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Qiushi: How Should China’s SOEs Deal With the Competitive Neutrality Rule?

"The Western countries have been on high alert about China’s State-Owned-Enterprises (SOEs). The U.S. and other countries have been promoting the ‘Competitive Neutrality’ rule in bi-lateral and multi-lateral trade treaties and have tried to adopt it in the TPP negotiations. [Editor’s note: Competitive neutrality is the recognition that significant government business activities which are in competition with the private sector should not have a competitive advantage or disadvantage simply by virtue of government ownership and control.] Qiushi article stated that, whether or not China joins the TPP negotiations, the ‘Competitive Neutrality’ rule will create challenges for China’s SOEs to carry out the ‘Going Abroad’ strategy."

The article suggested the following solutions to enable China’s SOEs to deal with this restriction:

1. Let the SOEs experiment with competition involving this principle (without the government’s subsidies and backing) in China’s Free Trade Zone (e.g. Shanghai) to gain experience.

2. Expedite "Going Abroad" activities. SOEs should take advantage of China’s "One Belt, One Road" strategy and other economic collaboration plans with Asian and African countries. This will enable them tom expand overseas quickly before the "Competitive Neutrality" term becomes a global rule.

3. Compete for international discourse power. Actively seek to control the discourse power and the right to define terms. Try to narrow the applicability of the "Competitive Neutrality" rule, reduce [other countries’ imposed] restrictions on China’s SOEs, request a longer grace period [for the government to stop supporting them], and tie the applicability of the "Competitive Neutrality" rule to match the economic development level of the emerging economies.

Source: Qiushi Online, April 19, 2015