Healthy online sector key to long-term growth
The rapidly expanding digital economy and innovation-oriented enterprises are playing an important role in China’s economic development, by promoting the “dual circulation” development paradigm and boosting high-quality development.
But the digital economy has also reshaped the traditional competitive market and increased the risks of monopolies, as digital enterprises control data circulation and create technology barriers to expand their business and make more profits.
Hence, the State Administration for Market Regulation, the Ministry of Industry and Information Technology and the Cyberspace Administration of China have jointly decided to tighten some regulations for internet-based companies. The move is aimed at addressing internet industry-related issues including infringement of users’ rights and threats to data security, so as to build an open, standardized and secure internet environment.
To ensure the healthy development of the digital economy, it is important that the market plays a decisive role in the allocation of resources and the government performs its governance role better.
China has made remarkable achievements since the launch of reform and opening-up, and should continue to optimize the market mechanism to boost high-quality development in the new era. But some leading enterprises tend to abuse their dominant market position, by restricting trading, using big data to introduce discriminating pricing, and creating market entry barriers for other players in a bid to increase their profitability. Such actions have undermined the market order and violated consumer rights.
Experience shows that a country can achieve economic success only through synergy between the visible hand of the State and the invisible hand of the market.
Yet boosting the high-quality development of the digital economy does not mean allowing disorderly and unfair competition. So the government should more strictly supervise the market and create a level playing field for all companies while allowing the market to play the decisive role in resource allocation.
Compared with the industrial economy, the digital economy’s operational costs are lower and trading process more convenient. But given the unfair, even destructive competition the digital enterprises can give rise to, the government should tighten both regulation and supervision.
The online market plays a key role in the development of the digital economy. As such, the government should also build a level playing field for online market players, improve the regulations for market economy, and ensure the market entities abide by the rules and regulations. There is a need to tighten supervision of tech companies to prevent them from indulging in unfair competition.
There is also a need for the government to adopt a multi-pronged approach to promote fair competition in the tech industry, and address the problems created by the lack of a fair competitive mechanism, in order to promote the highquality development of the digital economy.
The healthy development of the internet market is important to not only the growth of the digital economy but also the building of a healthy community of cyberspace. After all, the digital economy has been linked with China’s overall national development policy.
First, the essential function of the internet is to facilitate communication among people across the world and provide information, not to serve as isolated platforms to make money. So by restricting normal access to web links, some internet companies deny users their rights, hinder the flow of information and undermine the market order. Such illegal behaviors should be punished.
Second, the flow of information can increase cultural exchanges between communities and nations. The development of the digital economy is about material and social advancement. And by ensuring fair competition in the internet market and boosting the digital economy’s healthy development, the government can better implement related policies, and promote global cultural exchanges.
Third, innovation is the primary driving force behind the digital economy. The emerging innovation-oriented enterprises have changed the rules of the game. Still, fair competition remains a prerequisite for innovation. And a healthy competition mechanism can deepen internet market reform and ensure the healthy development of the digital economy.
Fourth, to promote the healthy development of the digital economy, it is also important to safeguard cyberspace security, and ensure orderly competition in the online market — because unfair and disorderly competition can prompt some tech companies to misuse big data, algorithms and consumers’ information to make profits, which not only infringe on consumer rights and influence users’ choices, but will also hinder innovation. So the government should strengthen supervision of the internet market and implement measures to maintain order in cyberspace.
Fifth, an internet governance system should be established to promote fairness in the online sector. Plus, a level playing field is necessary for the healthy development of market economy and building of a shared cyberspace community. In this regard, the anti-monopoly law and regulations are aimed at curbing tech giants’ monopolistic practices, without affecting the interests of small and medium-sized enterprises.
And sixth, by ensuring fair competition in the market and breaking up monopolies, the government can inject new vitality into the market entities, promote fair competition in the digital sector, and build a healthy digital market.