Continuing to Improve the Market Environment for Fair Competition

As a fundamental principle of the market economy, fair competition provides a crucial foundation for the efficient operation of market mechanisms. The report to the 20th National Congress of the Communist Party of China (CPC) held in October 2022 states that the CPC will work to “refine the systems underpinning the market economy, such as those for property rights protection, market access, fair competition, and social credibility, in order to improve the business environment.” It further states, “We will take stronger action against monopolies and unfair competition, break local protectionism and administrative monopolies, and conduct law-based regulation and guidance to promote the healthy development of capital.” At the Central Economic Work Conference in December 2023, it was stressed that steps should be taken to speed up the development of a unified national market and break down local protection and market segmentation.

I. Impressive results in governing fair competition

A more mature top-level design

The 21st meeting of the Central Commission for Comprehensively Deepening Reform of the 19th CPC Central Committee reviewed and approved the Guidelines on Strengthening Anti-Monopoly Efforts and Further Advancing the Implementation of Fair Competition Policies. These guidelines set forth the very first top-level framework for fair competition policies, providing a strong guarantee for coordinated policy implementation. The Fourth Plenary Session of the 19th CPC Central Committee proposed to “strengthen the foundational status of competition policies.” This status was then placed on a legal footing in the provisions of the newly amended Anti-Monopoly Law.

Thanks to the reform of Party and state institutions, we have achieved unified competition oversight and law enforcement, and the National Anti-Monopoly Bureau has been established to provide a further boost to the professional forces in this domain. Furthermore, the State Council has established the Anti-Monopoly and Anti-Unfair Competition Commission, which has further streamlined working mechanisms and enhanced the synergy of competition regulation. 

Steady improvement of institutions and systems

We have made the market access system more equitable. By implementing unified registration management for business entities, we have ensured that businesses can participate in market competition in a timely, full, and fair manner. The rules of market competition have also been refined. To provide business entities with clear and explicit rules for guidance, we have developed a law-based anti-monopoly system, which consists of one law, one set of administrative regulations, five sets of departmental rules, and eight sets of anti-monopoly guidelines.

We have made substantive progress in implementing fair competition review nationwide, achieving full coverage across the central, provincial, municipal, and county levels. Since the implementation of this system, a total of 1.59 million new documents have been reviewed nationwide, and 4.47 million existing documents have been checked, with 90,800 documents that exclude or restrict competition being repealed or amended. This has helped effectively regulate government behavior and safeguard the market environment for fair competition.

Considerable improvement of oversight and law enforcement

We have remained committed to regulation that serves the public interest. By intensifying competition oversight and law enforcement in sectors such as public utilities, building materials, automotive production, and bulk pharmaceuticals, we have effectively protected the rights and interests of consumers. In accordance with legal provisions, we have stepped up the review of concentrations of undertakings in key areas such as biopharmaceuticals, high-end equipment manufacturing, and semiconductors, so as to guide and regulate enterprise investments and mergers, maintain sound market competition, and preserve the stability of industrial and supply chains.

To break down local protectionism and market segmentation, we have strengthened anti-monopoly law enforcement to combat the abuse of administrative powers in order to eliminate or restrict competition. For five consecutive years, we have carried out special enforcement actions against unfair competition, with a focus on rectifying disorderly competitive behavior, such as false advertising, counterfeiting intended to mislead, fake orders and ratings, and commercial defamation. Since the 18th CPC National Congress in 2012, we have, in accordance with the law, investigated and dealt with 333 cases of monopoly agreements and abuse of market dominance, concluded reviews of 5,249 cases concerning the concentration of undertakings, and investigated and handled 250,500 cases of unfair competition. These efforts have effectively put a stop to and prevented illegal competitive behaviors.

Deeper awareness across society

Comprehensive efforts have been made to communicate and interpret laws and regulations, including the Anti-Monopoly Law and the Anti-Unfair Competition Law. We have published annual reports in Chinese and English on China’s anti-monopoly and anti-unfair competition law enforcement efforts, as well as model cases. By clarifying the law through analyzing specific legal cases, we have helped heighten awareness among businesses of the need for competition compliance.

