Top leadership's efforts expected to put growth on right track
China's emphasis on bolstering healthy development of the platform economy is expected to help boost innovation and revitalize enterprises, stabilize market confidence and foster high-quality economic development, according to industry analysts.
The platform economy refers to the transition many leading companies worldwide are making from mainly offering products to mostly providing digital platforms that allow consumers, entrepreneurs, businesses and the public to connect, share resources, and sell products or services.
Regulations covering the platform economy are expected to be normalized and enforced in a standard, transparent and predictable manner, the analysts said, adding that such an economy plays a vital role in boosting economic growth and employment amid mounting downward pressure.
Shi Hongxiu, a professor of economics at the Party School of the Central Committee of the Communist Party of China, also known as the National Academy of Governance, said, "The central authorities' support for the platform economy is conducive to shoring up market expectations and confidence."
The orderly and healthy development of the platform economy has great significance in promoting economic recovery in general, injecting new momentum into consumption growth, providing more flexible job opportunities, and ensuring people's livelihoods, Shi said.
More efforts should be made to improve regulatory methods and enhance supervision by establishing a system suitable for a modern market economy that would make oversight more transparent and scientific, Shi said, adding that the principle of the rule of law will also be followed.
Platform technologies should be taken into account regarding output, which would lead to a major upgrade in production factors, Shi added.
In March last year, President Xi Jinping, also general secretary of the CPC Central Committee, stressed efforts to promote regulated, healthy and sustainable development of the platform economy at the ninth meeting of the Central Committee for Financial and Economic Affairs, which he heads.
It was decided at the meeting that to build its competitive strengths, China would establish and improve the platform economy governance system, giving equal importance to development and regulation amid efforts to boost fair competition, oppose monopolies, and prevent the disorderly expansion of capital.
According to industry experts, there is a big overlap between healthy development of the platform economy and effective supervision of capital.
In an article on major theoretical and practical issues concerning China's development published in the mid-May issue of Qiushi Journal, a flagship magazine of the CPC Central Committee, Xi stressed the need to understand the nature of capital and its laws of behavior. The article called for capital's positive role to be put into play under the conditions of a socialist market economy, while effectively reining in any negative effects.
Healthy future
Experts said the top leadership's attitude toward regulated and healthy development of the platform economy has been consistent, guaranteeing its growth is on the right track and that it has a healthy and sustainable future.
Shi said, "The problem is that our theoretical research in past years has failed to keep up with the fast development of the platform economy."
Rectification and completion of the platform economy is in line with the nation's high-quality development concept－with more efficient, equitable, sustainable and secure features－a key principle of Xi Jinping Thought on Socialist Economy with Chinese Characteristics for a New Era.
On April 29, a key meeting of the CPC Central Committee's Political Bureau sent a strong signal for the need to boost healthy development of the platform economy, Shi said.
According to Vice-Premier Liu He, China will support sustained and healthy development of the platform economy and the private sector. It will also formulate measures to boost the orderly and sound development of the platform economy, and encourage platform-based enterprises to take part in major national sci-tech innovation projects.
Liu made the remarks on May 17 at a symposium organized by the National Committee of the Chinese People's Political Consultative Conference in Beijing. The CPPCC is China's top political advisory body.
The government will increase direct investment in the digital economy and support the listing of technology companies on domestic and overseas financial markets, Liu said.
Zhou Hongyi, founder of cybersecurity company 360 Security Group and a member of the 13th CPPCC National Committee, attended the May 17 meeting. He said the authorities' support for development of the platform economy and the private economy gave him confidence and hope. "The latest statements are full of positive energy. At this time, confidence and hope are more precious than gold," Zhou added.
According to the high-level meeting on April 29, rectification of the platform economy will be completed, regular supervision will be launched and specific measures introduced to support its standardized and sound growth.
Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, said, "After two years of special rectification of the platform economy in terms of information protection, antimonopoly work and a crack down on unfair competition, illegal and unfair practices hindering development of industries and harming personal privacy have been removed.
"The latest moves indicate that rectification of the nation's platform economy is nearly complete, while more concrete measures will be taken to achieve regular supervision of platform-based enterprises."
Pan said the platform economy is playing an increasingly important role in driving China's economic development amid the COVID-19 pandemic and a complex external environment. He said more efforts are needed to give full play to the advantages of the platform economy, which is vitally significant in improving livelihoods and increasing employment.
The authorities should bolster development of the platform economy to improve resource allocation efficiency, as well as create new business models, new economic growth points and more jobs, while better regulating the sector, Pan said.
According to a meeting of the State Council's Financial Stability and Development Committee on March 16, governance of the platform economy should abide by the principles of market orientation, the rule of law, and internationalization in a stable manner.
It was decided at the meeting that rectification work should be completed on large platform companies as soon as possible through regulated and transparent supervision.
The meeting also called for "red lights" and "green lights" to be introduced for the platform economy in China to boost its stable and healthy development and raise its international competitiveness.
At an executive meeting late last month, the State Council, China's Cabinet, announced 33 additional measures to stabilize growth, including promoting healthy development of the platform economy.
