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Illustration: Sarah Grillo/Axios

The Chinese government's anti-monopoly machinery presents a major challenge to U.S. and European regulators, a new book argues.

Why it matters: China's huge markets are attracting investment from multinational corporations and shaping the behavior of its own globe-trotting companies — giving international heft to the country's idiosyncratic antitrust enforcement and putting it on a collision course with Western-style regulation.

  • Anti-competitive practices in China's domestic markets, such as pervasive but opaque state ownership, can make Chinese companies difficult for Western institutions to regulate while enabling China's own antitrust regulator to sometimes target Western companies for political reasons.

Driving the news: The Chinese government has launched a high-profile anti-monopoly campaign against domestic tech firms, including Alibaba, Ant Group, Meituan and others.

Details: In her new book "Chinese Antitrust Exceptionalism: How the Rise of China Challenges Global Regulation" (Oxford University Press, May 2021), legal scholar Angela Huyue Zhang makes three key points:

1. The anti-competitive behavior of some Chinese state-owned and private enterprises as they trade with the rest of the world is often due to China's complex domestic economic environment, rather than intentional, top-down orders from Beijing, as some have speculated.

  • The takeaway: U.S. pressure on Beijing to change its laws so that they more closely resemble Western antitrust law isn't effective, because bureaucratic and economic complexities have shaped how China's antitrust law is carried out.
  • Instead, America's "top priority should be to help China promote structural reform of its bureaucracy and enhance due process in administrative enforcement," Zhang writes.

2. The Chinese government sometimes uses its muscular domestic antitrust regime to support its larger international interests and exert pressure on foreign firms and governments — a type of extraterritorial influence that the U.S. has long wielded, though often in different ways.

  • The U.S. has used its extraterritorial influence to shape the global regulatory environment, whereas the Chinese government has sometimes used its growing regulatory clout to pursue geopolitical interests, such as pushing back on boycotts.
  • The takeaway: The line between antitrust action and national security has become blurred, especially since the U.S.-China trade war under the Trump administration saw both governments take economic actions against each other's companies for what appeared to be underlying security interests.

3. China's antitrust laws are superficially similar to Europe's but their enforcement is vastly different, a result of the fundamentally different political-economic systems of China and the West — a tension that presents a major challenge to globalization.

  • Western regulation often requires a "clear delineation of a firm’s boundaries at the outset," Zhang writes, but Chinese firms may be partially or fully state-owned, and even private Chinese companies know they have to court the Chinese government to get ahead.

Zhang's solution: Zhang says she is still optimistic the two different systems will eventually arrive at a live-and-let-live kind of compromise.

  • "As Chinese antitrust agencies hold foreign businesses hostage through the aggressive enforcement of antitrust law, foreign regulators can do the same by holding Chinese firms hostage, not necessarily through antitrust but also via other regulatory rules such as investment and trade," Zhang writes.
  • "It is this reciprocal exchange of hostages that gives me hope for a peaceful resolution of the conflict."

Go deeper: China wants to avoid America's tech monopolies problem

Go deeper

DOJ brands Chinese-owned U.S. newspaper a foreign agent

Sing Tao Daily is seen at a newstand in San Francisco's Chinatown in 2017. Photo: Liz Hafalia/San Francisco Chronicle via Getty Images

The Justice Department has forced a major Chinese-owned newspaper's U.S. subsidiary to register as a foreign agent, records show.

Why it matters: The DOJ has stepped up scrutiny of foreign-owned media in recent years, and its demand that Sing Tao U.S. register as a foreign agent comes amid high tensions between Washington and Beijing over the latter's influence efforts in the U.S.

Aug 24, 2021 - World

Kamala Harris accuses Beijing of intimidation in South China Sea claim

Vice President Kamala Harris delivers a speech at Gardens by the Bay in Singapore on Tuesday. Photo: Evelyn Hockstein/Pool/AFP via Getty Images

Vice President Kamala Harris accused Beijing on Tuesday of continuing to "intimidate and to make claims to the vast majority of the South China Sea."

Why it matters: Harris' major foreign policy speech in Singapore comes at a crucial point for the Biden administration, as officials seek to emphasize the Biden administration's commitment and rally an international coalition to curb the influence of China's government.

Updated 5 hours ago - Politics & Policy

U.S. sounds alarm on Ukraine

Conscripts line up at a Russian railway station yesterday before departing for Army service. Photo: Sergei Malgavko/TASS via Getty Images

The Biden administration is "deeply concerned" by new intelligence — detailed for Axios and other outlets — showing Russia stepping up preparations to invade Ukraine as soon as early 2022.

Why it matters: Most of this was known from public sources and satellite imagery, but the administration is sending a stronger signal by releasing specific details from the intelligence community.