Confronted by internal conflict within the export sector,
Chinese enterprises have called for stricter management on
under-pricing or under-cutting. An official from the Ministry of
Commerce said that Regulations on Investigating and Penalizing
Unfair Conduct in Exporting will be issued in August and not in
July as originally scheduled, according to a report in the
Economic Observer reported on July 8.
"We still must solicit opinions and criticisms, revise the
draft, and submit it to the State Council for examination and
approval," the official said.
According to the ministry, internal conflicts within companies
are to blame for the export sector's heavy economic losses. For
example, coke exports in 2004 were valued at US$450 per ton. By the
end of 2005, that figure had dropped to US$120 per ton. The drastic
drop in value is inconsistent with the general rise in price of
other resources in recent years, the ministry said.
According to ministry statistics, Chinese coke exports account
for nearly half of the world's total, with north China's Shanxi Province producing 80 percent of the
country's total volume of exports.
About 70 percent of coke in the EU is imported from China.
Industry insiders say that, in this situation, it would be
reasonable of China to raise the export price of coke. However,
increasing competition for business with foreign companies has
forced prices down. Chinese companies fight tenaciously for
business, accepting lower prices and even unreasonable terms of
contract.
Some insiders say that China's lack of legislative control in
this respect is responsible. The Anti-Monopoly Law hasn't been
issued yet, and the current Anti-Unfair Competition Law doesn't
specifically address the matter.
This is why Chinese enterprises are waiting anxiously for the
new regulations in August, in the hope that it will set things
right.
At the same time, other industry insiders disagree and say that
the problem is really with non-enforcement of legislation. In 1996,
the central government issued Temporary Regulations on Penalizing
Unfair Conduct in Exporting, but the regulations have not been
applied in practice.
In this case, the best way forward for the moment is to curb
internal conflicts.
To do that, it is first necessary to understand that internal
conflicts aren't just within companies or between competing
enterprises. In China's economic structure, there is the central
economy and local ones. By separating local economy from the
central economy, local governments set their own production levels
and prices, which encourages competition between local economies.
But this also gives rise to protectionist measures.
Further, it is common that local governmental officials take the
lead in fuelling such conflicts. A typical example is seen when
local governments try to attract foreign investment. Local
authorities have been known to offer concessions in contravention
of existing laws and policies, more often than not benefiting only
the foreign investors.
To address the issue, industry experts suggest two things: One,
the central government must improve and strictly implement laws and
regulations to combat local protectionism. Two, it must encourage
the establishment of a national industrial association, perhaps in
the form of an authoritative non-governmental organization, to
promote solidarity in the sector and fair play.
International experience has shown that an industrial
association is an effective tool for strengthening industrial unity
and curbing internal conflicts.
(China.org.cn by Li Jingrong, July 16, 2006)
