China unveils new fair-competition regulations in ongoing push to unify domestic market

The regulations must be taken into account when any future policy measures are proposed, and the change underpins Beijing’s efforts to cultivate a “unified domestic market” – a strategy proposed in April 2022 to promote more efficient production, distribution, circulation and consumption, while making China an even bigger magnet for global companies and investment.

The new standards will be part of the fair-competition-review system, first introduced in 2016, and local governments have also been newly given the authority to conduct self-reviews and make amendments under the latest announcement.

“It is necessary to introduce regulations for fair-competition reviews to implement details of fair competition and anti-monopoly laws and systems,” said the official statement, attributed to an unnamed spokesperson for the Ministry of Justice and the State Administration for Market Regulation.

Problems regarding discriminatory market practices for private enterprises … still exist

State Council statement

China has taken a range of steps regarding anticompetitive market behaviour against the backdrop of slowing economic growth and intensifying economic tensions with the West. Meanwhile, private and foreign investors have for years been voicing concerns over unfair competition from state-owned enterprises.

“The fair-competition-review system has faced certain challenges during its implementation. Some policies have not taken into account the requirements of the system in areas such as market access, government procurements, and subsidy allocation,” the statement said. “Problems regarding discriminatory market practices for private enterprises, local protectionism, and restrictions on certain industries still exist.”

The upcoming third plenum, which traditionally lays out China’s reform and economic strategy for the next five to 10 years, is expected to further underpin the building of such a business environment. Premier Li Qiang has repeatedly said that the “marketisation, legislation and internationalisation” of the business environment should be put in “a core position” for China’s post-pandemic economic recovery.

China’s previous efforts to shore up anti-monopoly efforts included setting up the State Administration for Market Regulation in 2018 and introducing an update to the Anti-Monopoly Law in 2022. The revision in 2022, however, was seen by critics as tightening Beijing’s grip on China’s fast-growing tech sector, as it came at a time when central authorities had kicked off an antitrust investigation and fined some of its biggest tech companies for violations of the law.

And just over a year ago, Chinese authorities pledged to refine regulations under the fair-competition-review system. The draft was introduced in May 2023 and passed by the State Council last month, according to the announcement on Thursday night.

However, there have been no updates on removing market-access barriers in relation to a so-called negative list that prohibits or restricts foreign and private investment in China, despite authorities saying last June that more items on the list would be removed in a “reasonable manner”.

Meanwhile, private and foreign investors continue to voice concerns over unfair competition while calling for the removal of market barriers, including the ratio of foreign shares permitted in sectors such as the automobile industry.

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