Huang Yiping: Lecture to NPC Standing Committee

[Machine translation of: http://www.npc.gov.cn/npc/c30834/202301/e85122dc97eb4c0d80c098ccd61197c5.shtml]

Lecture 31 of the 13th National People’s Congress Standing Committee Special Lecture

Development and Governance of the Digital Economy

Huang Yiping

Source: China National People’s Congress

January 3, 2023

Chairman, Vice-Chairmen, Secretary-General, Members:

The digital economy is a product of the fourth industrial revolution, and it is also the economic sector closest to the international economic and technological frontier in my country. Some leading digital economy companies even rank in the forefront of the world. As a developing country, this achievement of our country is very remarkable. At the same time, the digital economy is also of great significance to the high-quality development of my country’s economy. However, in the past period of time, there have also been some irregularities in the field of digital economy, such as harming the interests of consumers and unfair competition. How to build an effective digital economy governance system and promote the healthy development of the digital economy is an important topic of Chinese-style modernization.

1. The development of the digital economy is an important achievement of market-oriented reforms

The digital economy is the main economic form after the agricultural economy and the industrial economy. It takes data resources as the key element, modern information network as the main carrier, and the integration and application of information and communication technology and the digital transformation of all factors as the important driving force. It promotes fairness and A new economic form with more unified efficiency. 1 “The 14th Five-Year Plan for the Development of the Digital Economy” proposes that “with data as the key element and the deep integration of digital technology and the real economy as the main line, strengthen the construction of digital infrastructure, improve the governance system of the digital economy, and coordinate the promotion of digital industrialization and Industrial digitalization empowers the transformation and upgrading of traditional industries, fosters new industries, new formats and new models, and continues to make my country’s digital economy stronger, better and bigger.”

The digital economy includes five major industries: digital product manufacturing, digital product service industry, digital technology application industry, digital element-driven industry, and digital efficiency improvement industry. The first four categories are “digital industrialization”, which refers to the provision of digital technology, products, services, infrastructure and solutions for industrial digitalization, as well as various economic activities that are completely dependent on digital technology and data elements, which is the core of the digital economy industry. The fifth category is the “industrial digitalization” part, which refers to the process of upgrading, transforming and reengineering traditional industries by using data and digital technology. 2 According to calculations by the research group of Peking University, from 2012 to 2018, the contribution of the digital economy sector to GDP growth reached 74.4%. 3 In addition, according to the estimates of the China Academy of Information and Communications Technology, in 2021, the scale of my country’s digital industrialization will be 8.35 trillion yuan, accounting for 7.3% of GDP. The scale of industrial digitization reached 37.18 trillion yuan, accounting for 32.5% of GDP. 4 In the same year, the scale of the US digital economy continued to rank first in the world, reaching US$15.3 trillion. China comes in second with $7.1 trillion. 5

The platform economy is a special form of the digital economy. It refers to the network infrastructure relying on the cloud, network, and terminal, and using digital technology tools such as artificial intelligence, big data analysis, and blockchain to match transactions, transmit content, and manage processes. new economic model. Common digital platforms include e-commerce, online car-hailing, entertainment, social media, search, digital finance, etc. In the nearly 30 years since our country was connected to the Internet in 1994, a huge number of Internet companies have emerged, some of which have grown into national or even global leading platforms. According to statistics from the American survey company CBInsights, as of the end of September 2022, there are a total of 1,199 “unicorn” companies in the world, that is, start-ups with a valuation of more than US$1 billion, of which American companies account for 54.1%, ranking first in the world. Chinese companies accounted for 14.4%, ranking second.

It is generally believed that my country’s digital economy has the characteristics of “big but not strong”. 6 “Large” is mainly reflected in the number of users covered, the scale of the market, and the number of enterprises. “Not strong” mainly refers to the low quality, low technological advantages, and insufficient innovation capabilities in key areas. In 2021, the ratio of my country’s digital economy to GDP will be 39.8%, which is also significantly lower than the 65% or more in Germany, the United Kingdom, and the United States. Comparing the 10 largest innovative companies in China and the United States, seven of them in my country have business models driven by business models, and the other three are driven by technological innovation. In the United States, seven are driven by technological innovation, and only three are driven by business models. In addition, almost all leading platforms in my country are mainly based on the consumer Internet, and only a few are also engaged in the industrial Internet. In the United States, the number of leading platforms focusing on consumer Internet and industrial Internet is almost the same. If the comparative advantage of the US digital economy lies in technology, the comparative advantage of my country’s digital economy lies in the market.

