The Proposed Antitrust Law and the Problem of Administrative Monopolies in China

The People's Republic of China officially became a member of the World Trade Organization (WTO) on 10 December 2001. Its major commitments under the Protocol on Accession are trade-related. To meet them, systemic reforms in the areas of transparency, uniform application of laws and substantial changes to trade-related laws and regulations that are inconsistent with WTO rules, have taken place. A raft of new and amended laws have brought many areas of China's trade and investment regimes into compliance with WTO requirements, and member states have positively appraised China's performance in its first year following accession. China's Ministry of Foreign Trade and Economic Cooperation (MOFTEC) announced in May 2002, for example, that more than 2,300 laws and regulations had been amended to comply with WTO rules, and 830 abolished since China joined the WTO in 2001. The State Department, however, claims that in 2001 alone, China amended or abolished more than 1,100 domestic laws and rules that were inconsistent with the requirement of the rules or norms of the WTO. Despite these wide-ranging reforms, however, China still has many issues to tackle before it fulfills all its WTO obligations.7 Problems in compliance are generated by a panoply of difficulties, including a lack of coordination among relevant ministries of the government; a lack of effective or uniform application of China's WTO commitments at local and provincial levels; and entrenched domestic interests that seek to minimize their exposure to foreign competition.8 It is clear that, in China as elsewhere, promulgation of laws and regulations does not necessarily improve law enforcement. Nowhere is this clearer than in the case of competition law. This report therefore examines problems of China's competition law in light of its new WTO commitments, focussing, in particular, on the problem of administrative monopolies. It analyses political, economic and legal factors contributing to the administrative monopolistic practices and makes proposals for the more effective regulation of administrative monopolies in a proposed new uniform Antitrust Law