China's Long Shadow Over The EU's Regulatory Landscape

MLex Market Insight

News

4.9 • 9 Ratings

🗓️ 12 June 2020

⏱️ 21 minutes

🔗️ Recording | iTunes | RSS

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Summary

It’s the perennial question for European Union policymakers: Should the state aid granted to Chinese companies prompt regulatory responses? And if so, what form should those responses take? With Europe still smarting from the effects of Covid-19, a new policy initiative appears set to impose strong, tangible rules on Chinese investment in the EU — rules that could also hit other countries doing business in the bloc. While these new policy directions are being considered in Brussels, China is itself pondering how it can prevent local authorities supporting favored companies and, in so doing, create market distortions that reverberate throughout the country.

Transcript

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0:00.0	Hello there. Welcome back to Emlex's weekly podcast, bringing you the very latest in regulatory affairs, thanks to our team of reporters around the world. I'm James Panicki from Emlex's Asia-Pacific team,
0:22.5	and it's great to be with you again. Today we're focusing on China, Chinese foreign investment
0:27.0	and Chinese trade, and we'll be approaching it from both sides. In a moment, we'll be looking
0:32.5	at plans by the European Union to develop tools to counter what policymakers argue is an unfair competitive
0:39.6	advantage which is posed by Chinese companies supported by government subsidies.
0:45.1	But first let's examine how the issue of regulation is being debated within China, where
0:50.8	the discussion has now focused on the policies of local governments that may create what
0:55.4	are referred to as market distortions. By that we mean situations in which local policies get in the way
1:01.6	of, for example, a fair and easy exit from the market, the designation of trading counterparts
1:07.2	and the protection of local players through funding rewards and subsidies.
1:12.5	All of these continue to occur despite attempts by China to make the country into a single market.
1:19.8	Yonix Lee is M-lex's chief correspondent for Greater China.
1:23.3	She's been writing about this very issue recently, and she joins us now from Hong Kong.
1:28.7	Yonix, the Chinese government has been advocating the Fair Competition Review System,
1:34.0	and that's the name of it over the last couple of years.
1:37.6	What is it exactly, and what problems is it seeking to address?
1:42.5	So, yes, in 2017, the National Development and Reform Commission, the NDRC, which is formerly,
1:52.3	it was an antitrust regulator.
1:54.2	It launched the first version of the Fair Competition Review System that year in 2017.
2:04.1	And it was seeking to crack down on administrative monopolies so you know the local governments they have policies in place that could be
2:11.4	anti-competitive that means they are in favor of local players and they want to address that and they said that sometimes
2:19.0	people are saying people say that those policies are more harmful to competition than our
	...

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