Chinese Premier Li Qiang has signed a State Council decree announcing the implementation of the Regulations for Fair Competition Reviews (hereinafter referred to as the "Regulations"). The Regulations, set to take effect on August 1, 2024, consist of 27 articles across five chapters and lay out key guidelines and mechanisms to ensure fair competition in the market.

Scope of Fair Competition Reviews

The Regulations delineate the scope of fair competition reviews. Administrative agencies and organizations authorized by law to manage public affairs (collectively referred to as drafting units) must conduct fair competition reviews when drafting laws, administrative regulations, local regulations, rules, normative documents, and specific policy measures related to business activities (collectively referred to as policy measures). This ensures that all policy measures comply with the principles set out in the Regulations.

Responsibilities of Various Entities

The State Council will establish a coordination mechanism to oversee, coordinate, and guide fair competition reviews nationwide. The State Administration for Market Regulation (SAMR) will be responsible for guiding and supervising the implementation of the fair competition review system, urging relevant departments and local governments to carry out fair competition reviews. Local governments at the county level and above are required to establish and improve their own mechanisms for fair competition reviews, with local market regulation departments organizing and implementing the reviews within their jurisdictions.

Standards for Fair Competition Reviews

The drafting of policy measures must not include content that restricts or indirectly restricts market entry and exit, limits the free flow of goods and factors, or improperly affects production and business costs and operations. Policy measures that have or may have the effect of eliminating or restricting competition may be introduced only if they meet the criteria for safeguarding national security, achieving public interest objectives, lack a less competitive alternative, and have a defined implementation period or termination conditions.

Mechanisms for Conducting Reviews

For policy measures proposed by departments, the drafting unit will conduct the fair competition review during the drafting stage. For measures jointly proposed by multiple departments, the leading drafting unit will be responsible for the review. For measures proposed by local governments at the county level and above or submitted to local legislatures for approval, the local market regulation department will conduct the review in conjunction with the drafting unit. Fair competition reviews must consider the opinions of stakeholders and, when involving public interests, seek public opinion. Policy measures that have not undergone or do not comply with fair competition reviews cannot be implemented.

Strengthening Supervision and Safeguards

The market regulation departments will organize random inspections of policy measures and require drafting units to rectify any violations of the Regulations. Any unit or individual can report violations of the Regulations to the market regulation departments. The State Council will periodically inspect the fair competition review work of local governments at the county level and above. Drafting units that fail to conduct fair competition reviews in accordance with the Regulations and do not rectify upon supervision may have their responsible persons interviewed.

Promoting a Unified National Market

In its new development paradigm, China prioritizes the establishment of a unified national market characterized by high efficiency, standardization, openness, and fair competition. The government has pledged to eliminate regulations and practices that impede a unified market, ensuring that all types of enterprises can participate in fair competition and better protecting the legitimate rights and interests of all business entities.

The introduction of the Regulations marks a significant step forward in promoting fair competition and optimizing the market environment, which is crucial for maintaining market order and fostering high-quality economic development.