Top Chinese legislators urged that an anti-monopoly law should be created to break administrative monopolies and prevent multinational industrial giants from dominating the home market.

"If we fail to curb monopolies, the healthy development of the market economy will be undermined," warned Peng Fusheng, a National People's Congress (NPC) deputy from Chongqing Municipality.

Wei Wenlin, also a NPC deputy and a professor at Tsinghua University, also believed that the early introduction of such a law is vital especially with China's entry into the World Trade Organization (WTO).

"After China's WTO entry, new monopolies by foreign rivals may emerge, which call for prompt promulgation of such a law to protect the interests of domestic companies," said Wei.

Dai Qi, along with 34 fellow deputies, raised a similar proposal which said the law is indispensable in combating anti-dumping and monopolies and defending the nation's industries and consumer interests with China's further integration into the global market.

At present, there are three kinds of monopolies in China, industry monopoly, administrative monopoly such as the postal service and railways, and economic monopoly in the form of price cartels, or self-regulated prices.

Wei is optimistic that administrative monopolies, a remnant of China's planned economy, will be phased out in the near future as the government has already started the process.

China Telecom's monopoly ended with the launches of China Unicom, China Mobile and China Railcom in the past few years. As a result, a competitive environment has taken shape with three operators in the fixed-line business and two in the mobile sector.

In the power sector, a reform package is under way to split electric power supplies from power grid operators.

But what concerns Wei the most is that without appropriate anti-monopoly legislation, foreign firms may muscle in.

He warned there is a great possibility that foreign conglomerates with technical know-how, efficient management and ample capital can become monopoly powers in China's home market.

At present, most Chinese business entities are still small and weak. Even some large industrial companies, which might be perceived as monopolies in China, are relatively small when put in the context of the global market, he said.

Among the Fortune global 500 list released last July, only 12 Chinese firms were listed.

Which is why Wei believes careful investigation is needed before splitting administrative monopolies.

"To end an administrative monopoly, the simple break-up approach may not be a wise choice," emphasized Wei. "Instead, the key lies in separating the enterprises from administrative organs and transforming them into real and proactive players on the market."

Qi Yudong, a professor with the Capital University of Economy and Business echoed his view.

"It is necessary to firmly deal with monopoly practices such as price cartels or collusion," said Qi.

(China Daily March 16, 2002)