Trust-busters target telecoms

Opening the market

Market analysts say the investigation is rare and unusual.

It marks the first time that a state-owned enterprise has been invested for suspected violation of the country’s Anti-monopoly Law, said Wu Yong, an expert in the telecom field and a lawyer at a Beijing law office.

It is also the first probe launched by the NDRC, Wu said. He believes it is a sign the country will pursue more antitrust probes as it opens state-controlled industries.

Wu said there has long been discussions over whether the country’s oversized state monopolies threaten its economy.

Last year, among the Global 500 enterprises filed by Fortune Magazine, 21 companies from the Chinese mainland were listed. All were hulking state-owned enterprises, dominating the fields of finance, construction and telecommunications.

That’s not something to be proud about, Wu said.

Instead it exposed serious problems in the country’s economy structure.

State control can mean stability, but it prevents free competition. In the case of telecoms, more operators would naturally result in fewer complaints and faster Internet speeds, he said.

But the opening up of monopolized industries is a sure thing. Premier Wen Jiabao said in his government work report that the country will accelerate the reform of these areas.

“We will create a market environment that ensures fair competition among economic entities under diverse forms of ownership, and that facilitates stronger growth of the non-public sector,” Wen said.

The government pledged to loosen its grip and invite private companies to compete, he said.

And that is what Wu expects to see.

“The private firms are more comparable with their counterparts in Europe and the US. Only when those companies are among the Fortune 500 will China have something to feel proud about,” he said.