Breaking down local protectionism and setting up a unified, fair and orderly national market are urgent and important tasks facing the government, said Wang Yang, vice-minister of the State Development Planning Commission.

Tackling these changes is even more important now that China has become a member of the World Trade Organization and its economic restructuring has entered the stage of system innovation, he said.

Wang said the government will push integration of the market from three approaches -- law enforcement, system improvement and economic development.

Wang made the remarks on the 2002 China Development Forum.

He further said that a number of new laws and rules in line with the market economy will be enacted, while those that conflict with market rules will be cancelled or modified.

"A comprehensive legal system is the starting point for the breaking up of local barriers," he pointed out.

Anti-trust laws and rules to control individual and enterprise credit are being drafted, and the laws against unfair competition and the commercial bank law need modification.

In addition to legislation, the judicial system should be improved to enhance co-ordination in law enforcement, he said.

The strength of law enforcement in local jurisdictions is expected to be increased to cut down on local protectionism, which severely disrupts the market system.

Wang said the regional tax collection system also needs further improvement during the reform of the national fiscal and tax systems.

The division of state and local tax collection often results in local governments protecting local enterprises.

The restructuring of monopolistic industries such as power, the railways, civil aviation, telecom and public services will be speeded up, in a bid to form a unified, open and transparent market, he said.

Systems which impose obstacles on the rational flow of the labor force will be eradicated, Wang said.

"The household registration system, which restricts movement of people, will be further changed to build a unified national labor market and social security system," he said.

Administrative examination and approval procedures will be streamlined, with the aim of slashing local government's power to provide protectionism to local firms, Wang said.

Wang also noted that rapid economic development is key to eliminating the country's local protectionism.

"Strong economic power provides the central government with a material foundation to co-ordinate fiscal support and shorten regional gaps," he said.

Wang considers local protectionism a key factor weakening the international competitiveness of Chinese enterprises, as it protects the backward, blocks the natural allocation of resources, increases trade costs and hinders the formation of large-scale economies.

(China Daily March 26, 2002)