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Project Details
Funding Scheme : General Research Fund
Project Number : 17603918
Project Title(English) : Antitrust and the Rise of China: An Institutional Analysis 
Project Title(Chinese) : 反垄断与中国的崛起：制度化研究 
Principal Investigator(English) : Dr Zhang, Huyue Angela 
Principal Investigator(Chinese) :  
Department : Department of Law
Institution : The University of Hong Kong
E-mail Address : angelaz@hku.hk 
Tel : 39174351 
Co - Investigator(s) :
Panel : Humanities, Social Sciences
Subject Area : Social and Behavioural Sciences
Exercise Year : 2018 / 19
Fund Approved : 637,440
Project Status : Completed
Completion Date : 31-7-2021
Project Objectives :
To elucidate how Chinese antitrust agencies compete and cooperate with one another within China’s vast and complex bureaucratic framework
To investigate the reputational mechanisms that Chinese antitrust agencies employ strategically in enforcing antitrust law in China
To test empirically the stock market reactions to the antitrust regulator’s strategic use of reputational sanctions
To examine empirically whether bias exists in media coverage of Chinese antitrust investigations and identify the factors driving the supply and demand of media content
To explore how to establish adequate procedural safeguards for the enforcement of antitrust law in China
Abstract as per original application
(English/Chinese):		 My project will explore the clash between antitrust legislation, a body of law originally designed to address market failures in Western democracies, and China, an economic superpower under authoritarian control. Set against the backdrop of China’s increasing integration with the globalized market, the project will analyze the significant challenges that Chinese antitrust regulation poses to foreign multinational companies doing business in China. It will chronicle those challenges and unravel their complex network of causes. By showing that the conflicts we observe on the surface are in fact deeply rooted in institutional factors, my research will offer a cautionary tale of the challenges that globalization poses to law and the economic order. Thus far, most academic attention to Chinese antitrust law has focused on formal rules, procedures, and precedents. Few studies have examined the informal rules and extralegal factors that may also play an important role in driving law enforcement outcomes. My project will be the first to examine how key institutional factors, such as bureaucratic politics, reputation, and the media, can influence antitrust enforcement outcomes in China. It will analyze the incentive structure of Chinese administrative agencies, the constraints that they face when operating within the country’s vast bureaucratic system, the tactics that they use to establish their legal authority, and the reputation sanction on firms subjected to antitrust investigations, as well as the role the media plays in law enforcement. Although my project will focus on antitrust law, its findings will have implications beyond the law. The idiosyncrasies in Chinese antitrust enforcement will serve as a reminder of how distinct China is from the rest of the world, and how important it is for the financial, legal, and political communities to fully recognize that distinction and prepare for the complex challenges involved. My project’s anticipated output is a monograph systematically examining the institutional issues in the enforcement of Chinese antitrust law and two peer-reviewed articles.
我的项目将探讨反垄断立法，一部最初旨在解决西方民主国家市场失灵的法律与中国这个专治控制下的经济超级大国之间的冲突。在中国与全球化市场日益融合的背景下，该项目将分析中国反垄断监管对在中国开展业务的外国跨国公司所面临的重大挑战。它将记录这些挑战并解开其复杂的原因网络。通过表明我们在表面上观察到的冲突实际上深深扎根于制度因素，我的研究将提供一个关于全球化对法律和经济秩序构成的挑战的警示故事。到目前为止，大多数学术界对中国反垄断法的关注都集中在正式的规则，程序和先例上。很少有研究检查过非正式规则和法外因素，这些因素也可能在推动执法结果方面发挥重要作用。我的项目将是第一个研究官僚政治，声誉和媒体等关键制度因素如何影响中国反垄断执法结果的项目。它将分析中国行政机构的激励结构，他们在国家庞大的官僚体制中运作时所面临的制约因素，他们用来建立法律权威的策略，以及对遭受反垄断调查的公司的声誉制裁，以及媒体在执法中的作用。虽然我的项目将侧重于反垄断法，但其研究结果将超出法律范围。中国反垄断执法的特质将提醒人们中国与世界其他地区的区别，以及金融，法律和政治界充分认识到这种区别并为所涉及的复杂挑战做好准备的重要性。我的项目预期成果是一本专着，系统地研究了中国反垄断法执行中的制度问题和两篇文章。
Realisation of objectives: My project has fulfilled exploring the main objectives as per my original application. First, through extensive interviews with government officials working at different antitrust agencies, I was able to present a complex network of Chinese administrative agencies involved in the enforcement of Chinese antitrust law. I found that antitrust enforcement is a pluralistic process involving many different government departments. As such, the bureaucratic missions, cultures and structure of an antitrust authority can affect its enforcement priority and agenda. I also identify a consensus-building process among enforcers during merger enforcement. Looking ahead, I explained how the power fragmentation in the Chinese bureaucracy will continue to challenge Chinese antitrust enforcement in the years to come. Second, by searching for relevant news articles using Wisenews database, I found that Chinese antitrust agencies are adept at applying media strategies and found that they regulate firms through strategic shaming sanctions. My interviews with various case handlers, as well as the reading of the relevant news articles and the final decisions of the cases show that Chinese authorities are aware of the potential negative market consequences once a firm is subject to an antitrust investigation, and could strategically leak news to the state media depending on the firms’ level of cooperation. This entices firms to cooperate with the government and deters them from challenging the government authority. Third, with the help from my research assistants, I analyzed the market reactions to the antitrust authority’s strategic announcement of an antitrust investigation