Considering that our country is still a developing country, the feature of the digital economy being “big but not strong” cannot be regarded as a defect. Regardless of the scale of the digital economy or the number of leading platforms, my country ranks second in the world, which is a very remarkable achievement. In the past five or six years, my country’s cutting-edge digital technology innovation capabilities have achieved rapid progress. According to the statistics of British scholars, if the number of patents in the United States, Europe, Japan and China is put together, my country’s blockchain technology patents account for 80%, computer vision technology patents account for more than 60%, and autonomous driving technology patents account for 80%. About 40%, the number of patents in these fields in my country has surpassed that of the United States. 7 Since the middle of the eighteenth century, four industrial revolutions have taken place around the world. During the fourth industrial revolution, for the first time, our country followed the pace of digital technology progress and used new technologies such as big data, cloud computing, the Internet, blockchain and artificial intelligence to innovate economic activities. This is a historic progress .

The development of my country’s digital economy has made great achievements. There are many contributing factors. The most important thing is the combination of “promising government” and “effective market”. The promising government not only improves the business environment and overcomes market failures, but also builds With a large amount of digital infrastructure, the efficient market allocates a large amount of resources, especially funds, to the emerging digital economy industry. On the one hand, the digital economy is one of the most dazzling economic achievements of my country’s market-oriented reform, and it has also created many typical cases of the “Chinese Dream”. Almost every leading company starts with one or several young people forming the idea of starting a business, and then uses the market to mobilize large-scale technology, talents, and funds to quickly implement new digital economic products or models and continue to iterate ,Improve. On the other hand, the development of the digital economy also benefits from my country’s relatively developed digital infrastructure. Regardless of the coverage of mobile telecommunications or the penetration rate of the Internet, China is significantly ahead of most developing countries, thanks to the “moderately advanced” layout and investment made by the government in the field of digital infrastructure over the years. At present, my country has built the world’s largest network infrastructure with leading technology. By the end of 2021, 1.425 million 5G base stations will be built, accounting for more than 60% of the world’s total. The number of 5G users will reach 355 million, and the broadband rate in administrative villages will reach 100%.

Other factors have also played an important role in driving the development of the digital economy at certain stages, including large populations, weak protection of personal rights, and relative isolation from international markets, but some of these factors have changed or will soon change . First of all, the population of more than 1.4 billion is conducive to innovation, testing of new products, and new business models. It is especially important for the scale effect of the digital economy. Some leading platforms in my country have hundreds of millions or even billions of users. Secondly, in the past, my country’s protection of personal rights, especially personal privacy, was insufficient. This provided a lot of room for digital economic innovation, but many businesses violated personal rights and grew wildly. This is exactly the problem that the special rectification of the digital economy is

trying to solve. one. Finally, the domestic digital economy industry has been separated from the international market so far, which has won time and space for the growth of domestic companies, but it can be expected that the separation of domestic and foreign markets cannot last for a long time.

As my country’s economy embarks on a new journey in a new era, the development of the digital economy is also entering a new stage. On the one hand, high-quality development is the primary task of building a modern and powerful socialist country, and the digital economy should undertake the mission of supporting high-quality development. The digital economy has formed a relatively large scale, and it is catching up rapidly in some technical fields. However, technological advantages need to be further cultivated. On the basis of business model innovation, more attention should be paid to innovation capabilities in key areas to enhance the development of the digital economy. quality. The business focus should also be further expanded, closer to the real economy, expanding from the consumer Internet to the industrial Internet, from “new retail” to “new manufacturing”. On the other hand, digital economic governance is now moving from special rectification to normalized supervision, some prominent problems have been corrected, and the development of digital economy has also begun to enter a new, more standardized and healthy stage. However, regulation and governance is a long-term task. As General Secretary Xi Jinping pointed out: “To promote the healthy development of the digital economy, we must insist on both promoting development and regulation and regulation, and both of them must be strong, and we must regulate development and develop in regulation.”

