Anti-trust move is fair, not targeted at foreign firms

The victim mentality reflected in the willful accusation of China's normal regulatory moves could have resulted from the changing business landscape in China in recent years.

In the 30 years following China's launch of the reform and opening-up drive in the late 1970s, foreign companies have been widely welcomed as their investment can bring much-needed capital to cash-thirsty local governments. As a result, "introduction of foreign capital" has become a crucial factor in evaluation of the career performance of local officials and local governments competed fiercely with each other in releasing preferential policies, such as free or low-cost use of land and tax exemption, to woo foreign investors.

Only in recent years have authorities realized that such investor-wooing policies are not sustainable and have put domestic enterprises at a disadvantage.

In a landmark move, China unified its corporate income tax rate for foreign and domestic companies at 25 percent in 2007. Previously, the rate for both types was 33 percent, but in reality, local governments have offered various preferential tax treatments to foreign companies, giving them an edge when they compete with Chinese rivals.

The move is a crucial step for China to build an equality-based market for all, but by depriving foreign enterprises of their super-national treatment, it has inevitably aroused protests from those spoiled foreign players.

In the same vein, the current anti-trust move, which is also an indispensable step for China to build a real, mature market economy, is set to make the scrutinized foreign companies uneasy.

Instead of complaining, they should rethink their way of operation in the maturing Chinese market.

The author is a senior writer with China Daily. xinzhiming@chinadaily.com.cn

(China Daily 08/13/2014 page9)

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