Chinese Antitrust in the Trade War: Casualty, Refugee, Profiteer, Peacemaker

Assuming command of U.S. strategy in the roiling trade and technology row with the People’s Republic of China (PRC) is among the principal foreign policy challenges facing the Biden administration. China’s Anti-Monopoly Law (AML) is, for better or worse, caught on the battlefield. In March 2018, the United States Trade Representative (USTR) under the Trump administration issued its Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974. The report catalogued Chinese government strategies for obtaining foreign-origin technology, advancing China’s domestic technological capacities, and promoting Chinese technologies, products, and companies in foreign markets. The USTR specifically noted risks that enforcement of the AML might advance industrial policy or protectionist goals. Three years later, the USTR under the Biden administration restated these concerns in the 2021 National Trade Estimate Report on Foreign Trade Barriers.

Given the AML’s flexible text and policymaking context, it should be unsurprising that Chinese competition enforcement sometimes reflects overarching objectives of the Chinese Communist Party (CCP) and the Chinese state— to the potential detriment of foreign investors, competitors, and consumers. Indeed, if anything is surprising, it should be the extent to which published AML rules and decisions converge with foreign practices—benefiting Chinese consumers and foreign consumers alike.

At the risk of trading depth for breadth while chasing the daily news cycle (the Chinese idiom of “looking at flowers from horseback” comes to mind), this article surveys the interplay of Chinese competition policy and trade policy to reach a modest, if daunting, conclusion: it is still worth endeavoring to preserve competition policy as a sphere of peer engagement among Chinese and foreign competition authorities and as a channel for market-oriented regulatory innovation in China—however constrained by political and geostrategic realities.

Modern Chinese leaders have viewed competition and trade policy as complementary elements of the ever-evolving reforms ultimately aimed at safeguarding CCP rule. Economic policy under Xi Jinping aims to harness the gains of market competition selectively, while preserving the state’s prerogatives to pursue industrial policies and other objectives. To reinforce this overall program, published measures under the AML promote “default” antitrust rules—applicable to most competitors in most domestic markets in most circumstances—largely consonant with prevailing international practice.

Beijing is, however, recalibrating its economic model to respond to geostrategic and trade tensions, stoking long-standing concerns about discriminatory or selective enforcement of the AML. China’s competition authority, the Antimonopoly Bureau (AMB) of the State Administration for Market Regulation (SAMR), remains constrained both by the broad directives of senior leadership and by policymaking mechanisms requiring alignment, compromise, and sometimes deference to other stakeholders within the CCP and state bureaucracy. The opacity of these institutions obscures the extent to which any specific action—or inaction—actually aims to advance conventional antitrust goals of consumer welfare and economic efficiency, reinforce policies compatible with them, or subordinate them to higher priorities. Protracted trade disputes raise the risk that AML enforcement might be “weaponized” for retaliatory or deterrent purposes, or that the economic and political circumstances of specific cases allow other policy objectives to override China’s default antitrust rules.

Ironically, recent overhauls of China’s own economic sanctions, export control, and national security review regimes might alleviate some of the institutional pressure on SAMR to use the AML as a trade tool. Nevertheless, if AML actions against foreign parties do advance China’s trade, industrial policy, diplomatic, or defense goals rather than furthering consumer welfare and economic efficiency, then existing bilateral and multilateral trade agreements offer only limited recourse. Consequently, continued peer engagement among competition policy communities remains the most promising channel for promoting convergence between China’s default antitrust rules and prevailing international practices for the benefit of Chinese and foreign consumers alike.

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