China Issues New Regulation to Curb Price Monopolies

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Last updated at: (Beijing Time) Tuesday, July 01, 2003

China Issues New Regulation to Curb Price Monopolies

China's macroeconomics watchdog Monday declared a new regulation to remove pricing monopolies and protect fair competition in the increasingly sophisticated Chinese market.

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China's macroeconomics watchdog Monday declared a new regulation to remove pricing monopolies and protect fair competition in the increasingly sophisticated Chinese market.

Market players are not allowed to set predatory prices by making use of monopolistic force, according to the regulation set forth by the National Development and Reform Commission, the authorized State Council department to oversee the country's economy.

The commission has also listed forbidden pricing-related actions for market competitors in the regulation.

The commission said the formalizing of regulation, which is scheduled to take effect on November 1, is an important first step in the eventual realization of China's anti-monopoly law.

Xu Lianzhong, branch director with the commission's Pricing Monitoring Centre, said that monopolies exist in a number of sectors including telecommunications and aviation. This is despite the fact that the country has accelerated its pace to become more market-oriented.

Xu said pricing alliances in many sectors are the most evident form of pricing monopolies in China.

"They use either monopolistic low-price or high-price tactics to control the market,'' said Xu. "The interest of consumers is damaged and other competitors are prevented to enter the market.''

Although China has made significant progress in breaking down industry monopolies, price monopolies have still been the focus of criticism from the public.

A recent survey conducted by the State Administration of Statistics found that the telecommunications industry tops the list of sectors that need more competition.

Sectors including railways, power, public transportation, aviation, finance and insurance all follow, according to the survey conducted among 700 respondents in Beijing, Guangzhou and Shanghai.

"One of the main reasons why price monopolies still remain in China is inadequate institutional reform,'' said Zhao Xiaoping, an official for the Pricing Department of the commission.

He said the solution should not rely solely on the easing of price controls and the strengthening of price supervision.

"Without removing the source of the problem - the institutional obstacles - price monopolies will not just go away,'' he said.

A fundamental solution, Zhao said, is to prevent the government from interfering with the business, and prevent the so-called natural monopolies - such as those involving power suppliers and railway companies - from influencing competitive industries.

"I'm confident the situation will change for the better in the coming years,'' Xhao said.

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