Let rule of law guide the market

Second, the authorities should adjust the power structure of market supervision and establish a law enforcement organization that strictly separates policymaking and policy implementation. The new comprehensive market supervision organization should integrate the market supervision functions of the State Administration for Industry and Commerce and the General Administration of Quality Supervision, Inspection and Quarantine; and integrate the antitrust law enforcement power of the Ministry of Commerce, the National Development and Reform Commission and the State Administration for Industry and Commerce to establish an antitrust bureau directly under the State Council. It should improve the coordination mechanism between the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission to focus more attention on financial activities rather than financial organizations.

Third, legislation of market supervision should be strengthened. The authorities should enact a market supervision law to establish the legal status of supervision organizations, sanction violators and put limits by law on supervision. The Food Safety Law and Drug Administration Law should be revised to perfect the food and drug supervision system. And anti-administrative monopoly measures should be included in the Anti-monopoly Law.

In a modern market economy, it is difficult to guarantee the effectiveness of market supervision if it solely relies on the government. Social organizations such as industry associations should be authorized with corresponding legal status so they can play a role in market supervision and ensuring enterprises' self-discipline.

The frequent consumer goods safety scandals that have been exposed reflect the loopholes in the government's market supervision and the lack of self-discipline. We should develop intermediary organizations in the market to propel market supervision by law.

Although numerous intermediary organizations have emerged in many industries since the launch of reform and opening-up, most of them are attached to administrative organizations and lack the necessary independence required. Thus these intermediary organizations have played a limited role in maintaining market competition and market order. We should accelerate the uncoupling of industry associations and support enterprises to establish independent industry organizations, which can then take on administrative management functions from the government.

Industry associations should establish a corporate governance structure to guarantee their healthy development and set out their market supervision responsibilities. The authorities should define in law the independence and management framework of industry organizations.

The transformation of market supervision can guarantee that the "market determines resource distribution" and the safety of China's consumer market.

The author is president of the China Institute for Reform and Development.

(China Daily 06/27/2014 page8)