Taming SOEs within a Redefined Competition Policy Framework: An Alternative Approach for Consensus?

Abstract

With the growing concern of the international community about the negative spillover effects of SOEs on trade, reaching a consensus among different stakeholders has become increasingly urgent. This paper argues that strengthening a redefined competition policy is a feasible alternative, or at least a complementary option to the existing trade framework. The reasons are as follows: (a) surrounding SOEs is not only trade-related, but also competition-related; (b) the existing SOE disciplines have defects when it comes to dealing with competition distortion effects; and (c) characteristics of competition policy make it easier to reach a “maximum common divisor” among all parties. Accordingly, competition policy needs to be redefined and pursued from an international and domestic level. It is necessary to strengthen the fundamental position of competition policy in China by integrating it into SOE reform measures, advancing the implementation of the Fair Competition Review System, and promoting the construction of the competitive neutrality system.