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Chapter II Fair Competition

Article 11 [Original text

Article 11 The people's governments at all levels and their relevant departments shall implement a fair competition review system, formulate policies and measures involving the production and business activities of business entities shall be subject to a fair competition review and regular assessment, promptly clean up and abolish policies and measures containing content that impedes the national unified market and fair competition, and safeguard the fair participation of private economic organizations in the market competition.

The market supervision and administration department is responsible for receiving reports on policy measures that violate the fair competition review system and handling them in accordance with the law.

Interpretation of Provisions

Legislative Background and Purpose: The fair competition review system is an important institutional safeguard for maintaining fair competition order in the market and preventing undue government intervention in the market. The purpose of this Article is to strengthen the implementation of the system and ensure that the formulation and implementation of government policies do not have the effect of excluding or restricting competition.

Article Interpretation:

a. “Fair Competition Review System”: refers to the competition assessment that shall be conducted by administrative organs, as well as organizations authorized by laws and regulations with the function of managing public affairs (policy-making organs), when formulating regulations, normative documents and other policies and measures involving the economic activities of market subjects, such as market access, industrial development, investment promotion, bidding and tendering, government procurement, business conduct norms, qualification standards, and so on.

b. “The formulation of policies and measures involving the production and business activities of business entities shall be subject to fair competition review”: establishes the pre-requisite requirement of fair competition review. Those that have not been reviewed or have not passed the review shall not be introduced in principle.

c. “Regular assessment, timely cleanup and repeal”: establishes a dynamic management mechanism for stockpiled policies, requiring that introduced policies and measures be regularly scrutinized, and those found to impede fair competition be timely cleaned up and repealed.

d. “Guaranteeing the fair participation of private economic organizations in market competition”: re-emphasizes the special significance of the fair competition review for the private economy, and prevents discrimination in terms of ownership as a result of inappropriate policies.

e. “Market Supervision and Administration Departments are responsible for accepting reports of violations of the policy measures of the fair competition review system and handling them in accordance with the law”: clarifies the responsibilities of market supervision and administration departments in the supervision of the fair competition review and the channels of redress.

[Relevant Laws and Regulations

a. Regulations on Fair Competition Review (if issued, or the State Council's Opinions on the Establishment of a Fair Competition Review System in the Construction of the Market System and its Rules): this is the core basis of the fair competition review system.

b. Anti-Monopoly Law of the People's Republic of China: Article 5 provides that the State Council establishes an Anti-Monopoly Committee, which is responsible for organizing, coordinating, and guiding anti-monopoly work, and performing the corresponding duties. Articles 39 and 40 prohibit administrative authorities from abusing administrative power to exclude or restrict competition.

c. Regulations on Optimization of Business Environment: Article 15 stipulates that policymaking organs shall conduct a fair competition review when formulating regulations, normative documents and other policies and measures relating to the economic activities of market players.

Translated with DeepL.com (free version)

[Practical Guide]

a. Enterprise rights defense: If a private enterprise discovers that a policy measure introduced by the government may exclude or restrict competition (e.g., granting unreasonable preferences to a specific enterprise, restricting foreign enterprises from entering the local market, etc.) or fails to conduct a fair competition review in accordance with the regulations, it may report the matter to the higher-level organ of the policy-making authority or the market supervision and administration department.

b. Government Compliance: Government departments at all levels must strictly fulfill fair competition review procedures, assess the impact of policies on market competition, and keep records of the review before introducing policies. A sound internal review mechanism and process should be established.

c. Policy Transparency: The process and conclusions of the fair competition review are appropriate to be disclosed to the public and subject to public scrutiny, except for special circumstances such as those involving state secrets.

d. Lawyering: Lawyers may provide government departments with professional consulting services on fair competition review to help them identify and prevent competition risks in their policies; they may also act on behalf of enterprises in filing reports or legal opinions on policy measures suspected of violating the fair competition review system.

Article 12 [Original text

Article 12 The State guarantees private economic organizations equal access to all types of factors of production and public service resources, such as capital, technology, human resources, data, land and other natural resources, in accordance with the law, and equal application of the State's policies in support of development in accordance with the law.

Interpretation of Provisions

Background and Purpose of Legislation: Equal access to factors of production and public service resources is the basis for the survival and development of enterprises. The purpose of this article is to eliminate the ownership discrimination that private economic organizations may face in accessing these resources, and to ensure that they enjoy the same opportunities as other types of economic organizations.

Interpretation of the Article.

a. “Various types of production factors”: enumerates key factors such as capital, technology, human resources, data, land and other natural resources. This is an open-ended list, and the word “etc.” indicates that other unspecified factors are included.

b. “Public service resources”: refers to services provided by the government or public institutions that support economic and social activities, such as infrastructure, information services, and government services.

c. “Equal use in accordance with the law”: the core is “equality”, i.e. in accessing and using these factors and resources, private economic organizations shall enjoy the same rights and opportunities as other subjects such as state-owned enterprises, and shall not be subjected to higher thresholds, poorer conditions, or outright exclusion on the basis of their private status.

d. “Equal application of State policies in support of development in accordance with the law”: It is emphasized that all types of enterprise-friendly policies (such as tax incentives, financial subsidies, industrial support, etc.) should be applied equally to private economic organizations, and that there should be no “glass door”,

[Relevant laws and regulations]

a. Civil Code of the People's Republic of China: Article 6 (Principle of Equity), Article 113 (Property Rights of Civil Subjects Are Equally Protected by Law).

b. Land Administration Law of the People's Republic of China: Provisions on land supply.

c. Law of the People's Republic of China on Government Procurement and Law of the People's Republic of China on Bidding and Tendering: embodies the principle of fairness in the allocation of public resources.

d. Regulations on the Optimization of Business Environment: Article 4 stipulates that all types of market entities shall be guaranteed equal access to all types of factors of production and equal application of support policies in accordance with the law.

