The State Council's approval in principle of a draft of the long
awaited anti-monopoly law marks a significant step forward in the
country's efforts to create a fair and orderly marketplace.
This legislation, on which work started more than a decade ago,
has long been viewed as a much needed weapon in the battle against
anti-competitive behavior.
Relevant anti-monopoly provisions can be found in many existing
laws and regulations. But they have become increasingly
insufficient to target monopolistic practices emerging during the
nation's market-oriented economic reform and its rapid integration
into the global economy.
Hence, the battle against monopolies makes it imperative for the
country to enact comprehensive and systematic anti-monopoly
legislation, which will help ensure the healthy development of the
market economy.
After further revision, the draft anti-monopoly law will be
submitted to the country's top legislature for deliberation.
But while applauding this legislative progress, we must also be
aware that the current draft will not offer a legal remedy for all
forms of monopoly.
By excluding most of the clauses related to administrative
monopolies, it now focuses mainly on checking market-based
monopolies.
Both forms of monopoly hinder the country's sound economic
growth. Be it by administrative means or market dominance, monopoly
will curb fair competition at the expense of consumers and the
country at large.
On the one hand, consumers are disadvantaged, as, under a
monopoly, the prices of goods or services will always remain at an
artificially high level due to the absence of more efficient
competitors.
On the other hand, to the country's disadvantage, monopolies
prevent the entry of competitors and sources of innovation that can
raise the overall efficiency of the national economy.
As a market economy newly developed out of many years of central
planning, China still has a number of key sectors dominated by a
number of large state-owned enterprises with administrative
monopoly power.
The fact that average wage levels in these monopoly sectors is
three times the national average shows that the public has paid an
unfairly high price for goods or service these State firms provide
on an exclusive basis.
Meanwhile, with their recent aggressive purchases of some
Chinese companies, there is an increased threat of foreign firms
having a monopoly in some sectors.
In terms of expediting this legislation, it may be wise to
narrow the targets of the new draft to mostly market-based
monopolies. As the Chinese economy is further opened and reformed,
it is predictable that this sort of monopoly will be the main
target of the country's anti-monopoly efforts.
Yet, in order to protect fair competition and to boost the
efficiency of the national economy, the authorities also need to
keep an equally attentive eye on administrative monopoly.
(China Daily June 9, 2006)