2. The benefits and challenges of the digital economy are equally prominent

The economic changes brought about by digital technology are revolutionary. The “14th Five-Year Plan” Digital Economy Development Plan proposes that “the digital economy develops rapidly, has a wide range of radiation, and has an unprecedented degree of influence. It is promoting production methods, Profound changes in the way of life and governance have become a key force for reorganizing global factor resources, reshaping the global economic structure, and changing the global competitive landscape.” Accelerating the high-quality development of the digital economy is essential for my country to reach the level of a moderately developed country in 2035 and to achieve the level of a moderately developed country in 2049. It is of great significance to build a powerful modern socialist country in 2019.

The changes of digital technology to the economic operation mechanism can be summed up as “three ups and three downs”, namely expanding scale, improving efficiency, improving user experience, reducing costs, controlling risks and reducing direct contact. These changes are mainly based on some new economic characteristics of digital technology, such as economies of scale, economies of scope, network externalities, bilateral or multilateral markets, etc. Economies of scale mean that the larger the scale of the enterprise, the lower the average cost and the higher the operating efficiency. This may be due to the long-tail effect of digital technology, that is, after the fixed cost investment is completed, the marginal cost of further expanding the scale of operation is very low . Economies of scope mean that the total cost of producing multiple products at the same time is lower than the sum of the costs of producing various products separately. This may be the main reason why cross-border competition in the digital economy is very common. Network externality means that the more users of a network, the higher its per capita use value and the greater the market value of the network itself. A two-sided market refers to an economic network of independent user groups that mutually provide network benefits. The benefits of one group of participants joining the platform depend on the number of other participants joining the network. In this way, the pricing of one party by a digital platform often takes into account external influence on the other party. It is precisely based on these characteristics that many digital platforms have hundreds of millions of users at every turn, and provide a variety of online services at the same time, and even provide free or even subsidized services to users.

The digital economy has brought earth-shaking changes to my country’s production methods, lifestyles, and social governance methods: First, it improves the quality of life of the people. Almost all services needed in daily life such as shopping, ordering food, car booking, and hotel booking can be arranged online, which not only saves time and money, but also enjoys a richer range of consumer goods. During the COVID-19 pandemic, online transactions played an important role as a stabilizer for consumption; second, it improved the inclusiveness of economic activities. Taking advantage of economies of scale and long-tail effects, digital economic services have covered more than one billion individuals and nearly 100 million self-employed individuals. At the same time, it has also lowered the threshold for innovation and entrepreneurship. While activating economic micro-cells, it has also created two The third is to accelerate innovation and incubate many new digital economic formats. Almost all digital economy enterprises are innovative institutions, which rely on new technologies to incubate new manufacturing and service formats, and most of the leading platforms are still large intellectual property owners; the fourth is to use digital technology to transform traditional industries and achieve quality improvement and growth. effective purpose. Industrial digitalization has grown from focusing on individual business links to covering the entire industrial chain ecosystem, forming stronger and stronger economic momentum.

my country’s digital financial innovation provides a representative case. It is not only a financial revolution rooted in China, but also a cutting-edge financial innovation in the world. The scale of active users of the two leading mobile payment institutions leads the world, and the payment efficiency and security also perform well. On the one hand, several new Internet banks use digital platforms to quickly, massively and low-costly acquire customers and accumulate digital footprints; on the other hand, they use big data and machine learning methods to evaluate credit risks. The innovative business model can serve a large number of “credit white accounts” who have neither financial data nor mortgage assets. During the COVID-19 pandemic, some traditional financial institutions suspended their services, but digital financial institutions continued to provide payment, investment and credit services. Georgieva, President of the International Monetary Fund (IMF), therefore personally invited domestic academic institutions to jointly organize a closed-door seminar on big technology credit in June 2020. The “Peking University Digital Financial Inclusion Index” shows that from 2011 to 2021, the regional differences in the development level of digital financial inclusion have been greatly reduced, and digital financial services have crossed the “Hu Huanyong line” and reached the vast western region. 8

However, there are also many problems in the field of digital economy that are worthy of in-depth consideration and solution.

First, does the scale effect of the digital economy necessarily lead to monopoly? Expanding the scale of the enterprise and forming market power is the business goal pursued by every entrepreneur, and the scale effect also means that the larger the scale, the higher the efficiency, but this may lead to a situation where one company dominates and the winner takes all. In reality, many leading digital economy companies are indeed “big Macs”, occupying a large share of the domestic market. It is not uncommon for large digital platforms to impact small offline factories and stores, and platform users cannot judge the fairness of platform resource allocation and pricing. Exclusive agreements such as “choose one” were also common in previous years. Therefore, market participants often worry about large companies taking advantage of their market dominance to implement monopolistic behavior.

