Ground breaking

Media and experts are applauding the investigation for another reason. The probe into the two operators is the first anti-monopoly case involving large state-owned enterprises in China since the first Anti-Monopoly Law became effective in 2008.

"The Anti-Monopoly Law is an important basic law to establish a market economy system," said Yang Dong, Deputy Director of Institute for Competition Law Studies of Renmin University of China.

Yang told ChinAfrica that in the past three years, there was no case involving state-owned enterprises, which could imply that the Anti-Monopoly Law only applied to foreign-funded enterprises and private enterprises. That could pose a negative impact on China's development and international image.

"The investigation is timely," said Yang. "It will contribute to the establishment of a fairer competitive environment."

No easy way

China Unicom said on its online homepage that among 102 enterprises under the management of the Chinese Government, it's on the bottom of last year's profit list with a deficit of millions of dollars, indicating that it did not use its monopoly position to make huge profits. 

The complaint of the two telecommunications companies is understandable, since they are the first to be investigated. A monopoly is nothing new when it comes to state-owned enterprises in China, especially in the sectors of finance, gas, electricity, railway and public transportation.

Li Chang'an, Professor of University of International Business and Economics, explained that most monopolistic enterprises in China are not chosen by the market economy but fostered under administrative protection and preferential policies. In China, most monopolistic enterprises are state owned.

Favored by policies and resources, state-owned enterprises with market dominance can suppress privately owned competitors.

"The state advances as the private sector goes backward, which is very harmful for the country's development," said Yang. "Anti-monopoly laws can help restrain the trend."

It starts with telecommunications giants by chance, but to punish monopolistic enterprises is inevitable and necessary, he said. 

Huge profits of state-owned enterprises enable employees to enjoy high benefits, which cause widespread discontent in society.

"The government should regulate the behavior of enterprises in the fields of telecommunications, petroleum and electricity, and even banks," said Yuan Gangming, Researcher with the Center for China in the World Economy of Tsinghua University. An anti-monopoly supporter, Yuan admitted the process would not be easy.

"It's hard to completely separate government administration from enterprise management, and to set up a market operating mechanism; but we should at least access social supervision and allow public criticism," he said