China Daily (Hong Kong)

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.

 ?? ?? The author is an associate professor at the School of Law at Wuhan University.
The author is an associate professor at the School of Law at Wuhan University.

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