The meeting decided that full play should be given to the platform economy's advantages in stabilizing employment and helping small and medium-sized enterprises overcome their difficulties.
It also called for platform enterprises to be encouraged to accelerate breakthroughs in technological research and development for artificial intelligence, cloud computing, blockchain, operating systems and processors.
Long Haibo, a senior researcher at the State Council's Development Research Center, said recent policy developments signify that China will strike a balance between encouraging and regulating the platform economy－sending positive signals to the market in an attempt to further stabilize investor expectations and confidence.
On the one hand, disorderly growth of the platform economy and related monopolistic behavior will be reined in, while on the other, more efforts are needed to unleash the innovative vitality of such an economy, Long said.
"Effectively curbing the disorderly expansion of capital while boosting market confidence is a major test for improving modern supervisory capabilities, and also a prerequisite for deepening reforms to streamline administration and delegate power amid efforts to improve the business environment," Long said.
He added that greater emphasis on the synergy between governance of the platform economy and stability of the capital market is conducive to fostering high-quality development and safeguarding people's interests.
Healthy development of the sector will also further stimulate the innovation of platform-based enterprises amid the pandemic and enhance their global competitiveness, Long said.
Last month, the China Banking and Insurance Regulatory Commission said it would complete rectification of large platform companies, set up "red lights" and "green lights", and implement regular oversight to encourage healthy growth of the platform economy.
In addition, the People's Bank of China, the nation's central bank, said in a statement it would improve its capital governance capability and conduct regular supervision of platform enterprises' financial activities.
Chen Bing, director of the Competition Law Research Center at Nankai University in Tianjin, said the platform economy is an important force in stabilizing economic growth and also acts as ballast to ensure people's livelihoods. He expects the government to step up policy support for the innovation of platform-based enterprises.
Using platforms' strengths to better allocate resources and promote the digital upgrading and transformation of micro, small and medium-sized enterprises is particularly important, Chen said.
He added that integration of the platform economy with cutting-edge digital technologies will also create new products, business formats and jobs.
Foreign investment banks have taken a new look at the investment value of Chinese internet and technology companies.
Last month, JPMorgan raised the ratings for stocks of seven Chinese internet companies, including Tencent Holdings, Alibaba Group Holding, Meituan, NetEase and Pinduoduo, from "underweight" to "overweight". An "overweight" classification typically means that an analyst believes that the stock is above average compared to the full range of available stocks traded under a benchmark index.
Wu Qi, executive director of the Wuxi Institute of Digital Economy, said the latest move to support platform-based enterprises seeking listings on domestic and overseas bourses will provide financial support and create a better business environment for these companies.
Efforts are needed to support increased investment by platform-based enterprises in core technologies and to boost their technological innovation capabilities, Wu said.
Last year, China introduced stricter regulations on the platform economy, imposed fines on a string of technology companies for their monopolistic behavior, set up an antimonopoly bureau, and proposed amendments to the Antimonopoly Law.
Chinese market regulatory authorities cracked down on monopolistic behavior in the platform economy, healthcare and public services last year. A total of 176 monopoly cases were dealt with and fines totaling 23.59 billion yuan ($3.5 billion) were imposed.
In April last year, the State Administration for Market Regulation, or SAMR, the nation's top market watchdog, imposed a record fine of 18.23 billion yuan on e-commerce giant Alibaba for monopolistic behavior. It also fined internet giant Meituan 3.44 billion yuan for abusing its dominant market position in the domestic online food delivery platform market.
Wang Xianlin, director of the Center for Competition Law and Policy at Shanghai Jiao Tong University, said the ultimate goal of supervising the platform economy is to bolster its healthy development, stimulate compliant behavior by companies, and create a better business environment for market entities.
Better protection
In March, the SAMR said antimonopoly work this year would be carried out steadily and in a regulated, transparent and predictable manner to promote high-quality economic development and better protect the public interest.
As part of ongoing efforts to restore sound market order and promote fair competition, the regulator has pledged to strengthen the rule of law regarding antimonopoly supervision.
It will step up efforts to improve the legal system for fair competition and also provide clearer guidance for market entities, with a focus on stabilizing the macroeconomy, safeguarding people's well-being, and strengthening antitrust regulation and law enforcement in key areas.
The SAMR said intensified efforts should be made to build a modern regulatory system, enhance governance to ensure fair competition, promote enterprises in strengthening compliance management, and enable the nation to play a bigger global role in formulating antimonopoly rules.
Pu Chun, deputy head of the SAMR, said more efforts should be made to constantly improve the fair competition mechanism, establish a comprehensive oversight system, and guide sound and orderly development of capital in accordance with laws and regulations.
Ouyang Rihui, assistant dean of the China Center for Internet Economy Research at the Central University of Finance and Economics in Beijing, said the country's antitrust efforts are expected to continue this year, and stabilization work will be crucial.
"Antitrust regulatory measures will abide by the rule of law, striking a balance between stimulating innovation and supervision," Ouyang said, adding that such action will help stabilize the capital market, reassure investors and boost their confidence in the platform economy's long-term development.