Platform companies to see new growth

A saleswoman promotes local dry fruits via livestream at the Grand Bazaar Pedestrian Mall in Urumqi, capital of Xinjiang Uygur autonomous region. [Photo/Sipa]

China's platform companies and the digital economy are expected to embrace a new round of high-quality development after two years of healthy correction, which will also bring new dynamics to the country's private sector and economic growth, government officials, leading industry experts and company executives said on Tuesday.

They made the comments following the tone-setting Central Economic Work Conference that ended on Friday, which stated that platform companies will be supported to "fully display their capabilities" in bolstering economic growth, job creation and international competition.

Wei Jianguo, a former vice-minister of commerce and vice-chairman of the China Center for International Economic Exchanges, said, "The conference has sent a strong signal that China will vigorously develop the digital economy and encourage the development of the platform economy over the year to come.

"It is an affirmation from the government on the role of platform companies in driving economic growth, as well as an encouragement for them to now make another step forward," he said.

At the 2020 Central Economic Work Conference, central authorities pledged to prevent the "disorderly expansion of capital". In 2021, the conference maintained that the country should set red and green lights for capital market activity in order to prevent "barbaric growth".

As a result, a group of platform companies — internet and tech companies that leverage platforms to offer services — such as Alibaba Group Holding and Tencent Holdings, which had been engaging in monopolistic practices, underwent corrective measures.

"This positive shift aims to enable platform companies to not only lead development in various business sectors in the domestic market, but also compete further on the global stage in the future. To some extent, China's platform economy is expected to usher in a new round of healthy development," Wei said.

In line with these new moves, Zhu Keli, founding director of the China Institute of New Economy, said that a group of green light investment cases are likely to be announced soon, and detailed policies and measures to support the standardized and healthy development of the platform economy are expected to be unveiled next year.

A white paper released by the China Academy of Information and Communications Technology, a government think tank, showed that the market scale of China's digital economy reached $7.1 trillion last year, which was the second largest globally.

While supporting the digital economy, the conference also emphasized that the country will continue to improve the level of "normalized supervision", which according to Wang Xianlin, a member of the expert advisory group of the State Council's anti-monopoly commission, is aimed at creating a more predictable business environment.

"This means that the country will avoid sudden, intensive and special rectifications of improper behavior in the platform economy in the future, which will be another firm support for platform companies to develop," he said.

In addition to encouragement for platform companies and the digital economy, the conference underscored that it is important to work "unswervingly" both to consolidate and develop the public sector and to encourage, support and guide the development of the nonpublic sector.

Han Wenxiu, an official with the Central Committee for Financial and Economic Affairs, said at a conference on Saturday that more efforts will be made to guide government officials to "do practical things and solve real problems" for private enterprises to drive economic development based on the rule of law, and to protect the property rights of private enterprises as well as the rights and interests of private entrepreneurs.

For decades, China's private businesses, which accounted for over 97 percent of the country's total market entities last year, have been the primary driver of the country's economic development. They have contributed about 50 percent of the country's tax revenue, 60 percent of gross domestic product, 70 percent of technological innovation and 80 percent of urban employment, according to the Ministry of Industry and Information Technology.

"Since the beginning of this year, China's private investment has remained at a relatively lower point with insufficient private financing from the market, which reflected weakening expectations," said Wang Xiaosong, a professor of economics at Renmin University of China.

"Such support will effectively boost material the expectations of private entrepreneurs and help to stabilize the nation's economic fundamentals next year."