China's Continuing Market Distortions Deserve A New Kind Of Response

China's policies are quintessential "Anticompetitive market distortions," or ACMDs - government-imposed discriminatory restrictions that largely fall outside the scope of existing national trade and competition laws. A viable response to China's ACMDs, which I outlined in a contribution to the Global Dictionary of Competition Law, may be possible. "China is now using its state-led, non-market approach to the economy and trade in ways designed to secure the dominance of Chinese enterprises, both in the China market and in global markets. As part of this pursuit of international dominance, China is targeting both traditional industries and emerging industries, not only by providing its own industries with unprecedented financial and regulatory support but also by actively pursuing policies and practices that are calculated to disadvantage and ultimately displace foreign competitors." Unless and until China faces significant international sanctions that impose a serious cost on its use of ACMDs, it will have no incentive to eliminate them. Even more significantly, cost measures could be used to develop targeted trade sanctions calibrated to counteract specific ACMDs, in China and elsewhere. Applying the model to India in a 2016 report published by the Legatum Institute, the authors concluded that India's domestic GDP would rise dramatically if all its ACMDs were replaced by procompetitive policies, making it the fourth-largest economy in the world, behind only the EU, United States and China. A subsequent 2019 study prepared by the Centre for Economics and Business Research found that a within-country ACMD that eliminates one-quarter of beneficial commercial transactions between companies and consumers also reduces global output by roughly 14%. An Anti-ACMD Strategy For China.