and the penalty decision which followed. I found that for many firms (whether domestic or foreign) under investigation, the stock market would react very negatively if the agencies made a high-profile announcement of its investigation. In an extreme example, a firm lost over one-third of its market capitalization within one week after such an announcement. This creates very strong chilling effects for companies ever thinking about challenging the agency, which helps explain the paucity of appeals against the government’s decision. Fourth, by reading and coding thousands of relevant news article I found on Wisenews, I found that media bias can be driven by both supply and demand factors. On the one hand, the government can act as a whistle blower and leak information to the media to shame firms under investigation. On the other hand, Chinese readers are also biased as they are more interested in reading news relating to price reduction rather than about the legal merits of a case. This explains why media reports focus heavily on whether companies had volunteered to offer price reduction and whether such promises from companies have been carried out in practice, rather than whether an agency had a solid basis in bringing those cases. Lastly, my research findings show that it is important to appoint an agency that is familiar with law enforcement and due process requirements to enforce antitrust law. As media exposure can have such a big impact on a firm’s market value, it is important that the agency applies a consistent approach in deciding when and how to make an announcement of its investigation. More transparency should be introduced to curb administrative discretion.
Summary of objectives addressed:
Objectives Addressed Percentage achieved
1.To elucidate how Chinese antitrust agencies compete and cooperate with one another within China’s vast and complex bureaucratic frameworkYes100%
2.To investigate the reputational mechanisms that Chinese antitrust agencies employ strategically in enforcing antitrust law in ChinaYes100%
3.To test empirically the stock market reactions to the antitrust regulator’s strategic use of reputational sanctions Yes100%
4.To examine empirically whether bias exists in media coverage of Chinese antitrust investigations and identify the factors driving the supply and demand of media contentYes100%
5.To explore how to establish adequate procedural safeguards for the enforcement of antitrust law in ChinaYes100%
Research Outcome
Major findings and research outcome: China’s rise and its accession to global trade rules have become the subject of much commentary, but there has yet to be a comprehensive and in-depth study of China’s impact on global antirust policy. This research identifies the idiosyncrasies underlying China’s enforcement of antitrust law. It reveals that agencies are particularly adept at applying media strategies to strategically deter firms from challenging the authority and enticing them to cooperate. And while agencies are largely free of judicial constraints, they remain subject to severe bureaucratic constraints. The missions, cultures and the structures of the agencies have a significant impact on the enforcement priority, regulatory approach and the final outcome of a case.
Potential for further development of the research
and the proposed course of action:		 I am applying my findings of this research to a new setting relating to Chinese regulation of big tech. I will explore the bureaucratic incentives in responding to the top leadership’s call to tighten regulatory scrutiny over big tech. I will also continue with this research by examining the reputation sanctions placed on big tech, as well as the strategies of big tech in responding to government regulation.
Layman's Summary of
Completion Report:		 Antitrust first originated as policies designed to correct market failures in western democracies. However, this research finds that antitrust has become a multi-functional regulatory tool in the hands of the Chinese government. In relentless attempts to expand their bureaucratic turf, Chinese administrative agencies have deployed the Anti-Monopoly Law to not only tackle monopolies but also to achieve their policy objectives to control and stabilize prices. At the same time, Chinese antitrust agencies are seldom challenged in court as they possess vast administrative discretion and are adept at applying media strategies aimed at enticing firms to yield to their demands. The Chinese example of enforcing antitrust law demonstrates the importance of having adequate institutional safeguards for antitrust enforcement. This research has proven incredibly timely and attracted media inquiries from numerous media outlets including the Wall Street Journal, Financial Times and the Economist. Commentaries based on this research have also appeared in Nikkei Asia Review, Bloomberg and Project Syndicate.
Research Output
Peer-reviewed journal publication(s)
arising directly from this research project :
(* denotes the corresponding author)
Year of
Publication		 Author(s) Title and Journal/Book Accessible from Institution Repository
2021 Angela Huyue Zhang  Chinese Antitrust Exceptionalism: How the Rise of China Challenges Global Regulation  No 
Recognized international conference(s)
in which paper(s) related to this research
project was/were delivered :
Month/Year/City Title Conference Name
Washington DC Implications of Different Legal Traditions and Regimes for International Cooperation  The FTC’s Role in a Changing World 
New York Antitrust: AI and Digital Platforms  2021: 28th Annual Fordham IP Conference 
Other impact
(e.g. award of patents or prizes,
collaboration with other research institutions,
technology transfer, etc.):
  SCREEN ID: SCRRM00542