China Task Force Meeting, Manchester 2008

This was the third formal meeting of the Initiative for Policy Dialogue Task Force on China, a group that also meets informally at Columbia University and in China.
 

Following our conversation at the last task force meeting, the group focused on regulation. First, they initiated a discussion of the general theory of regulation, followed by a look at regulation in several specific areas - competition policy, natural monopolies like utilities, telecom, financial markets (banking, securities), labor market, and product market (safety, consumer protection) , and environmental regulation. The group also considered certain aspects of the regulatory process, and perhaps the political economy of regulation (the problems of regulatory capture). Many of the issues that came up in our discussion of property rights were also relevant here - e.g. that it is not just the dejure regulations, but the de facto regulations that matter; just as implicit or explicit property rights are embedded in many areas, so too for regulation (immigration bills can, for instance, be viewed as "regulating" immigration); we want to consider distributive effects of regulation, as well as the special problems of regulating in a "large" economy, with limited central control.

Indeed, it is difficult to define precisely the boundaries of regulation. Tax policy (and even budget policy) has effects that are akin to regulation. The private sector engages in regulation (self-regulation, e.g. setting of standards).

Finally, increasingly the international regime (e.g. WTO and other trade agreements) is circumscribing policy autonomy. A key issue is how these restricts China's policy space, and how China best manage within these restrictions

This is a particularly opportune time for taking up these issues, as the problems of inadequate regulation in America's financial system - and its enormous consequences - become apparent. There is now an active debate in the United States, a growing consensus that it may have gone too far down the path of deregulation.