The draft of China's so-called "economic constitution," the anti-monopoly law, had been submitted to the State Council's Legislative Affairs Office, according to a Ministry of Commerce official Wednesday.

The law is listed on the 10th National People's Congress legislative agenda, but the draft still requires further revision, despite its decade-long drafting period, he said.

The absence of such a law is proving to be a source of major concern.

Some multinational companies are exploiting this situation to abuse their dominant positions to curb competition, warned a recent report from the State Administration for Industry and Commerce, which called for the legislative process to be accelerated.

In response, the ministry official pledged that efforts would be made to speed up the process, noting that the law has an important place in the country's internal trade legislation.

The ministry Wednesday issued an outline for the development of China's commodities markets, which laid stress on work to complete internal trade rules and regulations.

China is poorly catered for in this regard, with just one law on auctions and one rule dealing with the slaughter of pigs.

Apart from the anti-monopoly law, the ministry is considering rules on the wholesale bulk market, distribution of farm produce, and the franchise and chain businesses.

The outline, the first directive for business in the field, explains what is encouraged, allowed and controlled, the official said.

For example, the outline suggested that convenience stores, discount stores and small and medium-sized supermarkets will be a better choice for opening new retail sector businesses.

The official called for controls on the development of shopping malls, warning that this sector risked overheating in the same way as steel, real estate, cement and aluminium.

Although no official national statistics are available about mall construction investment, it is generally believed in the banking industry that the spending on big malls that were either planned or were under construction by the end of 2003 exceeded 200 billion yuan (US$24 billion), and at least 60 per cent of that funding came from banks.

Worries over so-called "mall mania" prompted Premier Wen Jiabao to order a thorough investigation of the situation.

The ministry has already conducted the investigation, said the official, adding that it will take measures on projects it believes to be irrational.

Such projects could be stopped at the planning stage, he said.

But the ministry does not have the approval rights for such projects, limiting its ability to control the sector's runaway development, the official said.

As a step to addressing this problem, the ministry is planning a rule governing the commercial layout of cities, he said.

"We are considering whether to introduce public hearings before the construction of mega-stores," he said.

The rule was proposed by nearly 100 deputies to the 10th National People's Congress in March this year, who submitted a proposal calling for a legal framework on the establishment of mega-stores in major cities.

The proposal called for legislation to set up a hearings on the opening of mega-stores, in order to prevent excessive numbers from opening in one area.

The ministry has asked cities to submit their commercial layout plans for review, which focuses on the opening of mega-stores, but the move did not have the legal impact of rules.

The ministry's stipulations cover major wholesale stores with an annual revenue over 50 million yuan (US$6.04 million), department stores covering more than 5,000 square metres, large-scale supermarkets, warehouse stores, shopping malls, food stores with an annual revenue over 20 million yuan (US$2.42 million) and commercial streets.

Wang Wei, a senior research fellow at the Development Research Center of the State Council, who helped to write the paper, said the outline was expected to improve the nation's commodities market, which is relatively backward in terms of its order, structure and trading mode.

The commodities market was the pioneer of China's opening-up, but its development has not been well-planned, Wang said.

"We expect that the outline will give the right signal to this sector," Wang said.

And a stronger commodities market, which means it plays a larger role in resources allocation, can improve China's market economy, she said.

(China Daily June 10, 2004)