China’s top regulators have released a sweeping guideline on regulating various aspects of online platform businesses, including their investments in financial institutions, big data-enabled price discrimination against customers and monopolistic behaviors, to promote the industry’s sound and sustained development.
The National Development and Reform Commission (NDRC), together with the State Administration for Market Regulation, Cyberspace Administration of China, the Bank of China and other departments, issued a joint statement on Wednesday, pledging to achieve a mature legal framework and strengthen regulations in the online platform sector.
Online platform companies must strictly regulate their investments and stakes in financial institutions and local financial organizations, and meet the required leverage ratio, the statement said.
It is the first time for a national department to make such requirements on online platforms’ investment in financial institutions, Wang Peng, assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China, told the Global Times on Wednesday.
“Once an online platform grows deeper into the financial sector, it may veer off course from its main business and bring about financial risks… With abundant resources, talent and money, online giants are able to undertake M&A with competitive but small companies. That will hurt industry innovation and finally result in monopolies,” Wang warned.
Local regulators in Shenzhen, a tech hub in South China’s Guangdong Province, last year called for controlling total investment from online platform companies in financial institutions.
The NDRC statement said that it will strengthen tax enforcement and crack down on data trading in the black market, as well as enhance the protection of deliverymen and ride-hailing drivers.
Also on Wednesday, the State Council, China’s cabinet, issued a document vowing to strengthen enforcement of the antitrust law and tame unfair competition.
Unfair behavior and hidden barriers, including regional protection, industry monopoly and market segmentation shall be cleared up and corrected, the document stressed.
China has been cracking down on monopolies and unfair competition, from launching the National Anti-monopoly Bureau to introducing strict policies and rules.
As for regulation of the online platform economy in 2022, Wang told the Global Times that it is a “long-term job” and not “a campaign.”
Efforts to ensure the sound and sustainable development of online platforms are essential to the economy and job market, as the online platform economy, valued at 39.2 trillion yuan ($6.18 trillion) in 2020, accounts for 38.6 percent of GDP. (Source: globaltimes.cn)