Xi Focus: Xi prescribes solutions for healthy development of China’s platform economy
The ninth meeting of the Central Committee for Financial and Economic Affairs, chaired by President Xi Jinping on Monday, analyzed the pros and cons of the country’s platform economy, stressing the need to promote its healthy development from the strategic height of fostering new advantages in national competitiveness.
The high-profile meeting emphasized the strategic role of the platform economy in fostering national competitiveness and made a clear-cut judgment on how to promote its healthy development, heralding new development opportunities for the sector.
Addressing the meeting, Xi, also head of the committee, said the development of China’s platform economy is now at a critical stage and it is necessary to focus on the long-term goals and tackle the needs of current development at the same time.
Industrial regulators such as the National Development and Reform Commission, the People’s Bank of China and the State Administration of Market Regulation tabled reports at the meeting, which marked the latest policymaking development involving the platform economy.
With its business closely related to people’s lives, China’s platform economy has grown to over 2.39 trillion U.S. dollars as of early April in 2020, according to statistics from the China Academy of Information and Communications Technology under the Ministry of Industry and Information Technology.
Digital marketplace firms each with over 1 billion U.S. dollars market value in China had increased to 193 by the end of 2019. By then, the total market value of online marketplaces had grown nearly 200 percent to 2.35 trillion U.S. dollars from 2014.
“Reviewing the sector’s development from a strategic height means the policy orientation of encouraging and supporting the development of the sector will not change, nor will relevant policies be weakened,” said Fang Aiqing, deputy director of the economic committee of the Chinese People’s Political Consultative Conference National Committee.
“This helps to unify the understanding of the sector’s development from all walks of life and enables platform economy to secure faster, more stable and better development,” he added.
According to Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges, healthy development of online marketplaces will in turn help advance the country’s economic transformation toward better quality, higher efficiency and stronger impetus.
The platform economy’s roles mainly lie in its ability to make resource allocation across the country more efficient, promote faster and more rigorous transformation in the spheres of informatization, digitalization and smart technologies, smooth the circulation of the national economy and enhance and refine national governance, the meeting noted.
However, problems and risks involving the sector have also caught the attention of policymakers and regulatory authorities.
Some large online marketplaces have done too much in tracking and collecting their users’ digital footprints to push ads touting excessive consumption to those with fragile credit standing and thus lured them into the traps of unsecured consumer loans, said Dong Ximiao, a part-time researcher with the Institute for Financial Studies, Fudan University.
“Internet platforms improve the availability of financial products but often ignore their affordability, which could cause financial risks to pile up,” he added.
Other latent risks ranging from data monopoly to deliberately circumventing regulation also trigger concerns. As current regulation is sector-specific, there exist certain regulatory gaps and loopholes. Supervision against cross-market, cross-sector and cross-domain financial risks needs to be strengthened, Dong said.
The meeting made it clear that all financial activities involving platform enterprises must be put under financial supervision to rectify the situation, while regulators need to consolidate their oversight capability under an optimized supervision framework.
It also reiterated the need to promote fair competition, oppose monopoly and prevent the disorderly expansion of capital as well as the need to strengthen the protection of the rights of all market entities involved in the platform economy and safeguard users’ rights and interests in data and privacy.
The meeting had pointed out the direction for the healthy development of the platform economy, which was pursuing development with regulation optimized side by side, Zhang Yansheng said.
Another takeaway of the meeting, as analysts noted, is that the platform economy has been tasked with a mission to make contributions to high-quality economic development and improve the quality of life as the country ushers in its 14th Five-Year Plan period (2021-2025).
In this regard, industrial internet platforms are encouraged to facilitate the transformation and upgrading of traditional industries and foster the development of advanced manufacturing, while platform enterprises in the consumer sector will be supported to tap the country’s consumption power and provide more quality products and services, the meeting noted.
The meeting also emphasized the need to boost opening-up and cooperation, foster a dynamic and innovative institutional environment, and strengthen international technical exchanges and research collaboration.
“More should be done to improve the weak links, create an environment for innovation, resolve prominent problems, and promote the regulated, healthy and sustainable development of the platform economy,” Xi said.