Strengthening market regulation for sound development of Chinese economy

Strengthening market regulation for sound development of Chinese economy

IN his latest written interview with ‘Daily News’, Mr Xu Chen, Chargé d’Affaires ad Interim of the Chinese Embassy in Tanzania, expounded on the market regulation measures taken by the Chinese government recently. He holds the view that these measures are normal international practices aimed at preventing market monopoly and safeguarding national security. 

Question: During the recent past, the Chinese government has made some big moves to strengthen market regulation, such as reorganization of large-scale technology companies, release of the ‘double reductions’ guidelines in the educational sector, and the enhanced supervision and data security vetting of the enterprises which plan to be listed in US stock markets. Some of the measures involve world-famous big enterprises. At a time when all the countries in the world are vigorously developing digital economy and online education, these measures are particularly outstanding. Why did the Chinese government adopt these policy measures?

Xu Chen: These measures are strategic moves taken by the Chinese government that conform to the general trend of economic development, drawing on the experience of established international practices. The purposes of taking these measures include: to further regulate competitions between enterprises; to restore the market order; to eliminate national security risks; and to protect the vital interests of the general public. To strengthen market regulation is a necessary step for ensuring that the fruits of development offer greater benefits to all the people in a fair way. Since the 18th National Congress of the Communist Party of China (CPC) held in 2012, China has been handling the relationship between efficiency and fairness in the right manner, and placing the goal of achieving shared prosperity for everyone in a more important position. Improving market regulation mechanisms continuously manifests the people-centered philosophy of development, with the aim of promoting normal and sound development of relevant industries, and “sharing the cake in an equitable way” while “making it bigger”.

The ultimate goal is to ensure that the fruits of development are shared by all the people. Take the “double reductions” in the educational sector as an example: In recent years, a large quantity of capital has flooded into the education and training sector, leading to the prevalence of after-school classes. Some public school teachers were involved in the paid private tutoring, which pushed up the educational cost and seriously spoiled the non-profit nature and fairness of education.

The Chinese government has required schools and training institutions to reduce the burden of homework and afterschool tutoring for students at the compulsory education stage (Grade 1 to 9). It has also banned the listing of subject-based tutoring institutions on stock market for financing. These measures aim to rectify the chaotic situation in the educational sector, bring education back to its non-profit nature, and prevent degradation of “the industry of conscience” to “the industry for profit”. To strengthen market regulation is an actual need for preventing monopoly and disorderly expansion of the capital. China supports and encourages the efforts of IT companies to develop through innovation and enhance their international competitiveness.

However, the rapid development of some big IT companies brings both “digital dividends” and “data risks” to the people. For instance, a few commercial digital platforms used their huge-capital advantage to conduct destructive competition and price discrimination, which invited suspicion of market monopoly. As a result, some medium and small-sized business owners and physical shops had to close, and consumer rights and interests were harmed. Moreover, the Chinese government has been taking a supportive and positive stance on Chinese enterprises’ attempt to seek finance from overseas stock markets, but such moves are not allowed to jeopardize national security.

Some large high-tech companies possess personals information of tens and even hundreds of millions of citizens. If they go for listing in foreign stock markets without being reviewed, our national data security will be endangered. It was against this backdrop that the Chinese government promulgated the Cybersecurity Law and the Data Security Law, and strengthened security regulation of high-tech IT companies in accordance with law.

Question: What benefits will these market regulation measures bring to the Chinese economy?

Xu: China’s GDP reached 53.22 trillion yuan (US$8.26 trillion) in the first half of this year. A recent report released by the World Bank raised the estimate of China’s economic growth this year to 8.5 percent. In 2020, China had 197 digital platform enterprises whose value exceeded US$1 billion and a digital economy as big as 39.2 trillion yuan (US$6.08 trillion). The value added of high-tech manufacturing industry in China registered a year-on-year growth of 22.6 percent and a two-year average growth of 13.2 percent in the first half of this year.

The aforementioned market regulation measures are conducive to the formation of a market environment of fair competition, the building of a unified, open, competitive and orderly market system, the creation of a world-class business environment established on market principles and the rule of law, and the enhancement of relevant companies’ capacity of scientific and technological innovation and core strengths. Undoubtedly, these measures will inject strong impetus to the sustained and high-quality growth of the Chinese economy.

Question: But some people said that these measures aim at imposing restrictions on the access of foreign capital to the Chinese market, and tightening government control on relevant industries. What’s your take on this view?

Xu: This year, the United States and the European Union have intensified their fight against monopoly by introducing a series of anti-monopoly bills and policy documents. China’s strengthening of market regulation is a necessary step for fighting against monopoly, which is a normal international practice. There is no real difference between China’s market regulation measures and the antimonopoly bills and policy documents introduced by the US and the EU. President Xi Jinping once said that reform and opening-up is China’s basic state policy and China's door will only open still wider. China is an important destination of foreign investment.

Last year, although the global FDI flow declined by 40 percent compared to the previous year, the FDI flow to China bucked the trend and increased by 4.5 percent. The first half of this year witnessed a year on-year growth of 28.7 percent in the foreign investment actually used by China.

China’s development is an opportunity for the whole world. At present, China formulates its policies based on its new development stage, implements the new development philosophy featuring innovation, harmonization, green, openness and sharing, and strives to establish a new development paradigm accordingly. It will take into account both domestic and international situations, and remain steadfast in supporting and participating in globalization, and promoting and deepening reforms and opening-up. China and Tanzania enjoy complementary economic structures, broad cooperation space and huge development potential.

China has a population of 1.4 billion, among which over 400 million belong to the middle-income group. China’s per capita GDP has exceeded US$10,000 for two consecutive years. The increasingly huge Chinese market provides ample opportunities for the export of Tanzanian specialties, which will help Tanzania achieve industrialization and diversification of its economy. China welcomes the efforts made by Tanzania and other countries in the world to enhance cooperation with China and to share the new opportunities generated by China’s new-round opening-up and development.

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