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Boosting, not Bashing, the Platform Economy

May 04-2022   



In a recent media commentary, Prof. Huang Yiping of the NSD stresses that governance policy should strengthen, not weaken, the innovative capabilities of the platform economy, for the platform economy has afforded China the first ever opportunity to closely follow in the footsteps of the Fourth Industrial Revolution and stay at the forefront of international economic and technological innovations.

 

His opinion piece starts off a series of commentaries on the platform economy jointly offered by the NSD and the finance desk of China News Agency. The series is an extension to a book, titled Orderly Prosperity: Innovation and Governance of the Platform Economy, soon to be published by CITIC Press. The book will present the findings of a research team comprised of 20 professors of the NSD.

 

A tally in June 2020 showed the US hosting 228 unicorns and China 122, but a deeper look at the number of new unicorns – those established in 2018 and onwards – revealed a widening gap between the two countries. The US-China trade frictions since 2018 and the stepped-up regulatory policies since the beginning of 2021 might have accelerated the disparity, writes Prof. Huang. More recently, an Indian minister claimed that his country now had more unicorns than China.

 

Though China’s platform enterprises don’t possess many world-leading core technologies, their business innovations in e-commerce, ride hailing, socializing and short videos are on a par with global counterparts. At a time when the Chinese economy traverses the critical juncture between extensive growth and high-quality growth, Prof. Huang worries that a continuous decline in the vitality of the platform economy would not only increase downward pressures on growth in the short term, but also exert adverse impact on the innovative capability of the economy in the long run.

 

Granted, along with its positive contributions, not least lowering the threshold for startups and giving a boost to the inclusive finance, the platform economy has been beset with problems such as encroachment on personal privacy, monopoly, and anti-competition behaviors. As a result, regulatory policies have been rolled out since the beginning of 2021 with the aim of achieving regulated development. However, the momentum of the platform economy has been evidently dented, as leading platforms’ market capitalizations have shrunk drastically, some founders have gone into retirement, and investment in the sector has contracted, observes Prof. Huang.

 

He advocates seeking a balance between innovation and order when making and implementing governance policies. Firstly, he advises relinquishing the term ‘powerful oversight’ in recognition of the fact that oversight is a routine activity and not a campaign-styled task, let alone regulatory competitions among various authorities. Secondly, economic oversight and anti-monopoly law enforcement should be appropriately separated, for they differ vastly in target issues and corresponding measures. Thirdly, governance policies should be unified and coordinated to avoid plunging the platform economy into uncertainties. Lastly, more economics analysis could be applied in policy making, given the complexity of the challenges.

Boosting, not Bashing, the Platform Economy

May 04-2022   



In a recent media commentary, Prof. Huang Yiping of the NSD stresses that governance policy should strengthen, not weaken, the innovative capabilities of the platform economy, for the platform economy has afforded China the first ever opportunity to closely follow in the footsteps of the Fourth Industrial Revolution and stay at the forefront of international economic and technological innovations.

 

His opinion piece starts off a series of commentaries on the platform economy jointly offered by the NSD and the finance desk of China News Agency. The series is an extension to a book, titled Orderly Prosperity: Innovation and Governance of the Platform Economy, soon to be published by CITIC Press. The book will present the findings of a research team comprised of 20 professors of the NSD.

 

A tally in June 2020 showed the US hosting 228 unicorns and China 122, but a deeper look at the number of new unicorns – those established in 2018 and onwards – revealed a widening gap between the two countries. The US-China trade frictions since 2018 and the stepped-up regulatory policies since the beginning of 2021 might have accelerated the disparity, writes Prof. Huang. More recently, an Indian minister claimed that his country now had more unicorns than China.

 

Though China’s platform enterprises don’t possess many world-leading core technologies, their business innovations in e-commerce, ride hailing, socializing and short videos are on a par with global counterparts. At a time when the Chinese economy traverses the critical juncture between extensive growth and high-quality growth, Prof. Huang worries that a continuous decline in the vitality of the platform economy would not only increase downward pressures on growth in the short term, but also exert adverse impact on the innovative capability of the economy in the long run.

 

Granted, along with its positive contributions, not least lowering the threshold for startups and giving a boost to the inclusive finance, the platform economy has been beset with problems such as encroachment on personal privacy, monopoly, and anti-competition behaviors. As a result, regulatory policies have been rolled out since the beginning of 2021 with the aim of achieving regulated development. However, the momentum of the platform economy has been evidently dented, as leading platforms’ market capitalizations have shrunk drastically, some founders have gone into retirement, and investment in the sector has contracted, observes Prof. Huang.

 

He advocates seeking a balance between innovation and order when making and implementing governance policies. Firstly, he advises relinquishing the term ‘powerful oversight’ in recognition of the fact that oversight is a routine activity and not a campaign-styled task, let alone regulatory competitions among various authorities. Secondly, economic oversight and anti-monopoly law enforcement should be appropriately separated, for they differ vastly in target issues and corresponding measures. Thirdly, governance policies should be unified and coordinated to avoid plunging the platform economy into uncertainties. Lastly, more economics analysis could be applied in policy making, given the complexity of the challenges.