China to name and shame firms blamed for destructive price wars
The steps are the latest in a government-led campaign to curb ruinous competition among businesses that is eroding their profits
[BEIJING] China is taking aim at low prices offered by companies to win market share and plans to expose those it deems the worst offenders to public scrutiny.
Officials from China’s powerful economic-planning agency – the National Development and Reform Commission (NDRC) – used a briefing on Friday (Aug 1) to lay out a range of measures targeted at the firms and tactics it blames for fanning deflationary pressure in the economy.
As part of that effort, the authorities will establish a system to carry out reports on competition-related problems and seek accountability for “typical negative cases” while punishing “those of a serious nature,” said Wang Renfei, head of an NDRC department in charge of researching and drafting major economic reform plans.
The steps are the latest in a government-led campaign to curb ruinous competition among businesses that is eroding their profits and put an end to the deflationary price wars plaguing much of the world’s second-biggest economy.
The authorities are advancing efforts to revise the country’s Price Law, cracking down on low-cost dumping whose intention is to drive out competitors or monopolise the market, said Jiang Yi, a spokesperson of the NDRC.
Officials are also carrying out investigations in industries where cutthroat competition is especially intense. The goal is to better understand operations and guide companies to act responsibly in setting prices, Jiang said.
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The effort aims to take comprehensive measures to rein in aggressive low-price tactics, so as to foster “rational pricing” among businesses and restore healthy competition in the market, he added.
“Competition must operate within boundaries and adhere to established rules,” Jiang said. When it becomes excessive, it can erode quality, shrink services, and fuel counterfeiting – undermining consumer rights and stalling growth of businesses and industries, he added.
Chinese leaders have in recent months intensified calls to end price wars that are squeezing corporate profits and driving down wages. Fierce rivalry fuelled by excess industrial capacity have driven exporters to slash prices to boost sales, drawing sharp criticism from abroad and deepening trade friction.
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The Politburo, made up by the Communist Party’s 24 most senior officials including President Xi Jinping, listed the goal of addressing “disorderly competition” among companies as one of its top priorities when it set the economic policy agenda for the rest of the year at a meeting this week.
The NDRC will advance efforts to control capacity in key industries and strengthen reviews of winning bids for fairness to others as part of efforts to curb competition, Wang said at the briefing. Measures will be taken to regulate local investment promotion practices and remove market access barriers, he said. BLOOMBERG
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