Recent Developments in China, the US and Europe
Edited by Michael Faure and Xinzhu Zhang
Michael Faure and Xinzhu Zhang 14.1 IS COMPETITION LAW NEEDED? Some contributors to this book have strongly emphasized the importance of competition law for the economic development of China. Huang Yong and Zhang Zhe stressed in Chapter 3 that horizontal agreements, more particularly hardcore cartels concerning price fixing are exceptionally harmful to market competition. These price cartels, which they see as most common in China, will impede both industrial development and social progress. This seems to be a sentiment that is shared by many contributors to this book and which was also stated in the introduction as one of the starting points for this study: a rapidly developing economy such as China will undoubtedly need an appropriate institutional structure to accompany its economic development, including adequate competition law and policy. The economic argument in favour of a competition law is also presented by Thomas Ulen in Chapter 2, who argues that monopoly imposes social costs in the form of deadweight losses and may stifle innovation. However, Ulen observes that this classic argument in favour of regulation (via competition) may work out differently in the case of developing countries. He formulates scepticism about the role of law in promoting economic growth in developing countries such as China since such a country may to a large extent also rely on alternatives to legal institutions. Moreover, Ulen powerfully argues that China has experienced a staggering 9 percent growth of annual GDP for most of the past 30 years, which seems to contradict the...