Newsletter on Chinese Antitrust 3.03-10.03.2023

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Newsletter on Chinese Antitrust 3.03-10.03.2023

Review № 7 of Chinese Antitrust News from the Experts of the BRICS Competition Centre

- Antitrust in the government's report at "two sessions"
- Key concepts of the government report
- Shifting Focus: Tech Industry Representatives in the NPC
- Minister of Science and Technology: Developing something like ChatGPT will not be easy
- Expanding China's Opening Is a Benefit for Foreign Companies
- China will create a data regulator
- Luo Wen on fair competition
- Local Antitrust Enforcement Campaigns
- Platforms publish guidelines to combat cyberbullying
- Netherlands will restrict the export of equipment for the production of microcircuits
- Working Paper of the Supreme People's Court

Antitrust in the government's report at "two sessions"

Premier of the State Council of the People's Republic of China Li Keqiang delivered a working report at the "two sessions" - one of the key events in the political life of China, where the consideration and subsequent formal approval of the country's political and economic course for a year takes place.

Among the successes of the past five years, he noted the constant development of the digital economy, as well as the fact that the share of added value of new industries and business models in GDP exceeded 17%. Antimonopoly measures and the fight against unfair competition were constantly strengthened, a comprehensive review of administrative decisions was carried out for the absence of adverse effects on competition, and the system of antimonopoly enforcement was restructured. The authorities regulated and directed the healthy development of capital and resolutely controlled its "disorderly expansion." China has also promoted the healthy and orderly development of the platform economy, playing its role in stimulating employment and entrepreneurship, expanding the consumption market, and creating innovative production models.

Among the tasks for the current year, the Prime Minister mentioned the digital transformation of traditional industries and SMEs, accelerating advanced scientific and technological developments and their applications, strengthening the development of the digital economy, increasing the level of “normalized” (has become the usual norm) regulation and supporting the development of the platform economy.

According to Southern Metropolis analytics, the topic of fair competition appears in all government working papers over the past three years, but in 2021 and 2022 there was talk of strengthening antitrust regulation, and this year this requirement was not put forward: the emphasis was on real measures to promote fair competition and improvement in market expectations.

Sources: WeixinWeixin

Key concepts of the government report

In the report of the government at "two sessions", the last five years were designated as "extremely outstanding". Key words of the report were “stabilize” (economy, rising consumer prices, foreign investment), “preserve/guarantee” (employment, legitimate business interests, investment in the fight against poverty), “new” (development, innovation, urbanization patterns), “ reform” (services, financial apparatus, research projects), “reduce” (taxes, customs clearance time), “lower” (credit rate, CO2 emissions) and “the people” (people above all, improve people’s living standards, guarantee and improve the welfare of the people).

Source: Weixin

Shifting Focus: Tech Industry Representatives in the NPCВ

In the new composition of the National People's Congress, now sitting in Beijing, the leaders of the largest Internet companies have given way to experts in artificial intelligence and semiconductors. According to The Wall Street Journal analyst, such changes indicate a change in China's political priorities. The absence of Pony Ma, Robin Lee and William Dean from the lists is a signal that digital platforms are no longer at the center of the Chinese development agenda. “Ding, Li and Ma are the symbol of the old era,” said Lu Xiaomeng, director of the consulting company Eurasia Group. By appointing entrepreneurs from the fields of AI, cloud computing, semiconductors and computer hardware, Beijing is "promoting their business models and indicating that they are the future of Chinese technology." According to Albright Stonebridge Group senior vice president for China, Paul Triolo, “Beijing needs to bring private companies into play as Xi [Jinping] and the party prepare for a long-term fight with the US: not for technological dominance in the future, but for control of Chinese supply chains. deliveries of technology free of US regulatory interference.”

Source: WSJ

Minister of Science and Technology: Developing something like ChatGPT will not be easy

At the opening of the "two sessions", Minister of Science and Technology Wang Zhigang commented on the development progress of Chinese counterparts to ChatGPT, which is not currently available in China. According to him, ChatGPT has attracted so much attention because it effectively combines big data, serious computing power and powerful algorithms. The same principle is implemented by different players in different ways: for example, many produce engines, but the quality is not the same for everyone; or there are a lot of players, but reaching Messi's level is not easy. In this regard, ChatGPT is a very complex program, especially considering that its algorithms operate in real time. With computation, we can engineer human language understanding and dialogue, but doing so in real time is difficult, and OpenAI has an advantage here.

China is also seriously engaged in this area, has been conducting relevant research for many years and has already achieved some success, but an effect similar to OpenAI will have to wait. In addition, the regulation of scientific and technical ethics should not be overlooked in order to avoid causing harm.

Expanding China's Opening Is a Benefit for Foreign Companies

Honeywell China President Yu Feng said that China's commitment to openness is driving the long-term development of foreign companies in China. He noted that China has "a variety of industry categories, a favorable environment for innovation, rich human resources, and so on." Yu Feng said that Honeywell has built a complete localized value chain in China, including R&D, manufacturing and service. “We are confident in the high-quality development of the Chinese market and the sustainable growth of Honeywell in this country due to the comprehensive advantages of China, which include comprehensive industrial systems, a super-large market, an improving business environment, and long-term positive economic performance,” said Yu Feng.

