Professor Angela Zhang is the Director of the University of Hong Kong's Centre for Chinese Law, which promotes legal scholarship with the aim of developing a deeper understanding of China and facilitating dialogue between East and West. Her new book, Chinese Antitrust Exceptionalism: How the Rise of China Will Challenge Global Regulation, analyzes Chinese antitrust law in the broader context of China's developing global economic presence and examines how Chinese exceptionalism—as manifested in the way China regulates and is regulated—is reshaping global antitrust regulation.
In China, there is a near absence of judicial review and thus bureaucratic politics dominates regulations. Unlike American and European companies, Chinese companies are often very reluctant to challenge antitrust regulation decisions. For example, Alibaba received a $2.8 billion fine for antitrust violations, and in response they thanked the regulator and praised the penalty decision. This happens because Chinese companies want to maintain a good relationship with the government and a good public image.
The Chinese government employs a strategy of strategic shaming to make sure that companies cooperate with regulations and penalties. When a firm is uncooperative, state media publicizes their wrongdoings which inevitably leads to a major drop in the company’s stock price. For example, when the National Development and Reform Commission (NDRC) announced on television that they were investigating Biostime, the company lost one third of its market capitalization in just one week.
Professor Zhang also discusses how China is regulated. After the Great Recession of 2008, Europe saw a major influx of capital from China, and leaders were nervous because they couldn’t tell if companies were separate entities or all arms of one big, state-run “China Inc.”. As a result, the EU decided in 2016 to treat all Chinese energy firms as one single firm.
Antitrust regulation can also be used as an economic weapon against the United States. It allows the government to exert extraterritorial jurisdiction over U.S. businesses, giving Beijing leverage in competition with Washington. Zhang argues that using antitrust regulations for “hostage exchanges” between the U.S. and China is actually conducive to peace because it leads to more economic integration.