Regulating Platform Economy in China: Shocks and Revisions

Abstract

Abstract: In 2020 and 2021, the Chinese government attempted to structurally tighten its regulatory controls over the country’s major digital platform firms. It was widely observed that the government’s once tolerant regulatory regime had shifted into a more heavy-handed mode, culminating in the proposed imposition of “primary responsibility,” a type of ambiguous yet encompassing legal responsibility. By the end of 2022, however, endeavors for structural reforms were mostly shelved by the authorities due to changed economic circumstances. The Chinese authorities, trying to strike a balance between growth stimulation and social protection, will now likely return to a more marginal regulatory approach to platform practices and operations. This paper explains that the initial policy turn was attributable to not only legitimate concerns over the industry’s flaws but also the popular societal sentiments associated with the firms’ perceived betrayal of their progressive promises.