China to Widen Fight Against Monopolies to the Giant Gig Economy
(Bloomberg) -- China pledged to deepen antitrust enforcement across emergent sectors including on-demand internet services, broadening a campaign to rein in the growing power of private firms.
China “resolutely” opposes monopolies and unfair competition and will step up regulation in sectors such as platform businesses, according to a plan released by the general offices of the powerful Communist Party Central Committee and the State Council, the cabinet.
Contained within a broad set of guidelines intended to enforce “high standards” in Chinese finance and markets, the agencies singled out a so-called gig economy as one area that needed more oversight. The industry typically encompasses services such as Didi Chuxing-led ride-hailing, food and grocery delivery that’s the province of Meituan, or Airbnb-style operators like Tujia.
Beijing has signaled its intention of curbing the mounting influence of private tech giants across the world’s No. 2 economy, scrapping Ant Group Co.’s record initial public offering and publishing new rules preceding an anti-monopoly investigation into e-commerce leader Alibaba Group Holding Ltd. Investors worry about what’s next for China’s biggest tech players, which have enjoyed unusual freedom to invest and expand into a plethora of adjacent arenas such as healthcare and online finance.
The government didn’t single out any firms in its broadly worded action plan published over the weekend. Authorities will improve rules to identify monopolistic platform companies and regulate consumer data collection and use, the agencies said. The government will also roll out guidelines to help Chinese companies meet antitrust rules overseas.
The action plan serves as a roadmap for the integration of an “efficient market and effective government” as China plans its economy for the next half-decade, state news agency Xinhua said in a commentary Sunday. The 51-point plan targeted areas where regulations are weakest and ordinary market development most curtailed, Xinhua added.
Chinese officials have in recent months zeroed in on an evolving online tech and finance sphere that Jack Ma’s Ant, before regulators scrapped its $35 billion IPO and initiated an overhaul, was making rapid inroads into. Fintech players are now rushing to shore up their capital, mulling how to restructure their businesses, and bracing for more turbulence as industry watchdogs examine everything from lending practices to banking partnerships to data privacy.
Last week, China’s finance ministry and market regulator published a set of rules that went into effect Monday, empowering their local offices to apply for funding for antitrust investigations and enforcement. Beijing has so far focused on the risks posed in particular by consumer lending -- another area in which Ant dominated.
In its weekend statement, the government said it will further open financial markets in areas such as interbank and exchange-traded bonds, while promoting an IPO system with “zero tolerance” for transgressions.
Other key points of the action plan for markets include:
- Stepping up oversight of China’s capital market and a strict implementation of delisting rules
- Allowing pension funds and insurance companies to boost share of equities in their investment portfolios
- Further reducing the negative list for foreign investments
- Supporting privately-owned and foreign-invested financial institutions to be lead underwriters of non-financial bonds on China’s interbank market
- Boosting monitoring of commodity and capital market risks, and drafting contingency plans to deal with major shocks
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