Vol. 17 No. 9 (September, 2007) pp.742-744

COMPETITION POLICY AND LAW IN CHINA, HONG KONG AND TAIWAN, by Mark Williams. Cambridge: Cambridge University Press, 2005. 492pp.  Hardback. £69.00/$110.00.  ISBN: 9780521836319.  eBook format.  $88.00.  ISBN: 9780511128592.

Reviewed by Yu Xingzhong, School of Law, The Chinese University of Hong Kong. Email: xzyu [at] cuhk.edu.hk.

On August 30, 2007, the Standing Committee of the National People’s Congress, China’s top legislature, voted on and eventually passed its long-awaited Anti-Monopoly Law, which is expected to play an important role in China’s transition towards a market economy. The law, containing eight chapters and 57 provisions, bans price-fixing, collusion, excessive market concentration and related practices by private and state-owned enterprises, and provides for investigation and prosecution of banned practices, while protecting monopolistic agreements that promote innovation and technological advance.

The making of this law did not seem to be an easy job: it required more than thirteen years, and in the process a number of drafts were introduced. It, in itself, presents an intriguing history of contemporary Chinese politics and economic development driven by the struggles among different interest groups, which tends to be quite difficult to understand, especially for Western observers. For instance, as a transitional economy, moving from a planned to a modern market economy, China is still a society in which the government controls many aspects of everyday lives, politically and economically. Will the Chinese government give up its control of the market? How would the government treat the relationship between private businesses and state-owned enterprises when China’s constitution still gives priority to public ownership? Mark William’s book, COMPETITION POLICY AND LAW IN CHINA, HONG KONG AND TAIWAN, provides answers to these questions. The book, well-researched and insightful, is a good reference for understanding China’s economic reform in general, and the Anti-Monopoly Law, its various drafts, and the debates over these drafts in particular.

Given many weaknesses of the Chinese economic system: weak financial discipline, regional fragmentation, limited success in corporate governance reform, ambiguous property rights (even with the newly promulgated Real Property Rights Law), uneven competition across sectors, poorly enforced laws and regulations, the competition law, as Williams argues, is clearly no panacea for China’s economic problems, but it might form a valuable component in the ongoing reformation of the Chinese economic system, if implemented fairly and competently. While the law could be seen as a move towards a more robust rule of law, it could also be seen as a mere instrument for the government to curb local protectionism as well as potential [*743] commercial domination by foreign enterprises on a short term basis.

William’s book, of course, does not only address issues relating to competition policy and law in China; it in fact provides a comprehensive guide to the competition regimes of China, Hong Kong and Taiwan, which he calls Greater China. The book, containing 11 chapters, can roughly be divided into three parts. The first part introduces the methodology, reviews general perspectives on competition law and policy and the experience of states adopting competition law, and lays out the theoretical and international background for discussing Chinese efforts and concerns in this field. The second part, Chapters 4-9, addresses competition regimes in Greater China. While China, half socialism, half capitalism, is on its way to constructing a competition law regime, Hong Kong, a sort of paragon of capitalism, remains indifferent and even hostile to competition law. Taiwan, however, has already successfully adopted such a law regime. This phenomenon can only be explained on the basis of the political and economic experience each of these three Chinese-speaking jurisdictions has encountered. Williams does that in the third part, and indeed, throughout the whole book.

In dealing with China, Williams traces China’s political and legal history in great length and depth so as to present a whole picture of its competitive policy and law within the larger context of social and economic development. The book offers sophisticated discussions on opportunities and difficulties associated with constructing a comprehensive competitive law regime within a socialist political and legal setting, while recognizing the efforts China has already made in that direction. Williams recognizes the importance of such a law regime for the healthy development of China’s economic and legal systems and argues very convincingly that sooner or later such a law regime will have to be put in place. The adoption of the Anti-Monopoly Law by the Chinese national legislature confirms Williams’ prediction and makes the book even more relevant for the study of Chinese law and legal system worldwide.

The Taiwan experience is treated as a successful story of adoption of competition law by a relatively developed economy and could serve as a useful case study for transitional and developing states that wish to succeed in creating and implementing a pro-competition policy and a legal regime to enforce it effectively. Taiwan has a well-developed and comprehensive competition law system that has been in place for more than 14 years. Despite its seemingly static bent, apparently skeptical of the benefits of economic competition, Taiwan’s once authoritarian political structure in fact did not present much hindrance to its economic structures.

Hong Kong’s case presents a challenge to the idea and practice of a competition law regime. As a free port with trade-based services making up the bulk of its gross domestic product, a low tax and spend policy, efficient and uncorrupt public administration and the rule of law, Hong Kong has been seen as a most [*744] successful market economy, which, interestingly enough, adopts an indifferent and even hostile attitude towards the making of such a law. Antitrust-type rules are considered unnecessary and may even be harmful to the territory’s success. Williams notes a difference between externally traded sector and the non-trades domestic segment in Hong Kong’s economy. The non-trades segment is dominated by a small number of diversified, family-owned conglomerates based on property. Over the years they have consolidated their grip on other sectors, from private monopolies in electricity and gas, to tight control of ferries, buses, the port, retailing and telecommunications. High concentration ratios and intra-firm trading create barriers to entry in many markets, and incumbents in some sectors have used exclusionary and exploitative abuses of market power to maintain pre-eminence. At least for this part of the economy, anti-trust rules are obviously needed.

Methodologically, Williams’ analysis is inherently comparative: capitalism v. socialism, sophisticated market v. developing market, and common law v. civil law. He is aware that, due to the nature of competitive law and policy in general, such a study calls for interdisciplinary approaches rather than employing traditional legal analysis. As a result, the book draws on inspirations from many fields and disciplines and represents a very successful multi-disciplinary study. Williams is particularly keen on grounded theory used in empirical studies – not employing any readily available theoretical assumptions in the study, but extrapolating from collected insights and explanations in the process of study. This of course is a very flexible, rational and pragmatic methodology, which could prevent dogmatic and mechanical interpretations of complex social, legal and economic phenomena. The downside of this approach is that it might not achieve the theoretical importance that such a study is expected to reach.

REFERENCES:

Chen, Albert. 1993. “Competition Law and Hong Kong.” 23 HONG KONG LAW JOURNAL 412-421.

Jiang, Xiaojuan. 2002. “Promoting Competition and Maintaining Monopoly: Dual Functions of Chinese Industrial Policies During Economic Transition.” 1 WASHINGTON GLOBAL STUDIES LAW REVIEW 49.

Jorde, Thomas, and David Teece (eds). 1992. ANTI-TRUST, INNOVATION AND COMPETITIVENESS. Oxford: Oxford University Press.

 Liu, Lawrence S. 2002. “Fostering Competition Law And Policy: A Facade of Taiwan’s Political Economy.” 1 WASHINGTON GLOBAL STUDIES LAW REVIEW 77-160.

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© Copyright 2007 by the author, Yu Xingzhong.