BEIJING -- Weakness persisted in Hong Kong Thursday, where the Hang Seng Index slid another 2.3% to 15,450. In mainland China, the Shanghai Composite Index bounced after Wednesday's 5% drubbing, rising 0.1% to 1591.

In Wednesday trading in New York, China-based equities lost ground, with energy plays falling on a decline in crude oil prices.

CNOOC

(CEO) - Get Report

closed down 3% to $72.78 and

PetroChina

(PTR) - Get Report

slid 4.5% to $102.

Sinopec

(SNP) - Get Report

was off 2.5% to $53.55.

Thursday brought news that top officials in China's State Council have signed off on a draft of an anti-monopoly law. It will now be submitted to the National People's Congress for approval.

Details of the legislation have not yet been made available to the public.But you can bet that U.S. tech companies like

Microsoft

(MSFT) - Get Report

and

Intel

(INTC) - Get Report

are keeping a close eye on it, given concerns that an anti-monopoly law might be used against foreign companies with big market share in China. Calls requesting comment from the companies' Beijing offices were not returned.

However, Chinese officials have at times complained about the patent and copyright privileges enjoyed by these and other foreign heavyweights that invest heavily in R&D. Just last month, China accused Intel of dominating the encryption standard for wireless local area network (WLAN) gear.

Antitrust legislation that might affect foreign companies in China has circulated and undergone multiple revisions for the past 12 years. Over time foreign attorneys, business people and even the Department of Justice have weighed in on the text, and it has evolved to hew more closely to global trade norms.

But some say recent drafts still contain overly vague language, leaving lots of latitude for bureaucratic interpretation.

Moreover, some wording has suggested a company might unintentionally restrict market competition through the exercise of its own intellectual property rights.

Gregory Shea, Beijing-based president and managing director of USITO, a trade association for American tech firms, has said in a previous press interview that under one draft of the law, a company might not even be aware it was acting in an uncompetitive way. Shea could not be reached Thursday for comment.

According to a technology source, the most worrisome scenario is that China could find companies guilty of anti-competitive behavior, then require them to license their intellectual property -- a penalty allowed under World Trade Organization rules. In theory, China might then cull from the licensed IP as it attempts to develop its own industry standards.

"The most recent anti-monopoly drafts have had very brief and general language that indicates the valid exercise of

intellectual property rights is permitted, but abuses can be construed to violate the law. The language at that level of generality really doesn't answer any of the difficult questions," says Nathan Bush, of counsel in the Beijing office of O'Melveny & Myers. "Much will depend on how the antitrust authorities here in China examine the policy issues and principles of other countries."

To be fair, parsing anti-monopoly laws can be tricky in any country. "Competition laws are inherently abstract," says Bush. "Even a phenomenally well-drafted competition law can lead to perverse results if the abstract terms are improperly, imprudently or unwisely applied."

Implementation of the law will prove key, since government agency decisions in China tend to trump those of judges.

The antitrust law might also have a big effect on M&A, since one recent draft says Beijing will consider the effect of proposed deals on the national economy. Such a policy could be used to nix acquisitions that would strengthen foreign companies at the hand of domestic ones.

There have been some signs of backlash against foreign acquisitions, especially since outside investors in Bank of China and China Construction Bank have made substantial paper profits following the two banks' IPOs.

At a national political meeting in March, the head of China's Bureau of Statistics criticized "ill-meaning takeovers by multinationals" that could allow outsiders to dominate Chinese industries.