The attractiveness of the Chinese market was also noted by the representative of the Chamber of Commerce and Industry of the Republic of Uzbekistan in China, Jamshid Sulaimanov: he emphasized the growing interest of Chinese consumers in imported agricultural products, including fruits, which, in his opinion, creates potential opportunities for the export of agricultural products from Uzbekistan. As one of the largest consumer markets in the world, China is committed to promoting openness to the outside world at a high level and forming a new development architecture at an accelerated pace, thus providing great opportunities for cooperation with Chinese partners in various fields, Sulaimanov said.

SourcesPeople's DailyPeople's Daily

China will create a data regulator

A plan for restructuring the State Council of the People's Republic of China was submitted to the "Chinese Parliament" (National People's Congress, NPC) for consideration. Among other things, it is proposed to reorganize the Ministry of Science and Technology. Xiao Jie, head of the State Council Secretariat, explained that in the face of international technological competition and increased external pressure, it is necessary to improve the management system of the science and technology industry and accelerate the achievement of technological sovereignty. The reform involves strengthening the party leadership of the sector and the creation of the Central Scientific and Technical Committee.

The proposals also include the creation of a State Data Office. The relevance of strengthening control over data, their production and use is due to the fundamental role of digital resources and the digital economy in the socio-economic development of the country. The proposed department will report to the National Development and Reform Committee and will take over the functions of coordinating the creation of data infrastructure, planning the implementation of digital China and digital society strategies, etc.

On March 10th, the NPC formally approved the proposed restructuring plan.

Separately, The Wall Street Journal reported on plans to create a supreme data regulator. As noted by the sources of the publication, the new body will deal with the export and collection of data, the use of algorithms, the identification of vulnerabilities to cyber attacks, and so on.

Luo Wen on fair competition

On March 7th, SAMR head Luo Wen took part in a "direct dialogue" with reporters about measures to protect and promote fair competition. He stressed that China has entered the era of high-quality development and switched from the question of "is it or not" to "good or bad", in connection with which the demand for fair competition becomes especially urgent. Luo Wen said that in order to maintain and improve a fair competitive environment in the market, the department will focus on four areas:

1) Improve the legislative framework (work is underway to update the law on combating unfair competition, revising the criteria for filing applications and economic concentration transactions, etc.);

2) Raise the level of “normalized” (which has become a habitual norm) regulation (work on assessing the state of competition, increase the intensity of proactive regulation);

3) Get rid of local protectionism and administrative monopoly in order to give more space for the free circulation of goods and the healthy development of companies;

4) Create a fair competitive atmosphere (engage in education and advocacy, publish annual reports on law enforcement, conduct trainings, form a conscious attitude of market entities to competition).

He expressed the hope that the media will help spread the knowledge about fair competition among a wide audience.


Local Antitrust Enforcement Campaigns

The market regulatory authorities of individual cities and provinces have launched local antitrust enforcement campaigns in socially sensitive sectors such as education, transportation, pharmaceuticals and medicine, auto, utilities, consumer goods, and so on. Agencies will specifically address anti-competitive agreements, abuse of dominance, improved M&A review mechanisms, and government abuse of their administrative powers to the detriment of competition. Campaigns will be held in Shanghai, Chongqing, Hainan, Shaanxi, Hunan, and others. The departments also urged to contact the single number 12315 in case of illegal actions.

Source: Weixin

Platforms publish guidelines to combat cyberbullying

Last November, the China Cyberspace Administration issued a Notice to Strengthen the Fight Against Cyberbullying, and recently, many platforms have announced measures to counter this phenomenon. They have published how-to guides and integrated easy-to-use tools for risk warning, privacy protection, and complaint handling. The intensity of the struggle was increased by such sites as Douyin, Weibo, Kuaishou, Tencent, Xiaohongshu, etc. In the last week alone, the platforms sent out notifications to 2,361 users about the availability of “one-click protection”, deleted 72,000 unfriendly publications, blocked the sending of more than 4 million illegal messages and 8511 accounts.


Source: Weixin

Netherlands will restrict the export of equipment for the production of microcircuits

The Dutch company ASML said the Dutch government is preparing to impose export restrictions: the measures will mainly affect microchip technology, and the company will need to request permission to supply the most advanced DUV lithography systems.

In response, Chinese Foreign Ministry spokesperson Mao Ning stressed that China is dissatisfied with the Netherlands' interference in the normal regime of trade and economic relations between Chinese and Dutch companies using administrative tools. In recent years, the United States, intending to deprive China of its right to develop and protect its own hegemony, has been blurring the concept of national security, politicizing trade, economic, scientific and technological ties, and forcing individual countries to impose export restrictions on China. Mao Ning expressed her hope that the Netherlands will be able to take an objective and impartial position, adhere to market principles and not abuse export control measures.


Working Paper of the Supreme People's Court

The Supreme People's Court reported on the work for 2022. In particular, active work was carried out to protect fair competition: 29,000 cases related to antitrust practices and unfair competition were considered in such areas as pharmaceuticals, telecommunications, building materials, cultural consumption, etc. The judiciary contributed to the healthy development of the digital economy: considered cases on deals on property rights to big data, on unfair competition using public data; imposed penalties for the abuse of data and algorithms, stopped cases of coercion to exclusive cooperation (so-called “choosing one of two”) and discrimination of old customers compared to new ones (so-called “killing “their” with the help of big data).

Source: Weixin

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