Second, how to strike a balance between big data analysis efficiency and personal privacy protection? “Data is the new oil”, new production factors, a large number of emerging business models such as matching supply and demand through big data analysis, and managing credit risks have been successfully implemented and achieved good economic benefits. However, in the past, information protection was not in place, and the phenomenon of non-compliant and illegal collection, processing and use of data was very common, and incidents of personal privacy and commercial secret leakage occurred from time to time. Where the balance between efficiency and equity should be drawn is an important policy problem. If data protection is not in place, it will damage the rights and interests of individuals and organizations, and even cause social and economic risks. If overprotected, big data analytics can become impossible.

Third, will digital platforms promote or curb economic innovation? Digital economy companies do have strong innovation genes. Without innovation capabilities, they cannot develop rapidly and grow into enterprises of a certain scale. However, it is worth observing whether digital platform companies will maintain their innovation motivation and capabilities after they become “big Macs”. The so-called “hunting mergers and acquisitions” means that some leading digital platforms use sufficient cash flow to acquire a large number of start-ups in similar business fields, and then shelve them, with the purpose of eliminating potential competitors. In addition, some leading platforms burn money to expand the market. The innovation of this type of business model may crowd out too many venture capital funds, thereby affecting hard technology innovation.

Fourth, how can the digital economy better help my country realize the vision of common prosperity? From the perspective of its inclusiveness, the digital economy should be conducive to improving income distribution. The approximately 200 million “gig” jobs with low thresholds and flexible working hours are a good example. But there may be another side of the coin: first, the rapid growth of digital economy companies is often accompanied by the closure of a large number of traditional companies, so that many employees will need to be re-employed; second, the working conditions of “gig jobs” are not good. Many delivery people are “trapped in the algorithm”, and their social security is usually not perfect; third, the concentration of wealth in the digital economy is very high, and industry participants may not always get the same income and contribution as their contributions. wealth.

Finally, how to improve the governance function of the digital platform? The governance function of a digital platform includes both the governance of the platform itself and social governance. In the traditional economy, enterprises, market and government play the functions of operation, transaction and regulation respectively. However, platform companies have broken the boundaries of the division of labor between the above three. They are both business entities and trading venues, and at the same time play a certain role in regulation. One problem that may arise from the platform’s concurrent management, transaction, and regulatory functions is that the platform acts as both a referee and an athlete, which may disrupt market order, cause unfair competition, and damage the interests of consumers. At the same time, the platform can also play a positive role in assisting government governance, including participating in the construction of e-government, digital government, and city brain. However, if the huge influence of the platform is reflected in the social, political or ideological fields, it becomes a very sensitive topic.

3. The construction of the governance system needs to start with conceptual innovation

The advantages of the digital economy are prominent, but the challenges are also severe. The Central Economic Work Conference at the end of 2020 proposed “anti-monopoly” and “prevention of disorderly expansion of capital”, which opened a special rectification policy in the field of digital economy. In the next two years, the decision-making department formulated relevant laws and adopted many regulatory measures. The Central Economic Work Conference at the end of 2022 clearly stated that “We must vigorously develop the digital economy, improve the level of normalized supervision, and support platform companies in leading development, creating jobs, and demonstrating their talents in international competition.” From special rectification to normalized supervision, the governance system It will become more clear, thereby providing a relatively stable policy environment, which will be conducive to the high-quality development of the digital economy.

The digital economy has many brand-new features, so it should not simply apply the governance methods of the traditional economy, or even copy some policy practices in Europe and the United States. There is a view in Europe and the United States that digital economic governance only needs to focus on a few leading platforms. 9 This idea is not suitable for China. The normalized supervision in Europe and the United States is relatively mature. Therefore, the focus of strengthening digital economic governance is to regulate the behavior of leading platforms, especially anti-monopoly. However, my country’s governance framework has just begun to be established, and what needs to be paid attention to is not only the monopolistic behavior of the head platform, but also the business behavior of all digital economy companies that need to be regulated.

