China Issues New Rules on Internet Platform Economy, Bans Exclusive Payments Arrangements


The Chinese central government has issued a new set of rules concerning the operation of the country’s economically critical Internet platforms, which are set to curb their strategic investments, apply stricter requirements to leveraged finance operations, as well as crack down on exclusive payments processing arrangements.

The “Several Opinions Concerning Driving the Standardised, Healthy and Continued Development of Platform Economies” (关于推动平台经济规范健康持续发展的若干意见) were issued on 19 January by nine of China’s top government authorities, including the Chinese central bank, the cyberspace regulator, the market regulator, the National Development and Reform Commission and the central government tax authority.

The Opinions outline a range of detailed rules and provisions, on topics including:

  • Improving governance regulations,
  • Improving systems standardisation,
  • Driving coordinated governance,
  • Improving the enforcement of competition regulation,
  • Strengthening regulation in the area of finance,
  • Exploring the regulation of data and algorithm security,
  • Improving and enhancing regtech and regulatory methods,
  • Reducing the operating costs for participants in platform economies,
  • Establishing orderly and open platform ecosystems,
  • Strengthening protections of the rights and interests of labourers in new forms of employment,
  • Supporting the strengthening of tech innovation by platforms,
  • Raising the level of globalised development,
  • Encouraging platform enterprises to undertake innovation in the area of business models.

“This document confirms the development paths and development models for the platform economy across multiple vectors,” said Pan Helin (盘和林对), head of the Digital Economy Research Institute at the Zhongnan University of Economics and Law and a specialist advisor to the Ministry of Industry and Information Technology, to state-owned media.

“The platform economy has undergone wild development over the past decade or so, and there are multiple problems. These problems also impact the long-term sustainability of the platform economy, so the use of anti-trust measures, data and information protections, and the formulation of fair competition rules is of benefit to the long-term, healthy development of the platform economy.”

While standardisation measures will lead to inevitable increases in the operating costs of platform enterprises, Pan believes that this is the “inevitable path for shaking off the road of wild development, and moving towards, long-term, healthy growth.

With regard to fintech, the Opinions also contain key measures concerning investments by platform enterprises in joint-stock financial institutions and local financial organisations, particularly concerning capital and leverage ratio requirements.

Wang Pengbo (王蓬博), senior financial analyst with Bu’tone Information, said that the move will “restrict the relevant strategic investments of platforms, as well as make the leverage ratios of platforms with micro-loan and consumer finance loan licenses subject to strict requirements.”

“Capital increases will be a necessary option, and it is expected that cooperation with banks and other institutions will expand.”

The Opinions also reiterate prior bans on platforms implementing exclusive agreements with vendors or partners in the form of “choose one of two” (二选一) agreements, in this with regard to payments processing.

“Exclusivity conduct in the payments processing is in fact similar to exclusivity in e-commerce, and involves platforms forcefully or tacitly making only one payment option available, and not providing users or businesses with other options,” said Wang.

With regard to improvements to the enforcement of competition regulation, the Opinions outline multiple measure including punishments for monopolistic and inappropriate anti-competitive conduct, and expanding the vigour of penalties for illegal business operations by platform enterprises.