Regular events have been organized to publicize and raise awareness of fair competition, including the China Fair Competition Policy Promotion Week, the China International Forum on Fair Competition Policy, and the National Fair Competition Conference. We have also arranged special competition compliance training for government departments, business associations, and various types of enterprises and provided guidance to enterprises on strengthening their antimonopoly compliance systems and protecting business secrets. A major push has also been made to foster a culture of fair competition and encourage all of society to embrace and practice fair competition.

An intelligent manufacturing workshop for float glass at a company in Shangqiu City, Henan Province, October 14, 2023. In recent years, people at Suiyang New and High Technology Zone in Shangqiu have been working hard to spur enterprises’ innovative vitality by developing clusters of high-quality industrial projects in sectors such as glass, new materials, textiles, and garments. PHOTO BY XINHUA REPORTER ZHU XIANG

More institutional opening up in competitive fields

In response to economic globalization and the internationalization of corporate competition, we have remained committed to a global vision, the spirit of fairness, and the principle of fair competition and steadily pursued more international exchanges and cooperation in the area of competition. We have signed 62 documents on anti-monopoly cooperation with antitrust enforcement agencies from 35 countries and regions, including the United States and the European Union. This has resulted in greater information exchanges and stronger coordination in law-making and law enforcement. Eleven of China’s bilateral and multilateral free trade agreements include chapters dedicated to the subject of competition policies. We successfully hosted the Seventh BRICS International Competition Conference and have put forward Chinese proposals and insights on improving global competition governance. Through these efforts, we have helped ensure a fairer international arena for China as it boosts its competitiveness and pursues development.

II. The basic context of fair competition governance in China

A more urgent need for fair competition

As we work to develop a unified national market, there is a pressing need to ensure fair competition. By working faster to establish an efficient, well-regulated, and open unified domestic market featuring fair competition, we can provide an important guarantee for creating a new development dynamic and promoting high-quality economic development. At present, bottlenecks still affect the domestic economy, and instances of local protectionism and market segmentation still occur. We must keep working to reinforce the foundational status of competition policies, focus on correcting improper competitive practices and market interference, and enhance the market environment for fair competition.

Fair competition is also urgently needed to promote the sound development of the private sector. The private sector is a vital driver of Chinese modernization and provides an important foundation for high-quality development. At present, some private enterprises still face difficulties and challenges in ensuring their survival and development. We must keep working to implement fair competition policies so that the private sector continues to grow bigger, do better, and become stronger as a result of fair competition.

Finally, fair competition is urgently needed to effectively stimulate vitality for innovation and creativity. Innovation is the primary driver behind high-quality development and the key to shaping new drivers and advantages for development. At present, we are still seeing frequent violations of competition law that undermine innovation. We need to refine our competition oversight systems and regulatory approaches to cultivate an enabling climate for innovation, encourage innovative progress, safeguard the fruits of creativity, and enhance the returns of innovation. This will pave the way for positive reinforcement between competition and innovation.

An increasingly complex market competition ecosystem

The rapid evolution of China’s vast market presents new challenges. With more than 180 million business entities, over 1.4 billion consumers, and a middle-income group of over 400 million people, China has become a vast market endowed with a series of unprecedented features specific to this development stage. The interests of all stakeholders are becoming diversified, the variety of goods and services has increased significantly, management levels and compliance awareness among business entities vary widely, and there is still an imbalance in development among regions and among urban and rural areas. Such factors have significantly increased the intricacy of fair competition governance. New challenges have also arisen as a result of increasingly complex competitive and cooperative relationships among businesses. Enterprises’ competitive behaviors are becoming much more diverse and complex due to the common development of enterprises under all forms of ownership, rapid integration of online and offline markets, accelerated industrial upgrading, and faster innovation of business forms. To safeguard and promote fair competition, we must give play to the advantages of large enterprises to boost their core competitiveness while also protecting the space micro, small, and medium enterprises need for innovation and development. We will support platform companies to play a leading role in driving development, generating employment, and engaging in international competition, while also protecting the rights and interests of the entities operating on these platforms and facilitating the development of the real economy. These tasks pose significant challenges in establishing a market environment for fair competition.

