Critics misunderstand nature of antitrust campaign

Foreign companies make up less than 10% of investigation targets

There has always been a close relationship between politics and the economy. At the World Economic Forum, which held a session in Tianjin last week, efforts are always made to avoid seemingly conventional, yet potentially controversial issues, but usually to no avail. Even before the meeting officially opened, Chinese Premier Li Keqiang faced questions about China's ongoing antitrust campaign from Klaus Schwab, executive chairman of the World Economic Forum.

Since the beginning of this year, China's government has stepped up investigations into companies suspected of breaking the country's antitrust law. Even though China has claimed that the campaign does not single out foreign companies, concerns have surfaced that China is no longer a good environment for foreign companies to do business, Schwab said.

Recently, Audi, Qualcomm and Microsoft have all been investigated as part of the campaign, prompting some in the media to speculate that China is pushing out foreign companies while the investment environment here deteriorates. However, many Chinese people see these accusations as unfounded. What Schwab said should be eclipsed by another truth - by the end of August, the National Development and Reform Commission (NDRC) had investigated 335 companies and industry associations, of which 33 are foreign companies, less than 10 percent of the total.

All companies are treated equally and subject to investigation, whether they are Chinese or foreign, State-owned or privately owed, according to officials from the NDRC, the Ministry of Commerce and the State Administration for Industry and Commerce.

So why have so many foreign media outlets shrugged off this fact and focused their attention on the investigated foreign companies? Why have there been so few doubts about the motivation behind the antitrust probes carried out in some Western countries?

From their perspectives, the economic institutions adopted by China and Western countries are apparently different. For decades, China had modeled itself on the Soviet Union in carrying out a planned economy. Even though China has opened up its market and followed the path of a market economy, they tend to see the Chinese government as the one in command of economic decisions. In their eyes, any major market move contains a secret profound political motivation, or an omen for policy change. It appears that Western countries still don't know enough about the rapid growth and change within China, lagging behind China's pace of economic marketization.

Overinterpreting China's economic decisions makes some countries teeter on the edge of anxiety. Actually, China's antitrust probe merely aims to regulate the market and guarantee the market economy. After all, the core attribute of a market economy is equal competition.

Since the beginning of the incumbent administration, changing the government's role and untangling the administrative process are among its major achievements. So far, hundreds of administrative approval requirements have been abolished or delegated to governments at lower levels, many of which concern the approval of corporate investments. This policy strongly demonstrates that the Chinese government is determined to carry on with market reforms. Similarly, an unprecedented antitrust campaign seeks to guarantee a level playing field in the market economy. It is also evidence that the government is changing its role.

China remains the most vibrant economy in the world. It still has a lot of potential to grow and its broad market offers an investment opportunity for overseas companies. Obviously, China needs to upgrade the structure of its economy by moving up the value chain on the global market, which demands more from overseas companies in China. Therefore, it's normal that some incompetent foreign enterprises are forced to bow out of the Chinese market and some others are punished for gaining illegitimate market advantages from monopolistic practices.

It's simply a false statement that foreign companies have lost the favor of the Chinese government. In fact, the discussion about the antitrust campaign during the World Economic Forum might perhaps encourage more accomplished foreign companies that are familiar with Chinese law and the Chinese market to continue investing in China.