China summit meeting marks new milestone in overseeing platform economy
China’s Anti-Monopoly Office will be officially launched on November 18, 2021. It is located in the same building as the country’s main market regulator, the State Administration of Market Regulation, in Beijing. Photo: Li Hao/GT
The Political Bureau of the Communist Party of China Central Committee held a meeting on Friday, stressing that the platform economy should develop in a healthy way. Experts noted that the positive narrative points to the end of the latest round of strict rectifications and suggested policies encouraging the growth of the sector to boost the Chinese economy.
“Rectifications of the platform economy will be completed, regular supervision will be initiated, and specific measures to support its standardized and healthy growth will be unveiled,” officials agreed at the meeting.
The shift from “strengthening” rectifications to “complete” signals the end of this cycle of special industry rectifications, while the meeting highlighting the deployment of “specific measures” also shows that regular monitoring rules may come out soon, Pan Helin , co-director of the Digital Economy and Financial Innovation Research Center affiliated with the International Business School of Zhejiang University, told the Global Times.
The focus of supervising the platform economy is widely expected, as this round of cracking down on monolithic behavior by internet giants has basically achieved the desired effect, and the sector is also important for efforts to combat against the pandemic and for the recovery of the real economy, especially in stabilizing jobs, said Li Yi, a senior researcher at the Internet Research Center of the Shanghai Academy of Social Sciences.
“As a crucial part of the private economy, Internet companies have created a large number of jobs, and the booming entrepreneurship not only creates new jobs, but adds fortunes to society,” said Li at the Global Times.
Following the Politburo meeting, Chinese internet companies led a broad rally in the Chinese stock market on Friday. The Hang Seng Tech Index climbed 10%. Alibaba’s Hong Kong trade jumped 16% to HK$102.1 ($13) at the close, Meituan rose 16% to HK$172 and Tencent rose 11.07% to HK$377.4 .
While US stocks fell on Friday, Alibaba’s trading in the US market still jumped 6.8% to $97.68.
National internet giants including Alibaba, Tencent and JD.com did not immediately respond on Saturday.
“After two years of special rectifications, China’s platform economy is reborn with a brand new look,” Pan said, noting that illegal and unfair practices that hinder the development of other industries and undermine the privacy, among other things, have been removed.
Since the end of 2020, China has launched an anti-monopoly crackdown campaign targeting the Internet sector, as the rampant expansion of the sector in recent years has brought havoc to the market and increased risks.
In October 2021, Chinese food delivery platform Meituan was fined 3.44 billion yuan ($520 million), or 3% of its 2020 domestic revenue by the State Administration for market regulation (SAMR), for monopolistic practices.
In April 2021, SAMR fined domestic e-commerce mammoth Alibaba 18.23 billion yuan for its violation of anti-monopoly laws. The regulator also summoned 34 internet companies, including Alibaba, Tencent, Baidu and JD.com, urging them to launch internal investigations and rectify issues involving “choosing one out of two”.
Pan said the platform economy is of crucial importance to China’s economy amid the pandemic and complex global situations, and its supporting role should play its full role. “While regulating the sector, the authorities should promote the development of the platform economy to solve the problem of inefficiency in resource allocation and create new points of economic growth and more jobs by encouraging new platform-related business models,” he said.
On March 16, a meeting held by the Financial Stability and Development Committee under the aegis of China’s State Council also urged relevant departments to improve established plans to govern the platform economy. They should steadily advance and complete rectification work on major platforms as soon as possible through standard, transparent and predictable regulation, according to the meeting.
The “red lights” and “green lights” should promote the steady and healthy development of the platform economy and improve its international competitiveness, officials said at the meeting.
Meanwhile, the country has accelerated changes to anti-trust law to strengthen regulation of the platform economy. Gan Lin, deputy minister of SAMR, said at a press conference on April 26 that the amendments to the anti-trust law have been submitted to the National People’s Congress and are expected to be passed by the end of 2022. .