Possible fine deciphered in light of recent events

A warning from the Chinese government that it may impose a fine on a US automaker for monopolistic behavior has observers wondering if there is a deeper message behind the action in the wake of the incoming Trump administration.

Zhang Handong, director of the National Development and Reform Commission's (NDRC) price supervision bureau, told China Daily that the penalty, against an unnamed company, comes as authorities work to step up antitrust oversight and expand the industries they scrutinize.

Bloomberg reported Wednesday that China is looking at General Motors' retail-pricing practices. Some dealerships in the SAIC-GM network were being investigated over retail -pricing practices, Bloomberg said.

All of this comes as Sino-US relations have been strained by a telephone call between President-elect Donald Trump and the leader of Taiwan earlier this month. In the campaign Trump had urged that tariffs be placed on Chinese exports to the US while The Global Times wrote in an editorial that orders for Boeing Co planes could be replaced and that Apple Inc.'s iPhone sales may suffer in a potential retaliatory move from the Chinese.

"It's hard to say if it's retaliation for Trump talking to Taiwan or not. The timing seems suspicious but I saw a quote in a report saying the investigation was likely ongoing for a long time," auto industry analyst David Whiston of Morningstar Inc said in an email.

"The message is that China can respond to actions by the new Trump administration, but it will do so in a thoughtful fashion. An overreaction would be dangerous; this step is carefully measured," noted Derek Scissors of the American Enterprise Institute.

The NDRC's Zhang said no one should read anything improper into the timing of penalty decisions or businesses that are targeted. Zhang said that the commission works independently and has no intention to use anti-monopoly actions as a tool to protect domestic brands.

"The major reason for issuing fines is to improve market order," he said.

Morningstar's Whiston said the government may want Chinese automakers to succeed over Western ones, but consumers in China still favor foreign brands. "The two largest players are GM and VW (Volkswagen) and I do not see that changing soon," he said.

paulwelitzkin@chinadailyusa.com