New regulation to remove monopolies ( 2003-07-01 06:37) (China Daily)
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.