The monopoly problem and data problem often encountered in the governance of the digital economy provide two good examples to prove why the governance methods of the traditional economy

cannot be simply applied. And this requires the innovation of policy ideas on the basis of rigorous analysis, and only then can a governance system that adapts to the characteristics of the digital economy be built.

Anti-monopoly is one of the main contents of the platform economy special governance policy. my country’s “Anti-Monopoly Law” clearly defines four types of monopolistic behaviors, that is, operators reach monopoly agreements, abuse market dominance, operators concentrate and abuse administrative power to exclude and restrict competition. On February 7, 2021, the Anti-Monopoly Committee of the State Council issued the “Guidelines on Anti-monopoly in the Field of Platform Economy”, which is the first complete framework for anti-monopoly policies on the platform economy. On April 10, the State Administration for Market Regulation imposed a penalty on Alibaba for its “choose one from two” behavior. This is the first anti-monopoly fine in the field of platform economy. On November 18, the National Anti-Monopoly Bureau was officially launched, marking that my country’s anti-monopoly policy, especially the anti-monopoly policy in the field of platform economy, has entered a new stage.

Since the promulgation of the “Sherman Act” in 1890, the thought of antitrust policy in the United States can be roughly divided into two stages, the “structuralism” before the 1980s and the “behaviorism” after that. Structuralism is largely based on the observation that market concentration is positively correlated with firm performance. Therefore, if the government can directly adjust the market structure, it can have an anti-monopoly effect of pulling wages from the bottom. The Brandeisism formed at the beginning of the last century is not only against monopoly, but directly against hugeness. The main criticism of behaviorism against structuralism is that if you simply punish large companies, you are punishing the competitive winners, which is not good for industry development and economic growth. Whether there is a monopoly depends not only on the market structure, but on the market behavior. If firms increase consumer welfare while expanding their operations, they should not be penalized. An indicator that reflects consumer welfare is price. If a company takes advantage of its dominant position in the market to raise prices to obtain excess profits, it is a monopoly.

However, the simple standard of consumer welfare or price is often powerless in the face of monopolistic behavior in the digital economy, because many platforms often lower prices for consumers and even provide free services. However, characteristics such as multi-sided markets and network effects show that no fee does not necessarily mean “free”, nor does it necessarily mean that these companies do not have a monopoly position. Expanding the market size by subsidizing users on one side is precisely an important strategy often adopted by platform companies to increase operating income and even form a dominant market position. Although “free” services are beneficial to consumers in the short term, if the purpose of this business strategy is to expand the market size or even change the market structure, and eventually obtain a monopoly position, it will be detrimental to consumers in the long run. Consumer welfare standards do not adapt to the monopoly of the platform economy, directly promoting the rebirth of Brandeisism in the United States. 11

But this goes back to behaviorism’s criticism of structuralism. The perspective of “big is the problem” is even less suitable for the field of digital economy, because it runs counter to the characteristics of digital technology. Traditional economic theory holds that the stronger the market dominance, the higher the price and the greater the “deadweight loss” or welfare loss. But the most important feature of the digital economy is the long tail effect and economies of scale. If monopoly is judged by scale, there will be an irresolvable contradiction: digital economy companies either cannot do it, and once they become bigger, they are likely to be anti-monopoly and split up. If so, the digital economy will never develop.

The economies of scope characteristic of the digital economy may allow sufficient competition and economies of scale to coexist. I don’t like large enterprise scale or high market share. I mainly worry about creating a “winner takes all” situation, but this is the concept of traditional economies, such as in the oil or steel industry. Economies of scope mean that once a platform becomes bigger in an industry, it is easy to compete across industries, such as short video platforms for food delivery and social platforms for search. Even if it can grow bigger, it may not be able to dominate the market. From 2013 to 2020, the e-commerce market share has undergone great changes. The original “one big” e-commerce platform lost more than half of the market share, which shows that It did not previously have a dominant market position.

When judging whether there is a monopoly in the digital economy, we should neither simply look at “consumer welfare” nor only focus on “enterprise size”, but should pay attention to the condition of “contestability”, that is, the convenience for potential competitors to enter or exit the market Spend. 12 If the degree of convenience is high, potential competitors can form greater competitive pressure on incumbent enterprises. In this case, even if there is only one or a few enterprises in an industry, the incumbent enterprises cannot freely implement monopolistic behaviors and extract high profits. It should be pointed out that the determining factor of the “contestability” condition is the sunk cost of entry of potential competitors. The sunk cost mentioned here includes not only business licenses, but also conditions such as users and data. In addition, stronger “contestability” does not necessarily lead to a higher degree of competition, but it can still prevent incumbent companies from implementing monopolistic behavior.

