Cabinet offers support to platform economy

Private investors encouraged to make more high-quality services available to public in range of sectors

The State Council has pledged to bolster support for the platform economy, a new growth engine powered by the rapidly expanding internet sector whose ability to create jobs has been hailed by experts and business leaders.

At its executive meeting on Wednesday, the Cabinet decided to introduce another basket of measures to beef up the sector's growth, including steps to scrap restrictions on private sector access, and others to improve the business environment.

The move came as the country's GDP growth slowed to 6.2 percent year-on-year in the second quarter, its slowest pace in the 27 years since quarterly record keeping began.

The platform economy, as a new way of organizing production and a new growth engine, has contributed to the optimization of resources, the upgrading of industries, the expansion of consumption and the creation of jobs, a statement released after the meeting said.

The total market value of China's top 20 internet platform businesses, including Alibaba, Tencent and Baidu, exceeded $1.38 trillion by the end of last year, according to a report by the China Academy of Information and Communications Technology.

"The platform economy has become a core business model for the internet sector," Li Qiangzhi, a senior analyst with the academy, said. "Innovative businesses that are structures in platform models are reshaping industries in sectors such as finance, tourism, logistics, transport, medical care and education.

"Some have even become industry leaders."

A guideline issued by the Ministry of Commerce and 11 other departments in February said the country will facilitate the development of the platform economy by fostering a number of 100 billion yuan ($14.5 billion) commodity markets by 2020.

To further drive growth of the platform economy, the State Council said more measures will be implemented to promote the development of the Internet Plus service industry.

Internet Plus is the central government's strategy to integrate mobile internet, cloud computing and big data with traditional industries. The strategy, unveiled in 2015 and included in the 13th Five-Year Plan (2016-20), aims to turn China into a digital powerhouse.

The Cabinet said private businesses will be encouraged to invest in sectors such as medical care, education, nursing, domestic services and sports to make sure more high-quality services can be made available to the public. The development and application of industrial internet platforms will be accelerated, and the sharing of data and manufacturing resources will be stepped up, it added.

Zhang Tao, the CEO of Beijing-based business-to-business platform Yeebee, which offers services to small and medium-sized service buyers and providers, said the State Council's decision was as a major boost to the company.

"The platform economy will definitely reshape the service sector in the near future," he said. "It could enable buyers and providers to strike deals more quickly and more conveniently."

Zhang said businesses could obtain services more cheaply through internet platforms, thanks to greater transparency during the deal-making process.

The development of 5G mobile communication technology will also transform the trade in services, largely facilitated by the platform economy, he said.

The State Council also vowed to improve the business environment, with measures to make business registration easier and simpler procedures for setting up branches. It also called for streamlined approvals and better services, with data sharing between platform companies and government departments set to be enhanced.

Financial institutions will be encouraged to provide support to the platform economy, and the government will continue with its prudent and accommodating oversight, the statement said.

The meeting also called for the responsibilities of platforms to be defined more clearly and for measures to ensure that those engaged in wrongdoing - including online fraud, the leaking of users' information and unfair competition - can be held accountable.

Li, the analyst, said it is important for the authorities to adopt different oversight strategies for different sectors.

The rise of the platform economy has profoundly changed the job market, he said, with a large number of individuals becoming freelancers, posing challenges to the social security system.

"More people could become self-employed or freelancers with the rapid rise of the platform economy," Li said. "To cope with the new situation, it is imperative that the authorities are forward thinking."

Another issue is to ensure that individual workers have enough say when disputes with platforms occur, he said.

"That is why it is necessary for platforms and the authorities to establish mechanisms for laborers to file complaints and demand rulings and enforcement," Li said.