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 government’s 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.