China may pass a so-called new "anti-monopoly" law as early as this
week, state media reports. The law, which has been debated for several
months, will target foreign companies that plan to take over or merge
with domestic companies in specific high-priority sectors. Should the
law be implemented, it will undoubtedly evoke a raft of
anti-protectionist protests from around the world.
Some analysts see this move as a major change in economic policy.
While China has eagerly received as much foreign investment as
possible during the last two decades, the domestic economy is changing
fast, and local companies are lobbying for more robust protection
against stronger multinational competitors. The new law may hinder
some foreign companies from further investing into the Chinese
economy, particularly with regard to acquisitions.
It would also, to some degree, safeguard domestic companies' local
positions by giving them a safety net within which to stave off
aggressive foreign competition, and provide a barrier for
multinationals that are seeking to buy greater market shares in China.
"From the point of view of protecting local companies, [the new law]
does make some sense," said Chen Xingdong, Chief Economist with BNP
Paribas Securities in Beijing, in a statement published by Channel
News Asia.
"China is not desperate for foreign investment any more," said Chen.
"Some foreign mergers and acquisitions have added competitive pressure
on local companies, so a policy change is necessary," he told Agence
France Press.
According to official statistics, mergers and acquisitions made up
five per cent of foreign direct investment in China until 2003, rising
to 11 per cent in 2004, and almost 20 per cent in 2005.
Last update : Monday, 27 August 2007
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