Stronger 'institutional cage' to prevent power distorting market

China's new regulations on fair competition reviews came into force on Thursday, filling the legislative gap in the field. Although China founded its fair competition review mechanism in 2016, some local protectionism and market segmentation behaviors have not been completely addressed, which has hindered the free flow of production factors and reduced the efficiency of resource allocation and economic operations. Administrative agencies and organizations legally authorized to manage public affairs must conduct fair competition reviews when formulating laws, rules and policies related to business activities, according to the new regulations that allocate duties to both central and local government departments. The regulations provide a strong institutional guarantee for fair competition and the innovative development of business entities, which is conducive to giving full play to the innovation incentivizing and survival of the fittest functions of the market competition mechanism, guiding the effective allocation of innovative resources through market demand, and allowing various advanced and high-quality production factors to flow smoothly. The regulations, if strictly implemented, can help tighten the "institutional cage" for the abuse of administrative power and curtail improper interference in fair market competition.