The Chinese government is cracking down on monopolies by “platform” companies and increasing oversight into them. The country’s president Xi Jinping, after a meeting with the Chinese Communist Party’s financial and advisory coordination committee, ordered regulators to step up oversight to promote competition, reported Bloomberg, citing state broadcaster CCTV.
The term “platform company” can refer to several of the internet-based companies that have come up in China in the past decade or so, such as e-commerce companies JD.com, Pinduoduo and food delivery company Meituan. According to the CCTV report, the platform companies were operating in “non-standardized” ways that poses risks. “It is necessary to accelerate the improvement of laws governing platform economies in order to fill in gaps and loopholes in a timely fashion,” read the minutes of the officials’ meeting, according to CCTV. These companies will also have to enhance data security and their financial activities will come under regulatory supervision.
Additionally, Reuters has reported that the Chinese government will launch rules for companies involved in online transactions, signalling greater due diligence by the companies, and increased supervision by regulators. Wei Lu, an official in the country’s competition regulator State Administration for Market Regulation (SAMR) told Xinhua News Agency that the regulator would adopt powerful “supervision methods” to clear up problems in the online market. Wei reportedly said that the regulator will accelerate the construction of a system to collect online transaction information in real time for better monitoring and coordination. The government could issue “administrative guidance” to companies on major promotional events such as Singles’ Day, an annual online shopping festival in China, reported Reuters.
Jinping’s orders are in line with the Chinese government’s increased scrutiny of tech companies. Last month, the country unveiled its anti-monopoly rules, primarily targeting monopolistic behaviour of big tech companies. A few days ago, SAMR fined a dozen companies, including tech conglomerate Tencent and search engine Baidu, for failing to disclose its investments, acquisition and joint ventures, in violation of anti-monopoly laws. More famously, the Alibaba Group has been in the Chinese government’s crosshairs, for the past several months. Jack Ma, founder of the Alibaba Group and its affiliate Ant Group, had criticised economic policies of the Chinese government. Soon after, Ma went missing for the most part, and the Ant Group’s upcoming IPO was put on hold by regulators. Alibaba has since been subject to anti-competition scrutiny.
- Chinese Authorities Turn The Heat On Fintech Tycoon Jack Ma
- Ant Group IPO Put On Hold By China’s Authorities