(China Daily)
Updated: 2007-08-10 11:05

Monopoly is still an obstacle to the development of a private economy, says an article in Dazhong Daily. The following is an excerpt:

The All-China Federation of Industry and Commerce (ACFIC) on Monday released a report on the development of the country's private enterprises. The research shows that there is still an invisible door for private companies to enter monopoly industries. Though the total number of private companies has risen in recent years, there are still very limited private companies in monopoly industries like oil, power, telecommunications, finance and public utilities.

The State Council issued the guidelines for encouraging, supporting and guiding the development of the non-public sector of the economy, including self-employed workers and private companies in February, 2005, and the guideline was to relax the market entry for non-public sector. But the guidelines have not been well implemented.

The ACFIC report shows that though the industry threshold is lowered for non-public companies, the old barriers have not been totally removed. Some departmental regulations that bind the private sector are still working.

There are two kinds of monopolies affecting market entry. One is operational monopoly, caused when operators form monopoly agreements or abuse their dominance over the market. The other is administrative monopoly, which means administrative departments use their power to restrict competition.

Both kinds should be broken. But at the present stage, administrative monopoly is the reason the guidelines are not well implemented.

So far the monopolies in some industries are closely related with institutional obstacles. Related administrative departments are the bosses of monopolies. So besides anti-monopoly legislation, further institutional reform is needed.