. 21].
Both non-administrative licensing approvals and administrative licensing involve pre-control over social affairs, are initiated upon application, and follow the principle of "no approval, no action." A typical example is the pre-approval by national development and reform commissions of various project initiations and economic activities by enterprises.
The distinction between administrative licensing and non-administrative licensing approvals lies in the fact that administrative licenses can be printed on a unified national form, with limited validity periods for certificates; however, non-administrative licensing approvals manifest as "replies, approvals," which cannot be standardized into a unified national format due to varying content in applications.
Non-administrative licensing approvals also exhibit characteristics such as lack of legislative control, low legal status of setting documents, arbitrariness, and non-uniform procedures.
Example: In a joint venture, shareholders A and B reached an agreement on equity transfer. Later, they signed a contract amendment stipulating that within one year of the contract's approval, A could repurchase the transferred equity at a certain price. On April 1, 2001, both the equity transfer contract and the contract amendment were approved. On July 2, A proposed repurchasing the equity, but B disagreed, citing a new reply from the original approving authority dated June 1, 2001, stating that the April 1, 2001, approval only covered the equity transfer contract and did not approve the equity repurchase clause, requiring further approval for any repurchase. In this case, the equity transfer agreement and the repurchase clause both require approval from the commerce bureau, which constitutes non-administrative licensing rather than administrative licensing.
Generally, approvals by higher-level administrative agencies on requests from lower-level agencies are not considered administrative licensing unless the higher-level agency fulfills external public management functions under Article 35 of the Administrative Licensing Law, such as the State Tourism Administration's approval of applications for "international travel agencies" submitted by provincial tourism bureaus, which should be handled according to Article 35 of the Administrative Licensing Law.
Article 35 of the Administrative Licensing Law: "Where administrative licensing shall be reviewed by a lower-level administrative agency before being decided by a higher-level administrative agency according to law, the lower-level administrative agency shall submit preliminary review opinions and all application materials directly to the higher-level administrative agency within the statutory time limit. The higher-level administrative agency shall not request the applicant to resubmit application materials."
See Q&A on the Administrative Licensing Law, edited by Zhang Feng, published by China Public Security University Press, 2004 edition.