No trade in China has been truly monopolized by foreign capital, said the Ministry of Commerce on August 24, in a document it issue in response to the worries that the merger and acquisition by the foreign capital will jeopardize the country's economic security

Wang Zhile, director of the ministry's Transnational Enterprises Research Center, said the larger market share does not mean monopoly. The 'monopoly' criticized in business circle is, in essence, a kind of restriction action on competition. To date, there is still no industry that has so far been monopolized by foreign capital.

There are two errors in the judgment: first, there is also competition among foreign funded firms in the same industry. All the foreign funded firms of the same industry should not be put together and judged as the principle market competition body. Secondly, the centralization of market shares is just the condition for monopoly, but is not equal to the monopoly, which is the action that principal market competition body uses to restrict the competition by its competitive edge.

To judge whether a firm is monopolist one is to see whether or not it has used its competitive edge to restrict competition. Surveys show it is true that there is a centralization of market shares of foreign capital in some industries, but monopoly has not really taken shape. It is hard for a foreign-funded firm to monopolize a given Chinese industry within a short period of time.

Wang refers in his document most of the monopolistic enterprises in China are the state-owned enterprises (SOEs). With state restrictions on market access, administration gives rise to monopoly. As the acceleration for reform and opening, private and foreign enterprises should be permitted to enter into most of the industries, which will facilitate the security of Chinese industries. It is not appropriate to lift the normal competition problem to the height of national economic security, which will lead to the protectionism of industries. It is up to the competitive power that decides the economic security of a nation. And it is hard for any foreign capitals conduct monopoly in China.

By People's Daily Online