Foreign money to see wider market access
By Guan Xiaofeng (China Daily)
Updated: 2005-07-05 06:05

Foreign investors are expected to be granted wider access to the Chinese market once the long-awaited anti-monopoly law, at the draft stage since 1994, is enacted, experts have said.

An actress in traditional Chinese costumes talks at backstage through China Mobile service on June 25, 2005. [newsphoto]

Tong Jiadong, a professor of economics at Nankai University in Tianjin, said the law provisions will break monopolies in such industries as telecommunications and electrical power supply.

"The anti-monopoly law is absolutely good news, both to Chinese and foreign businesses," Tong said in an interview with China Daily.

"Foreign enterprises have reason to be optimistic because they will gain more access to a unified and orderly Chinese market and have more opportunity to expand their business."

The exact content of the law, listed in this year's legislation plan of the Standing Committee of the National People's Congress, has not been made public.

But Tong said the law would act against multinationals conducting monopolistic practices in China.

"It should be made very clear that the law does not prohibit dominant market position itself but does prohibit abuse of such a position," said Sheng Jiemin, dean of Peking University's Institute of Economic Law.

"We will not simply limit mergers and acquisitions, which are a good way of optimizing resources, we will create a report system in which any mergers or acquisitions that meet certain criteria should be reported for approval."

The criteria will be transparent, meaning enterprises will be held fully responsible for their business activities, Sheng said.

He also revealed that the State Council will probably set up an independent and professional agency, such as an anti-monopoly authority, to enforce the law.

Li Dongsheng, vice-minister of the State Administration for Industry and Commerce (SAIC), told a recent symposium on competition policy and legislation that the law will result in a unified, open, competitive and orderly market mechanism by prohibiting industrial monopolies and regional blockades.

At the same meeting, Toru Shibuichi, director of the Asian Development Bank Resident Mission in China, said China's monopolistic practices have three forms: State-owned enterprise monopolies created through links to administrative authorities, monopolies created by local governments to protect regional markets, and commercial monopolies created through various unfair business activities.

"The current laws and regulations are inadequate for addressing the problem of monopolies, and there is an apparent need for new laws," Shibuichi said.

China enacted the Anti-Unfair Competition Law in 1993 as the first step in regulating unfair competition. Other anti-monopoly provisions are covered in the Trademark Law, the Advertising Law and the Price Law.

According to SAIC statistics, more than 5,200 cases of monopolistic conduct were settled nationwide between 1999 and 2004, involving monopolies covering fields such as electric utilities, telecommunications, insurance, railways, postal services, petroleum and tobacco.

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