On China’s Adoption of Competitive Neutrality Policy

Nov 09, 2015

CPI Asia Column edited by Vanessa Yanhua Zhang (Global Economics Group) present:

On China’s Adoption of Competitive Neutrality Policy – By Ding Maozhong (Shanghai University of Political Science and Law)¹

Abstract

China should introduce a competitive neutrality policy in order to let the market play a decisive role in allocating resources and for the practical needs of blending in regional multi-lateral free trade markets. There is a potential risk, however, that the country may fall into the trap of trade protectionism resulting from an inaccurately positioned policy. Thus the competitive neutrality policy to be implemented by China should be accurately positioned and focus on the role of the government to promote fair competition. Unless under certain conditions such as government control in non-marketized sectors, national security review in foreign investment and asymmetric government support for the purpose of creating competition, competitive neutrality policy requires that the government should abide by the three principles of conduct that it must be neutral on trading opportunities, operating burdens and investment return. China should implement its competitive neutrality policy through administrative enforcement, institutional reform and promotion of competition, and facilitates the implantation based on a model of “pilot program-gradual spread out-international promotion”.

Introduction

The concept of competitive neutrality policy (&