Monopoly and Anti‐Monopoly in China Today

Abstract For three decades after liberation in 1949, the Chinese economy consisted almost entirely of state monopolies. Economic reforms, starting in 1979, sought to increase the efficiency of the economy by introducing competitive practices in many sectors of the economy. But the Chinese economy has been partially administered by the state for over two millennia. As a result, both state‐managed and private monopolies are still an intrinsic part of the Chinese economy today. Despite two decades of anti‐monopoly reforms, state‐owned enterprises (SOEs) continue to dominate key sectors of the economy, particularly in resource extraction and financial services. The government is aware of the inefficiencies and corruption caused by monopolies, both public and private. But Chinese tradition takes a balanced view of social harms and weighs the damage caused by monopoly against the stability that SOEs have provided China in recent decades. There is less reason for China to tolerate private monopolies, but most of them have arisen in conjunction with digital technology because of its distinctive cost structure (high entry costs, low marginal costs). China has made some use of antitrust law, but most economic regulation in China is administrative. Thus the anti‐monopoly activities that are used to restrain monopoly power in China are different from Western practices.