The increasing stealth and sophistication of illegal competitive practices have also presented new challenges. As new technologies and business models emerge, more industries and business entities are becoming technology-intensive. This shift has led to more technically intricate and covert illegal competitive behaviors, increasing the difficulty of oversight, early warning, detection, evidence collection, and adjudication. These developments have imposed higher demands on dynamic, incisive, and digital regulation to ensure fair competition.

A graver international landscape

Pressure to advance alignment with high-standard international competition rules and bolster the appeal of China’s ultra-large market has increased. The latest round of international economic and trade rules generally places a stronger emphasis on the issue of fair competition. This has created a more pressing need to accelerate efforts to improve the legal and policy framework for fair competition and cultivate a business environment that is market-oriented, law-based, and internationalized.

There is also greater pressure on our efforts to extensively participate in the governance of international competition and protect the legitimate rights and interests of enterprises that operate internationally. Against the backdrop of more intensive rivalry between major countries, Chinese enterprises face significant challenges in protecting their rights on the global stage and engaging in economic globalization. This has created a growing need to diversify China’s competition policy toolkit, better coordinate with competition rules in the international arena, and bolster support for Chinese enterprises so they can more effectively participate in global market competition and cooperation. 

Pressure is also amounting to regulate multinational corporations’ monopolistic practices and enhance the competitiveness and stability of industrial and supply chains. In recent years, some Western countries have zealously pursued technological monopolization, repeatedly imposing blockades against China. Certain multinational corporations have abused their first-mover advantages by raising market entry barriers, thereby cutting down the development space of Chinese enterprises. This has created an urgent need to regulate, in accordance with the law, the monopolistic actions of multinational corporations and safeguard the environment for the innovative development of Chinese enterprises.

III. Improving the market environment for fair competition

Improving the environment for developing business entities and stimulating market competition

Business entities are the wellspring of fair competition. We must regard their robust development as an important precondition for protecting and promoting fair competition. We will take solid steps to better manage all enterprise-related licensing items, refine regulations concerning the dissolution and deregistration of enterprises, and improve the mandatory exit mechanism to spur market rejuvenation and boost the quality and vitality of enterprises. We will put a halt to all monopolistic practices and unfair competition that impede the innovative vitality of the private sector and micro, small, and medium enterprises and directly harm the interests of consumers. These efforts will see us fostering a fairer and more transparent market conducive to developing all types of business entities. We will implement detailed policies and measures to support businesses’ development, ramp up special initiatives to overhaul fees levied on enterprises, and establish mechanisms for coordinated regulation and joint punishment to ensure the burden on enterprises is lightened.

Strengthening competition regulation and law enforcement to safeguard fair competition

Fair competition is an important public good provided by the government. We must regard strengthening competition regulation and law enforcement as a key lever for protecting and promoting fair competition. The fair competition review system will be implemented across the board. We will step up anti-monopoly law enforcement to prevent the abuse of administrative power that eliminates or restricts competition. We will keep working to abolish regulations and practices that hinder the development of a unified national market and fair competition. This will see us creating a domestic market that features efficient flows and is large in scale. We will investigate and deal with practices such as monopoly agreements, abuse of market dominance, and infringement of trade secrets in accordance with the law. Additionally, we will improve the categorized and multi-tiered review system for concentrations of undertakings to ensure orderly market competition. Flexible regulatory measures, such as administrative admonishment and guidance, advisory guidelines, and pledges for corrective action, will be effectively leveraged to provide enterprises with space for trial and error when pursuing innovation. This will ensure we create an enabling regulatory environment for innovation.

