China will balance incentivizing and regulating the “platform economy” to bolster its healthy development over the long term, according to a key meeting offering guidance on economic development.
The governance of the platform economy should abide by the principles of market orientation, rule of law and internationalization in a stable manner, according to the meeting chaired by Vice-Premier Liu He in Beijing on Wednesday.
Platform economy largely refers to the tendency of commerce to increasingly move toward and favor digital platform business models.
Supervision over platform economies should be carried out in a regulated, transparent and foreseeable fashion, and rectification work on major platform companies should be implemented as soon as possible.
The meeting also called for the setup of both “red lights” and “green lights” regarding the nation’s platform economy to boost its stable and healthy development and also raise its international competitiveness.
Consultancy Deloitte referred to digital platforms as companies creating online networks that facilitate digital interactions between people. An increasing number of businesses are starting to adopt the platform business model and its digital strategies in order to remain competitive.
The latest statements identify the multidimensional nature of the platform economy, with marketization as its basic value, rule of law as the overriding order and internationalization as the reference to unremitted opening-up efforts, said Wu Shenkuo, law professor and assistant dean of the Internet Development Research Institute at Beijing Normal University.
“We do expect ‘stability’ to chart the course of development in the platform economy. We also see a combination of supervising and incentivizing. This implies that supervision will become foreseeable and transparent, striking a balance among its economic, social and policy impacts,” Wu said.
“The meeting provided positive solutions to addressing market concerns related to the governance of the platform economy, and is conducive to stabilizing the policy expectations of companies and investors,” said Wang Jingwen, director of the Macro Research Center affiliated to China Minsheng Bank.
The reference to raising international competence signals support for developing platform economies, said Wang Sheng, chief strategist at Shenwan Hongyuan Securities.
“It is imperative to reassure foreign institutional investors, which helps stabilize expectations and boost confidence,” Wang said.
Agreed Wu, who said the guideline encouraged Chinese companies to become truly “global, rule-based and internationally competitive” digital platforms. These are in line with the strategic directions outlined in the country’s 14th Five-Year Plan (2021-25).
“In the long run, proper supervision is conducive in promoting the sustainable and healthy development of the platform economy …and stimulating compliant behaviors of companies,” said Sun Jin, director of the Competition Law and Policy Research Center at Wuhan University.
“Meanwhile, it is equally important for companies to have some form of self-governance regarding innovation and interconnectivity,” Sun said.
Open platform is the major trend, with relevant rules and standards to be established taking into consideration the interests of the public and enterprises, said Wang Xiaoye, a researcher at the Chinese Academy of Social Sciences.
“The basic principles of anti-monopoly and the market economy should both apply to the development of digital economy,” Wang from the CASS said.
For a platform economy to thrive, it is critical to take into consideration the commercial logic, apart from the overriding rule of law, said Zhu Keli, executive director of the China Institute of New Economy.
“It is, therefore, essential to put in place regulations, such as identifying data ownership, data security, the regulation of information sharing and co-creation.”