China’s policymakers hold an important regular annual economic work conference in Beijing in the last month of a year – the Central Economic Work Conference – on which they reviewed the country’s economic work of the current year and outlined key tasks for the next year. At the recent such meeting concluded on December 18, 2020, the policymakers called on the country to strengthen anti-monopoly efforts and prevent the disorderly expansion of capital in 2021.

A week later, China’s market regulators started antitrust investigation into a few e-commerce giants including Alibaba and the Ant Group. Most people heaped praise on the move deeming it necessary and well in time.

Monopoly often occurs. Given a host of complicated legal and market issues in the enterprises and industries involved, the state market regulator is usually very cautious when dealing with monopoly cases. After all, once antitrust action is taken, multiple actors will get involved. The efforts, however, should not discourage related enterprises but rather create a fair atmosphere in the market. Therefore, antitrust moves may cause blowback.

China adopted the Anti-Monopoly Law of the People’s Republic of China on August 30, 2007 and implemented it on August 1 of the following year. In the past 12 years, the law has not really come into play until now. The antitrust move targeted at Alibaba and other internet giants is the first time China enforces the law. With far-reaching significance, the move will be a milestone in the Chinese market.

Anti-monopoly is an economic and social issue and is also a technical one. Most of the companies, industries and personnel involved in monopoly are influential in their sector, their monopolistic behavior, therefore, must come under such strict scrutiny that it complies with the basic principle of fair competition.

Over the past 26 years since China introduced the Internet in 1994, China’s Internet enterprises have indeed experienced very hard struggles and developed into today’s capital giants with the highest market value. However, the greed of capital has not been curbed. They have sprawled in the name of innovation to milk money from people disregarding the bottom line. In recent years, many companies in name of Internet innovation run lending business in broad fields such as house renting and daily consumption. But their rampant lending business was born with high financial risks which imposes threats to both consumers and banks. Some of these companies have forgotten the corporate responsibility and chose to run away when the capital chain broke, leaving the financial mess to customers and banks.

In the end, they became so arrogant that they can flout the laws and regulations and ignore the market rules, some of which even consider their success unequalled anywhere in the world. Their words and deeds ultimately triggered the anti-monopoly law and made the regulators realize it was about time to set about reining in the titans, which culminated in the suspension of initial public offering of Ant Group early last November, where Alibaba owns a roughly 33 percent stake.

The most intolerable thing about monopoly is greed. What the Internet giants do is to extract money from both sides, buyers and sellers, which is virtually the horizontal and vertical monopoly agreements defined as one of the monopolistic conducts in the law. The companies, however, claim they are just maximizing their profits, turning their back on the fairness of the market.

Monopolies take advantage of their resources, technologies and market share to exert vicious competition against other market participants, by exploiting and encroaching other enterprises. Their behavior has made some people broke and enterprises bankrupt, generating adverse impacts on social peace. For instance, the e-commerce monopolies have eviscerated many brick-and-mortar stores.

Within the huge market of 1.4 billion people, there are 400 million ambitious middle-income people, 130 million market entities, nearly 200 million people with higher education background, roughly 47 million children under age 3, and 250 million silver-hair consumers above age 60. For the sake of all groups above, anti-monopoly moves are aimed to provide a level playing field, in a bid to sustain China’s economic growth and build China into a better-off society.

The author is Senior Fellow of Chongyang Institute of Financial Studies, Renmin University of China.

Translated by Chen Ying and Liu Xiaomin