Accelerating efforts to turn China into a manufacturer of quality and enhancing the level of market competition

High-quality development necessitates a high level of competition. Encouraging business entities to focus on securing competitive advantages through quality and innovation must serve as an important focus in our efforts to protect and promote fair competition. We will give full play to the pivotal role of quality in helping enterprises grow bigger and stronger, in forging resilient industrial ecosystems and chains, and in fostering the sustainable growth of cities. We will refine the diverse range of multi-tiered quality incentive systems to see that quality is given top priority, is pursued through independent innovation, and becomes the decisive factor in competition. We will move at speed to develop high-quality infrastructure adapted to a modern industrial system, press ahead with implementing “one-stop” high-quality infrastructure services, and boost the overall efficacy of services for all business entities. We will work with a sense of urgency to improve the governance framework for Chinese quality. The central authorities will conduct rigorous quality inspections, and work quality assessments will be advanced to elevate Chinese quality.

Personnel from the Dongcheng District Administration for Market Regulation conduct spot checks and collect samples of children’s products in Beijing, May 23, 2023. STATE ADMINISTRATION FOR MARKET REGULATION / PHOTO BY DONG FANGZHONG

Systematically promoting law-based, credit-based, and smart oversight and enhancing the efficacy of competition oversight

A high level of competition requires highly effective regulation. We must regard the systematic advancement of law-based, credit-based, and smart oversight as an essential pillar of our efforts to protect and promote fair competition. We will move faster to refine supplementary laws and regulations for the Anti-monopoly Law and the foundational systems for market regulation and work out special guidelines for competition law enforcement, so as to improve further the workability and predictability of the fair competition system and its rules. We will establish a regular credit-based oversight mechanism, ensure targeted implementation of credit-based oversight in a multi-tiered and categorized fashion, and improve closed-loop management that encompasses credit commitments, credibility verification, penalties for breaches of trust, and credit restoration. We will accelerate the development of a big data platform for market regulation and fully utilize technologies such as the internet, big data, and artificial intelligence to ensure competition regulation is sound, targeted, efficient, and based on standard procedures.

Deepening institutional opening up in the field of competition and enhancing the international competitiveness of the modern economy

In the age of economic globalization, competition has taken on an international dimension. We must regard the steady expansion of institutional opening up in the field of competition as a crucial task in our efforts to protect and promote fair competition. We will channel our energies into important avenues for opening up, including Belt and Road cooperation and the BRICS cooperative mechanism, to support Chinese capital and enterprises in “going global” and engaging in international competition and to offer more high-quality public goods to the international community. We will pursue deeper multilateral and bilateral cooperation in competition regulation and law enforcement, legislative coordination, and efforts to create common positions on issues, with a view to protecting the legitimate rights and interests of Chinese enterprises engaged in international competition. We will intensify our involvement in international competition governance, actively participate in the formulation of relevant regulations, ensure high-standard competition oversight, and establish advanced platforms for dialogue. Through these efforts, we will effectively protect China’s national security and development interests.

Establishing a collaborative and efficient competition regulation mechanism and generating stronger synergy for protecting and promoting fair competition

Protecting and promoting fair competition is a complex systematic project. We must regard the establishment of a collaborative and efficient competition regulation mechanism as an important safeguard for protecting and promoting fair competition. We will see that interdepartmental coordination evolves from a case-by-case approach to one that is based on the alignment of rules, so as to promote greater coordination between competition regulation and oversight for other areas and issues, including market access, individual industries, finance, and safety. To encourage businesses to shift into a proactive compliance posture, we will support and guide companies in quickly developing their compliance management systems and enhance their awareness of the need to operate in compliance with the law and consciously uphold fair market competition. Our efforts will help achieve a shift in competition governance from unilateral regulation to a diverse collective governance approach by establishing a cooperative framework that combines government regulation, enterprise self-regulation, industry self-discipline, and public oversight.

(Originally appeared in Qiushi Journal, Chinese edition, No. 2, 2024)