Lei Kuang

'Competition Policy and State-Owned Enterprises in Contemporary China'

LL.B (Wales), LL.M (Edinburgh)

Biography

      From 1994 to 2007, it took China thirteen years to finally adopt its first comprehensive competition law, the Anti-monopoly Law (AML). This new law creatively takes into account some significant issues, among which the prohibition of anti-competitive activities by State-Owned Enterprises (SOEs) attracts most attention.  Though such activities are common in China’s economy, they were traditionally deemed ‘sensitive’ and were largely untouched by economy-related laws. The adoption of AML in theory marks a new era of regulating market behaviors by Chinese authorities; however, given the peculiarity of Chinese political structure, SOEs are de facto ‘Party-Owned Enterprises’, it remains to be seen how Communist Party will punish ‘itself’, and how efficient the punishment will be. 
      This research examines the structure of SOEs, the application of AML to SOEs, the political and economic environments in which SOEs operate by considering, inter alia, the reasons of state involvement in China’s traditional 'centrally planned economy’, and the changing status of SOEs in the so-called ‘socialist market economy’ after the ‘Reform and Opening Up’; the emergence of competition and urgent need of adopting a comprehensive set of competition law; the making of AML and the design of competition regime; the practical difficulties in enforcing AML against SOEs arising from the flaws within both the law and the structure of enforcement regime, for example, the issues of administrative monopoly and the confusing allocation of jurisdiction among various levels of enforcement authorities. 
      This research also involves discussion of EU competition regime, particularly the new design and actual effects brought by the modernization of competition enforcement led by the European Commission. It also illustrates the privatization initiated by Member States governments in the last centuries. This comparative element intends to use EU’s experiences of enforcing competition law and its evolving treatment of SOEs to provide important suggestions on future development of China’s competition regime as well as on possible political and economic reforms. This research suggests the challenges of applying AML to SOEs mainly arise from China’s transformation from a ‘centrally-planned economy’ to a ‘socialist market economy’ accompanied by incremental political reform. Due to China’s unique and complex backgrounds, it is important to appreciate that the AML is not able to ensure the effectiveness and consistence of competition system and facilitate the regulation of market behaviors of SOEs on its own. The AML’s ultimate goal of promoting competition will only be realized when other reforms, such as reforms of the internal structures of SOEs and reforms aimed at limiting the economic intervention of the government, are launched.