Abstract: The ability of graph neural networks (GNNs) to count certain graph substructures, especially cycles, is important for the success of GNNs on a wide range of tasks. It has been recently used as a popular metric for evaluating the expressive power of GNNs. Many of the proposed GNN models with provable cycle counting power are based on subgraph GNNs, i.e., extracting a bag of subgraphs from the input graph, generating representations for each subgraph, and using them to augment the representation of the input graph. However, those methods require heavy preprocessing, and suffer from high time and memory costs. In this paper, we overcome the aforementioned limitations of subgraph GNNs by proposing a novel class of GNNs---$d$-Distance-Restricted FWL(2) GNNs, or $d$-DRFWL(2) GNNs, based on the well-known FWL(2) algorithm. As a heuristic method for graph isomorphism testing, FWL(2) colors all node pairs in a graph and performs message passing among those node pairs. In order to balance the expressive power and complexity, $d$-DRFWL(2) GNNs simplify FWL(2) by restricting the range of message passing to node pairs whose mutual distances are at most $d$. This way, $d$-DRFWL(2) GNNs exploit graph sparsity while avoiding the expensive subgraph extraction operations in subgraph GNNs, making both the time and space complexity lower. We theoretically investigate both the discriminative power and the cycle counting power of $d$-DRFWL(2) GNNs. Our most important finding is that $d$-DRFWL(2) GNNs have provably strong cycle counting power even with $d=2$: they can count all 3, 4, 5, 6-cycles. Since 6-cycles (e.g., benzene rings) are ubiquitous in organic molecules, being able to detect and count them is crucial for achieving robust and generalizable performance on molecular tasks. Experiments on both synthetic datasets and molecular datasets verify our theory. To the best of our knowledge, 2-DRFWL(2) GNN is the most efficient GNN model to date (both theoretically and empirically) that can count up to 6-cycles.