Reform of Chinese state-owned enterprises : what China can learn from the practice of competitive neutrality policy in Australia

Abstract

The research is an examination of the question of whether China, with a substantial number of State-Owned Enterprise (SOEs) active in the market, can effectively maintain a level playing field through the existing competition law and policy framework and, if not, what strategies or policies it could adopt in order to address this problem.

The Thesis takes the position that the current competition law and policy in China have limited effect in ensuring a level playing field between SOEs and non-SOEs. To be clear, the Thesis does not suggest that the existing Chinese competition law and competition policy completely fail to address competition concerns caused by Chinese SOEs; on the contrary, there are cases that suggest that SOEs, like all the other market players, are under the scrutiny of Chinese competition law (the Anti-Monopoly Law ‘AML’) and will continue to be so in the future. Chinese competition policy is developing into a more comprehensive policy and the newly established Fair Competition Review System (FCRS) potentially addresses one aspect of competitive neutrality concerns caused by SOEs, the regulatory advantages of SOEs. Collectively, the Thesis argues that the application of AML and the FCRS cannot address all aspects of competitive neutrality problems caused by SOEs, leaving the problem of lack of competitive neutrality between SOEs and non-SOEs unaddressed in the market of China. Given the current reform of SOEs has increased pressure on Chinese SOEs to be more competitive, this Thesis argues that it is a good time for China to reconsider how level the playing field is between SOEs and non-SOEs.

To ensure competition between SOEs and non-SOEs is based on efficiency, rather than on who can benefit from government ownership and political connections, the Thesis proposed to reform the AML. It also provides policy recommendations for China to consider when introducing a competitive neutrality policy in its regime. These measures, if adopted, would provide stronger domestic competition and would help Chinese SOEs to be more competitive in the market.