The U.S. Chamber of Commerce on Monday accused Chinese anti-monopoly regulators of targeting foreign companies while turning a blind eye to state-owned enterprises — an allegation that comes amid a graft crackdown that has in recent months focused on foreign companies.
The American trade body said in a report that antitrust laws enacted six years ago to ensure healthy competition in the Chinese market are conversely being used to concentrate power in state enterprise.
The legislation gives the nation’s “administrative monopolies” a “privileged role,” said the chamber, which serves as a nongovernmental organization representing U.S. business interests.
“China appears to be using the [anti-monopoly law] to promote industrial policy goals at the expense of competition — the very goal that other countries’ competition laws are designed to enforce,” the report said.
And while China’s Communist Party cracks down on corruption within its own ruling class, some claim Beijing is loath to reform the state-owned enterprises that analysts say dominate the nation’s banking and energy industries, to name a few.
“The state-owned sector still represents a very large slice of China’s GDP, as a result of their size and the amount of people who are relying on these enterprises for employment,” said Arthur Dong, a Chinese business expert and professor at Columbia University. “That’s what makes it hard for policymakers to take them down.”
Alleged misuse of the antitrust law could be used to prove that Beijing has violated commitments made when it entered the World Trade Organization (WTO) in 2001, the report suggests.
While Dong said it was unlikely that the report will affect China’s WTO standing, it may empower the enterprises the report says have been targeted by Chinese regulators.
“I don't think at this point there's any serious talk about revoking China's status in the WTO. It does raise interesting challenges, I think. Certainly there are going to be greater opportunities for these companies to raise their voices and cite China for WTO violations,” he said.
Asked about the chamber’s report, Chinese diplomats in the U.S. directed Al Jazeera to a Ministry of Foreign Affairs statement on allegations that China is targeting foreign enterprises.
“China will, as always, encourage foreign companies and enterprises to take part in the competition in China's market and carry out various forms of cooperation,” Foreign Ministry spokesman Qin Gang said last week. “We are willing to create a sound investment environment for them. Meanwhile, they are also required to abide by Chinese laws and regulations.”
The report comes amid the investigation and prosecution of numerous, high-profile foreign companies.
Chinese monopoly regulators last week gave Microsoft 20 days to answer to allegations that its verification codes — which the company has reportedly said are designed to hamper rampant piracy — violate antitrust regulations.
“We’re serious about complying with China’s laws and committed to addressing SAIC’s questions and concerns,” a Microsoft representative told Al Jazeera on condition of anonymity, referring to one of China’s anti-monopoly regulatory bodies, the State Administration for Industry and Commerce.
The many foreign companies under investigation for dominating Chinese industry have little or no recourse under the Chinese legal system, the report said.
Eastern enterprises have also come under fire. In August, China fined a Japanese auto parts supplier well over $200 million over what authorities called a price monopoly.
"Some of the NDRC monopoly investigations involve overseas multinationals, but that does not mean that we are targeting them," director of China’s National Development and Reform Commission’s anti-monopoly bureau told state news agency Xinhua on Wednesday.
A few homegrown enterprises have come under fire as well. Regulators on Tuesday fined 23 Chinese property insurers and an insurance organization in the nation’s southern Zhejiang province $17.8 million for price fixing.