1. SAMR tells the government to play fair
On Thursday, the State Administration of Market Regulation (SAMR) and four other ministries released a revised version of “Implementation Rules for the Fair Competition Review Mechanism.”
Why it matters: The rules require governments to review regulations and policies to make sure that they don’t discriminate against companies and impede competition.
- That’s code for “engage in local favoritism.”
The mechanism sees a lot of use: In 2020 alone, over one million policy documents and regulations were reviewed, with 6,000 revised or aborted for anti-competitive effects.
The new version widens the scope of the review to include one-on-one agreements between the government and companies.
It also further squeezes the room for local governments to offer preferential treatment.
- There were already restrictions on land grants ,for example, and these will be extended to human resources, capital, and data.
One remaining exemption: security.
- Governments can continue to grant preferential treatment if it is a matter of security.
- But “security” is a squishy concept, and can be abused to circumvent fair competition rules.
Get smart: Anti-monopoly probes of local governments were not infrequent under the old version of the mechanism.
- The strengthening of these rules signals even more pressure to avoid local favoritism.
Get smarter: SAMR could open some high-profile cases to flex its new muscles.
2. SAMR official does in-depth interview on antitrust
SAMR also somehow found the time this week to speak to some foreign friends.
On Wednesday, the market regulator (SAMR) published a written interview with the head of its antitrust bureau, Wu Zhenguo, conducted by the American Bar Association.
- Editors note: For interested readers, the link below contains both Chinese and English versions of the interview.
Spoiler alert: Wu didn’t drop any bombshells here, but there were still a couple of points worth mentioning.
Wu said antitrust probes over big tech are difficult due to the firms’ complicated business operations (SAMR):
- “Digital platforms have complex business models.“
- “[The Alibaba] case was the world’s first monopoly case in online retail platform services, and was quite challenging.”
Wu said that while SAMR could learn some things from foreign regulators, the agency would ultimately enforce antitrust regulations to address China-specific issues:
- “We are observing the enforcement practices in other jurisdictions and appreciate the value of international experience.”
- “[T]he problems facing different jurisdictions in their enforcement process are not exactly the same.”
- “We focus on case-by-case analysis…ultimately promoting the healthy and sustainable development of the digital platform economy.”
Get smart: China didn’t invent antitrust enforcement, but its pioneering new forms of regulation to address its unique needs.
- This means officials are entering new regulatory territory, and at times even they might not know exactly where they are going.
The bottom line: The antitrust aspect of the tech crackdown has many twists and turns ahead.
3. Vibe Czech
On Wednesday, Xi Jinping dialed up Czech President Miloš Zeman and Greek Prime Minister Kyriakos Mitsotakis.
First up: Zeman.
Some context: Czech politics is highly divided on China policy. Zeman is firmly in the pro-Beijing camp.
Xi wants more Czech politicians to be like Zeman (Xinhua 1):
- “I hope more people in the Czech Republic will accurately view China and China’s development.”
Zeman would also like more Czech politicians to be like Zeman:
- “The Czech side is…willing to communicate closely with China to eliminate interference and ensure the healthy and smooth development of bilateral relations.”
Next up: Mitsotakis
Some context: Greece’s NATO Ambassador recently said that the country would not abandon its relationship with China just because “others do.”
Mitsotakis laid it on thick (Xinhua 2):
- “I believe under the leadership of Xi Jinping, China will continue to make great achievements.”
Xi wants to keep things rolling:
- “The two sides should continue to understand and support each others’ interests…[and] deepen cooperation between China and central and eastern Europe on the Belt and Road Initiative.”
Get smart: The Czech Republic and Greece are two of Europe’s most China-friendly countries.
Get smarter: With most of Europe increasingly skeptical of China, Beijing is keen to cultivate its dwindling roster of regional buddies.
4. Not just jobs, good jobs
On Wednesday, Li Keqiang did what he does, presiding over the weekly executive meeting of the State Council.
What’s LKQ on about this week?
Labor rights for flexible employees.
Some context: “Flexible employees” include China’s over-200 million self-employed, part-time, and gig-economy workers.
- This includes China’s ubiquitous delivery guys, as well as ride-hailing drivers.
Li wants to see their lives get easier (Xinhua):
- “The lawful rights and interests of workers engaged in new labor forms must be protected.”
- “Occupational injury insurance for the flexibly employed will be piloted, with ride-hailing, food delivery and instant delivery as the priority.”
- “Vocational skills training models tailored to new forms of employment will be developed, and subsidies will be provided to eligible workers participating in such training programs.”
- “The government has the job to provide for essential needs. Household registration restrictions should be removed regarding basic pension and medical insurance.”
Get smart: Li Keqiang is a stalwart proponent of the little guy.
The big picture: It’s not all altruism. As China’s economy evolves and some traditional industries become more reliant on automation, making sure employment opportunities keep up is tip-top on Beijing’s priority list.
5. China’s national carbon market gets a new launch deadline
Gig workers weren’t the only thing on the State Council’s agenda this week (see previous entry).
In an executive meeting, the governing body established a new deadline for the launch of China’s national carbon emissions trading scheme (ETS).
- According to the readout, the ETS will launch active trading “in July this year.”
ICYMI: A Ministry of Ecology and Environment (MEE) spokesperson announced in February that the ETS’s launch would occur “by the end of June” – a deadline that was passed without official comment.
The State Council’s announcement signals a significant elevation of the launch date’s political priority.
- The missing of the June deadline was a surprise – but its worth noting that it was set at the ministerial level.
- The new deadline, however, has been issued under the auspices of Premier Li Keqiang, thus carrying greater weight.
Get smart: While we don’t know the cause of the original delay, one thing is clear – now that the State Council has spoken, this baby will get launched in July.
The bottom line: There will be no more delays on this front.
6. Shenzhen drops landmark data regulations
Things are getting interesting.
On Tuesday, the Shenzhen Municipal People’s Congress passed sweeping data regulations that define the foundational framework for the local digital economy.
Some context: Shenzhen has become ground zero for experimental tech legislation, releasing pioneering policies on AI, autos, and now, data.
The regulations are a big deal: The document includes a number of firsts, and defines rules around a range of hot-button personal privacyissues at the forefront of Chinese data policy debates. The regs:
- Forbid apps from denying service to users who do not consent to over-collection of personal information
- Give users the right to refuse consent for data-driven behavioral profiling
- Forbid apps from making personalized recommendations to minors under the age of 14
- Forbid forcing users to submit to facial recognition
But here’s what really caught our eye: It outlines the ground rules for fair market competition in the data economy. According to the regs, market entities may not:
- Use illegal means to obtain data from other market entities
- Illegally collect data from other market entities to provide alternative products or services
- Use data analysis to impose differential treatment under the same trading conditions
Fines for data-related anti-competitive practices are also defined:
- RMB 50,000 to RMB 500,000 in standard cases
- In serious cases, up to 5% of the previous year’s revenue, with a cap of RMB 50 million
Get smart: What happens in Shenzhen won’t stay in Shenzhen.
- The Shenzhen regs serve as a bellwether for where national data policy is going.