Therefore, the condition of “contestability” is an important concept that can guide economic regulation and anti-monopoly law enforcement in the field of platform economy. Using the analytical framework of “competitiveness” to discuss the current problems facing our country has at least two important implications. First, compared with the United States, the level of competition in my country’s platform economy seems to be higher. In the United States, the four top platforms have dominated some industries for a long time, and perhaps we should be more worried about monopoly issues. Why are there relatively few cross-industry operations of American platform companies? There may be a variety of reasons, such as stricter regulatory restrictions, higher barriers to entry due to the application of data and artificial intelligence, and “tactful collusion”. But in any case, the phenomenon of cross-industry competition in my country’s platform economy is very common at present, and the degree of competition is relatively high. In comparison, the urgency of anti-monopoly in the field of platform economy in my country is not as strong as that in the United States.

Second, the regulatory policies of the platform economy should also pay attention to the “contestability” conditions. If the “contestability” is kept high, the possibility of forming a monopoly will decrease. Even if evidence of monopolistic behavior is found, try not to adopt the practice of splitting up, but try to reduce the sunk costs of potential entrants and lower the threshold for entering and exiting the market. If the number of users is an important barrier to entry, consider connecting different platforms. Take the telecommunications network as an example. As long as you have a mobile phone and can connect to the Internet, you can reach everyone, regardless of the size of the telecommunications system that the user joins. If data is the main cost, perhaps consider allowing users to port data or enable some form of sharing between different platforms. Of course, these measures cannot completely eliminate the relative advantages of those big platforms, nor should they ignore the legitimate requirements of leading platforms to obtain a certain return after making a large amount of investment. The purpose of adopting policy measures to ensure a certain degree of “contestability” is to prevent monopolistic behavior, rather than blindly pursuing absolute equality between platforms.

The governance ideas of data elements also need innovation. In April 2020, the Central Committee of the Communist Party of China and the State Council’s “Opinions on Constructing a More Complete System and Mechanism for the Market-oriented Allocation of Elements” put “data” alongside traditional elements such as land, labor, capital, and technology for the first time, and emphasized the need to accelerate the cultivation of data elements market. Data becomes a factor of production, which will rewrite the production function, amplify the contribution of other factors of production and increase the productivity of total factors. This actually provides a new way for developing countries to catch up with leading economies.

According to the data in the “Digital China Development Report (2021)”, from 2017 to 2021, my country’s data output increased from 2.3ZB to 6.6ZB, and the data output in 2021 accounted for 9.9% of the world, ranking second in the world . 13 However, according to the calculations of the National Industrial Information Security Development Research Center, the scale of my country’s data element market in 2020 is about 54.5 billion yuan, which is about 3.1% of the United States and 17.5% of Japan. The output of my country’s data is huge, but the efficiency of use needs to be improved. Therefore, how to cultivate the data element market, improve the supply capacity of data elements, build a data governance system, give full play to the advantages of massive data and rich application scenarios, and ensure the high-quality development of the digital economy is a major issue in the Chinese-style modernization drive.

The data element governance system refers to a series of policies and institutional arrangements that coordinate the production, circulation, use, and income distribution of data elements. The governance system of traditional elements has two important principles, one is to clarify ownership, and the other is to ensure fair transactions. These two principles are also applicable to the governance of data elements, but innovation is needed in specific practices, because compared with traditional production factors, data elements have some distinctive features. There are many participants in the formation of data elements, and the importance of each party in the use process is also very different, which means that it is difficult to clearly determine the ownership of data like land, labor and capital. At the same time, data not only contains some information about personal privacy and commercial secrets, but also presents non-exclusive, non-competitive and non-exhaustive characteristics. In addition, it is difficult to form standardized products, and the contradiction of information asymmetry is very prominent. Therefore, Nor can it be circulated in the market like land, labor and capital.

