The State Council, China's central government, discussed and
approved in principle a draft of anti-monopoly law on
Wednesday.
The approval was made at an executive meeting of the State
Council presided over by Premier Wen Jiabao.
A release from the meeting said the draft law, after further
revision, will be submitted to the Standing Committee of the
National People's Congress, China's top legislature, for
deliberation.
The State Council meeting agreed that the law is an important
legislation aimed at protecting fair competition, preventing and
checking monopolistic behavior, and maintaining an orderly
marketplace.
The State Council admitted that relevant anti-monopoly
provisions in China's existing laws and regulations have become
insufficient for the development of the socialist market economy
and for China's participation in international competition.
It is necessary for China to enact a comprehensive and
systematic anti-monopoly legislation, which will help create a fair
and orderly marketplace and ensure that the market economy develops
in a sound and healthy way, the release said.
According to the meeting source, the approved draft law has
absorbed experience from other countries and contains provisions on
banning monopoly-oriented agreement, forbidding abuse of dominance
in the market, as well as investigation and prosecution of
monopolistic practices.
Anti-monopoly legislation is vital for the market economy, and
regarded as the basic law for the market economy in western
countries.
China started drafting the anti-monopoly law in 1994, with the
first draft completed in 2003. The draft is said to target
monopolistic practices in various industries, regional trade
barriers, and monopoly by administrative means.
Chinese economists have urged the government to accelerate
anti-monopoly legislation to curb risks from multinationals
acquiring more and more Chinese firms.
Xie Fuzhan, deputy director of the State Council's Development
Research Center, said the government should establish an
early-warning mechanism to safeguard national economic security
concerning mergers and acquisitions, and prevent monopoly risks
related to foreign investment.
Xie said more than 400 of the Top 500 multinationals have
investments in China. In 2004, the average foreign investment per
project was US$3.51 million, but in the first nine months of 2005
the volume rose to US$4.04 million.
According to Xie, currently foreign investors in China prefer
solely-owned ventures rather than joint ventures, and concentration
of foreign investment in the electronics, auto and chemical
industries is rising.
(Xinhua News Agency June 8, 2006)