Exclusive | Break up ‘unnatural and abnormal’ monopolies to sustain high growth, US-China business group head urges Beijing

China should break up the state monopolies which dominate nearly half of its economy to create a level playing field for both foreign firms and private Chinese companies, the president of the US-China Business Council says. 

The power of monopolies in China is “very unnatural and abnormal” compared with other countries, Craig Allen said in an interview with the South China Morning Post, adding that 43 to 45 per cent of China’s economy is closed to foreign investment and Chinese privately owned companies.

The long list of sectors controlled by state-owned enterprises in China includes telecommunications, media, electric power, oil and gas, coal, steel, aluminium, construction, engineering, aviation, railways and most of the insurance and banking sector, he said.

The present economic model “served China well” when it was trying to catch up to developed countries after opening up to the West 40 years ago, Allen said.

But “the catch-up is over”, and China, now the world’s second-largest economy, should get prepared for the next step in its development, which “is about innovation, creativity, intellectual property and globalisation on equal terms”, the business council president said.

Allen, a former trade official who held posts in the administrations of several US presidents – including as senior commercial officer at the US Mission to China in Beijing – was appointed the non-partisan, non-profit council’s president in July 2018, as the trade impasse between the world’s two biggest economies grew amid the Trump administration’s tough China policies.