OECD Reviews of Regulatory Reform China: Defining the Boundary between the Market and the State

China has made enormous progress in developing the modern legal and regulatory foundation for the market economy. The private sector is now the main driver of growth, and new laws have gone a long way toward establishing private property rights, competition, and mechanisms for entry and exit comparable to those of many OECD countries. At the same time important challenges remain, including further clarification of the scope of state ownership, reform of relations among central and local governments, firmer establishment of the rule of law, and strengthening of regulatory institutions and processes. This review of China's regulatory system focuses on the overall economic context for regulatory reform, the governments capacity to manage regulatory reform, competition policy and enforcement, and market openness. The review also examines the regulatory framework in the electricity, water and health care sectors. As for OECD countries, the review follows a multidisciplinary and highly interactive approach. A number of OECD instruments and policies are used in this assessment, although the review also takes into account the specific challenges faced by the Chinese authorities. The review includes a comprehensive set of policy recommendations. Table of Content : List of Abbreviations Regulatory Reform Priorities in the Wake of the World Economic Crisis Executive Summary PART I. THE MACROECONOMIC CONTEXT Chapter 1. Economic Reforms -Introduction -The gradual transition to the market and its macroeconomic consequences -Taking stock: Progress on reform so far and its contributions -Regulatory reform: The remaining challenges -Conclusion PART II. THEMATIC ISSUES Chapter 2. Regulatory Governance -Introduction -Administrative reforms launched in the late 1990s -Bureaucratic reality limiting more profound change -The institutional framework for the creation of regulation -Regulation at different levels of government -Tools for the regulation of quality -Administrative and judicial review -Regulatory impact analysis -Keeping regulation up to date and improving the business environment -Conclusion -Policy options for consideration Chapter 3. The Challenges of Transition for Competition Law and Policy -Introduction -Competition policy foundations -Substantive issues: Content of the competition law -Institutional issues: Enforcement structures and practices -Limits of competition policy and enforcement -Competition law and policy in the transition to a developed market economy Chapter 4. Enhancing Market Openness through Regulatory Reform -Introduction -The economic and trade policy context -The policy framework: Basic principles -Transparency: Equal access to information -Non-discrimination: A core concept -Unnecessary trade restrictions -Internationally harmonised measures -Streamlining conformity assessment procedures -Some policy options for the future PART III. REGULATORY FRAMEWORKS FOR PUBLIC SERVICE Chapter 5. Infrastructure Services: Lessons from 30 Years of Reform in OECD Countries -Introduction -Infrastructure services in OECD countries: The state of play -Policy options and challenges regarding infrastructure services -Lessons for the reform of infrastructure governance in China Chapter 6. Power Sector Reform -Introduction -The context of the reforms in 2002-2004 -Reforms to China power sector, 2002 to 2004 -Key trends and changes in China's power sector, 2004-2008 -Re-evaluation of Chinas sector reform plans -Implications of recent lessons in OECD and developing countries Chapter 7. Water -Introduction -Regulatory reform in China's water sector -Water quality management -River basin water qualit