China Law Society: Research on the Legal Issues of the Competitive Neutrality of State-owned Enterprises

China - 1 November 2015

Trade topics: Other

China Law Society: Research on the Legal Issues of the Competitive Neutrality of State-owned Enterprises
Date of Project: November/2015 to March/2017
Competitive neutrality is a set of regulatory frameworks that ensure the state treats all enterprises equally in terms of market competition. Competitive neutrality was initially established through domestic legislation as domestic reform measures. However, it is now becoming a theoretical standpoint asserting that the state-owned capital enjoys unfair competitive advantage in international competition, and its implementation has translated into International Organization's Best Practices, Guidelines and Regional or Free Trade Agreements. China has made some explorations in competitive neutrality, but has not yet formed systematic rules. China can respond at both international and domestic levels. At the international level, China can uphold the “global value chain” theory to seek “substantial fairness” of global competition, point out the distinctions between competitive neutrality as “domestic reform measures” and “international binding rules”, and in participating in the negotiations of FTAs, China can put forward the proposition of competitive neutrality in line with its own needs; At the domestic level, in the short term, China can explore competitive neutrality by means of the “trial” of the domestic free trade zones. In the long run, it needs to build a competitive neutrality legal system that meets its own needs.

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