Fair competition review in China: examining progress after nine years

Abstract This article examines the effectiveness of the Fair Competition Review System (FCRS) of China. The FCRS is a competition impact assessment system of review of laws, regulations, and guidelines to assess their impact on competition. The stated aims of FCRS are to support marketization and a unified national market in China. It also works to curb government power and to encourage market transformation of state-owned enterprises (SOEs). FCRS operates, however, in the shadow of the nation’s strong industrial policy anchored by its SOEs, which complicates the tension between the objective of competition and China’s strong industrial policy. The article considers the substantial progress made in implementing FCRS, examining it in the context of clarity, predictability, and efficiency. It identifies current issues arising from the current implementation, some of which are common with other jurisdictions, but others that result from the unique nature of the Chinese political economy. The article suggests changes to increase the effectiveness of FCRS. It recognizes the enormous effort currently employed in undertaking FCRS, and concludes that if implemented effectively, FCRS has the potential to change significantly the way markets work competitively at all levels in China.