China: Competition Impact Review to Be Required for All New Chinese Regulations

Last Updated: 2 November 2017
Article by Lester Ross and Tingting Liu

China's three Anti-Monopoly Law enforcement agencies—the National Development and Reform Commission, the Ministry of Commerce and the State Administration for Industry and Commerce—together with the Ministry of Finance and the State Council Legislative Affairs Office, on October 26 jointly published the Rules on Implementation of the Fair Competition Review System (for temporary effect) (Fa Gai Jia Jian [2017] No. 1849) (the "Rules"). The Rules are intended to implement the Anti-Monopoly Law and the State Council's 2016 Opinions on Implementation of a Fair Competition Review Market System, the latter of which targeted local monopolies that tended to balkanize the economy while reducing the power of the central government.

The Rules were promulgated immediately after the conclusion of the 19th Party Congress. As the Congress marked the consolidation of Xi Jinping's power atop the leadership of a Party whose supremacy was declared over all sectors of the economy throughout the country, the Rules signify a determination to prohibit anti-competitive protectionism by sub-central governments in order to enhance market-based competition. While privately-owned domestically-invested companies will be the primary beneficiaries, foreign-invested companies and foreign exporters to China should also benefit.

The Rules have temporary effect, meaning that they will have the force of law but are expected to be revised in the near term based on experience, and some degree of flexibility may be allowed in implementation until that occurs. The Rules will potentially have a very significant impact on the role of government in fostering market competition, but the depth, in practice, of the competition reviews they mandate remains to be seen.

The Rules apply both to administrative agencies and organizations with responsibilities to administer public affairs under law. Such entities are required to (i) conduct a fair competition review when formulating rules, policies, normative documents (i.e., guidelines), and other policy measures that involve economic activities in the market by business operators regarding market entry, industry development, investment, tender and bid competitions, government procurement, business operating behavior norms, and qualification standards; (ii) evaluate the impact on market competition; and (iii) prevent exclusion or restriction of market competition (Article 2).

As part of the required competition reviews, "interested parties" – i.e., those with an interest in horizontal or vertical competitive effects of the policy measures under consideration including competitors and consumers (Articles 7 and 10) – will have an opportunity to comment during the draft stage. Policy measures may become effective only after the review has determined that they are not deemed to have an adverse effect by excluding or restricting competition except as otherwise provided by law (including national economic, cultural, and military security laws (Article 18)). Any policy measures that are deemed to have such effect may not take effect at all or may take effect only after relevant requirements have been met (Article 2 para. 2).

The Rules apply to the exclusion or restriction of products and services produced in parts of China that are not under the jurisdiction of the relevant administrative agency or organization or imported (Articles 7 and 10). They also apply to discrimination against investment by business operators from elsewhere in China, but it is unclear whether they also apply to foreign investment (Article 15). The Rules should apply to foreign-invested enterprises established in other parts of China, however, because they are Chinese legal persons.

Selective benefits to business operators in the form of financial benefits or subsidies, tax exemptions, grants of land use rights without charge or at a deeply discounted rate, environmental regulatory preferences, or other financial preferences are prohibited unless otherwise permissible under law. Such preferences would be permissible under law if they are embodied in central government law, but not if they are embodied in unauthorized protectionist sub-central regulations and policies (Article 16).

Aggrieved interested parties may appeal to the issuing entity or to its immediately superior entity (Articles 21-23). There is no provision directly authorizing businesses or consumers that believe a new policy will adversely affect fair competition to challenge the policy in court under the Administrative Litigation Law or another statute. There is also, however, no provision preventing such litigation, and the provisions providing for public comment appear to allow such litigation by parties who can establish standing.

The Rules take immediate effect, provided that any entity that cannot perform its responsibilities under the Rules may solicit comments from the anti-monopoly enforcement agencies (Article 11); and all entities subject to the Rules are subject to an annual reporting requirement by January 31 of the following year (Article 10). Remedial measures may be required if anti-competitive effects are discovered after a new regulation has entered into effect (Article 12).

The Rules promise benefits for foreign companies which are often hampered by sub-central government requirements to establish local subsidiaries or discriminated against in their efforts to do so. However, because many such companies still fear retribution for aggressive assertion of their interests, their prospects in the event of local protectionism may still be contingent on the vigor of central government enforcement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions