OpinionChina must rein in its state-owned monopolies
Hu Shuli says for the antitrust law to really have bite, the NDRC must throw the book at the state giants that block market development
China's anti-monopoly law is five years old this month, but ensuring that it truly bites is still a work in progress.
The government has stepped up its enforcement action of late, led by the National Development and Reform Commission (NDRC). In a crackdown on price-fixing, the NDRC not only slapped record fines on six producers of infant milk formula, targeting major multinationals, but also penalised five Shanghai-based gold retailers and a local trade association.
The law’s limitations means it has not been strong enough to take on the state firms
Antitrust laws are complex. So it is all to the good that, five years after its enactment in China, the authorities have become more confident in its execution. But for the law to be really credible, all before it must be equal. Thus, the regulator must confront the biggest monopolists in China - state-owned enterprises and the government-business hybrids such as profit-making government agencies.
To be fair, the lapses in implementation are understandable. In an advanced economy, an anti-monopoly law is built on sound market principles and targeted at market excess. But China today is still in transition from a centrally planned economy to a market economy, and enacting such a law can only be - in the words of one scholar - "a symbolic act in the creation of a legal framework for a market economy". The law's limitations mean it has not been strong enough to take on the state behemoths.
For one, in an early draft of the law, the entire chapter on abuse of administrative power was initially struck out except for Article 37, which says "administrative organs may not abuse their administrative power to formulate regulations with the contents of eliminating or restricting competition".
In the provisions on oversight, Article 51 states that government officials found to have abused the law may face sanctions ordered by the "the department at a higher level", while the "authority for enforcement of the law" may only "submit a proposal to the relevant department at a higher level for handling the matter according to law".
Another point of contention was whether, in cases of abuse, the anti-monopoly law or the laws regulating various professions should take priority.