Practical Guidelines

a. Claims by enterprises: If private enterprises encounter unequal treatment in applying for loans, acquiring land, participating in government projects, enjoying policy subsidies, etc., they may make representations or complaints in accordance with this Article. b. Governmental responsibilities: All levels of government are responsible for the implementation of these regulations.

c. Government Responsibility: In allocating resources, providing public services, and implementing support policies, governments and relevant departments at all levels must strictly abide by the principle of equality, and must not set any form of discriminatory conditions for private enterprises. Existing regulations should be reviewed and unequal provisions should be cleaned up.

d. Market-based allocation of factors: The spirit of this article is consistent with the direction of the State in promoting the reform of market-based allocation of factors, and calls for guaranteeing equal access to factors for all types of subjects through market-based means.

Specific areas of concern: 

Funding: Concerned about the equality of financing opportunities, such as bank loan approval standards and debt issuance conditions.

Land: Concerned about whether there is discrimination in land auctions and the supply of industrial land.

Data: Concerned about the open sharing of public data and equal opportunities in the market allocation of data elements.

Human Resources: Concerned about equal treatment in the introduction of talents and the evaluation of professional titles.

Article 13 [Original text

Article 13 The people's governments at all levels and their relevant departments shall, in accordance with their legal authority, treat private economic organizations equally when formulating and implementing policies and measures on government funding arrangements, land supply, sewage indicators, public data opening, qualification licensing, standard-setting, project declaration, appraisal of titles, evaluation of excellence and priorities, and human resources.

Interpretation of Provisions

Legislative Background and Purpose: This article is a further specification and refinement of the principle provisions of Article 12, listing the key areas in which the government should insist on equal treatment of private economic organizations in resource allocation and management services, and is more operational.

Definitions of the Articles.

a. "In accordance with legal authority": Emphasizes the premise of legitimacy of government actions, i.e., the formulation and implementation of government policies must be carried out within the scope of its legal authority.

b. Specific areas listed: 

"Arrangement of government funds": e.g. allocation of financial subsidies and special funds.

"Land supply": e.g. allocation of construction land targets, land supply methods and prices.

"Emission targets": Allocation of emission right targets on the premise of environmental capacity.

"Public Data Openness": The scope and conditions under which public data resources held by the government can be opened to the society.

"Qualification License": Approval of qualifications for enterprises to engage in specific industries or activities.

"Standard Setting": Opportunities to participate in the development of national standards, industry standards, and local standards.

"Project Declaration": Declaration of national or local scientific research projects, technical reform projects, industrialization projects, etc.

"Title Evaluation": evaluation of the titles of professional and technical personnel in private enterprises.

"Merit assessment: Selection of various honorary titles and awards.

"Human resources": enjoyment of talent introduction policies, training resources, etc.

c. "Equal Treatment for Private Economic Organizations": The core requirement is that in all of the above areas, the policy standards, application conditions, approval processes, and rights enjoyed by private economic organizations should be the same as those of other economic organizations, such as state-owned enterprises, and that there should be no discrimination on the basis of ownership.

[Relevant laws and regulations

Laws and regulations related to the same Article 12.

Special laws and regulations in specific fields, such as the Regulations on the Administration of Sewage Discharge Permits, the Measures for the Administration of National Standards, and the Interim Provisions on the Administration of the Evaluation of Professional and Technical Titles of Professional and Technical Personnel.

[Practical Guidelines

a. Cross-checking by enterprises: Private enterprises can examine whether they have encountered unequal treatment in their actual operation against the areas listed in this article. If so, they can reflect and complain to the relevant authorities accordingly.

b. Government Policy Formulation and Implementation: When formulating and implementing policies and measures related to the areas listed in this Article, government departments at all levels should take the initiative to conduct compliance reviews to ensure that there are no discriminatory provisions or practices against private enterprises.

c. Transparency and openness: In order to ensure equal treatment, the process of formulating relevant policies should listen to the opinions of private enterprises, and the content of the policies, the application process, and the results of approval should be open and transparent.

d. Areas of Focus: 

Government Subsidies and Project Declarations: Ensure that private enterprises enjoy the same treatment as state-owned enterprises in terms of declaration conditions, evaluation criteria, and financial support.

Qualification licensing and standard-setting: Ensure that private enterprises are not restricted by ownership in obtaining entry qualifications and participating in standard-setting.

Title Evaluation: Open up the channels for private enterprises to declare their talents' titles, and implement the same evaluation standards as those for personnel in the system.

(To be continued)

Special Announcement: 

This article was originally written by the lawyers of Jiawei Law Firm, which only represents the author's own views and shall not be regarded as a formal legal opinion or advice issued by Jiawei Law Firm or its lawyers. If you need to reproduce or quote any content of this article, please indicate the source.