Recently, the Central Committee of the Communist Party of China and the State Council have just released the “Opinions on Building a Data Basic System to Better Play the Role of Data Elements” (hereinafter referred to as “Data Twenty”), and put forward a series of innovative ideas and systems for data governance. The most noteworthy design may be the structural separation of data property rights, that is, the “separation of three rights” of data resource holding rights, data processing and use rights, and data product management rights. For public data, corporate data, and personal data, implement classified and hierarchical rights confirmation and authorization. For public data, it is mainly to strengthen the coordinated use and management of authorized use and break down “data islands”. For enterprise data, market entities have the right to hold, use, and obtain benefits. As for personal information, data processors are urged to collect, hold, host and use data in accordance with personal authorization. All of these are based on an important premise, that is, without compromising personal privacy, commercial secrets and public interests. Cooperating with the structural separation system of data property rights, it is also necessary to establish a system for protecting the legitimate rights and interests of all participants in data elements to fully protect the rights and interests of data sources and data processors.

Another important link that affects the efficiency of the use of data elements is circulation. In recent years, nearly 40 data exchanges have been established in my country, but the business development is not ideal, which also shows that data transactions are more difficult than other production factors or commodity transactions. The “Twenty Articles on Data” clearly supports data processors to circulate data in open, shared, exchanged, and traded ways both on-site and off-site, and proposes to design a data trading market system, coordinate and optimize the layout, strictly control the number of trading venues, and highlight the national The basic service functions and public attributes of the level data exchange, while encouraging data vendors to enter the market. Prudently treat the circulation and transaction behavior of original data. For public data, it must be provided to the society in the form of models, verification and other products and services, especially in accordance with the requirements of “the original data does not go out of the domain, and the data is usable but not visible”. However, whether it is on-exchange or off-exchange transactions, in addition to the protection of rights and interests, another very important condition is to overcome the information asymmetry in data transactions, which may be the main reason for the current inactivity of the exchange business. Relatively speaking, the point-to-point model of direct transactions and the data provider model of indirect transactions add a link of supply and demand matching. Therefore, in the short term, it may be necessary to focus on supporting the standardized development of such over-the-counter transactions, and then encourage them to enter the market when the conditions are ripe.

Data factor governance also has a problem that other production factors do not exist, that is, algorithm governance. The “Data Twenty” mentioned algorithm review, but did not specify how to do it. The research group of Peking University once put forward the idea of an algorithmic audit. 14 Algorithms are an important pillar of big data analysis productivity, and have made significant contributions to the improvement of operating efficiency and the management and control of credit risks in the digital economy. At the same time, problems such as algorithm black box and algorithm discrimination are also heard from time to time. The key is that most of the partners and consumers of digital economy companies are completely unable to judge the fairness of algorithms, and it is difficult for regulators to truly do so under the current policy framework. to penetrating regulation. The core of algorithmic governance can include three levels. First, enterprises implement compliance management and formulate scientific and technological ethics guidelines, and adhere to the orientation of technology for good; second, establish an algorithm filing mechanism, which can at least be transparent to the regulatory authorities; third, Regulatory authorities or entrusted third parties regularly or irregularly organize algorithm audits, and can also be initiated when complaints from other market participants are received.

4. Build a digital economy governance framework with Chinese characteristics

Building a governance system that adapts to the characteristics of the digital economy and promoting the healthy development of the digital economy is of great significance for my country to achieve high-quality economic development and build a socialist modern power. In the process of constructing the governance framework of the digital economy, the following ideas can be considered.

(1) It is clear that the purpose of the digital economy governance system is to create a good policy environment and form stable policy expectations. At the same time, the meaning of “disorderly expansion of capital” should be accurately defined, and the realization of The goal of the digital economy to “be stronger, bigger and better”

The core of a good digital economy governance system should be a good policy environment and stable policy expectations. The development of my country’s digital economy has been at the forefront of the world, but there have also been some irregular or even illegal

behaviors. The most effective way to regulate behavior is to establish and implement clear governance rules, rather than campaign-style rectification, because the purpose of regulation is development. For the meaning of “disorderly expansion of capital”, it is better to make a clearer definition, such as intervening in politics and influencing ideology, which is conducive to avoiding enlarged interpretations in the process of policy implementation. The practice of delineating “traffic lights” has clear policy direction and is relatively easy to understand and implement. However, if the concept of “negative list” can be used instead of the term “traffic light”, it should be more conducive to the integration with international rules.

(2) Build the top-level structure of the digital economy governance system, set up a high-level digital economy governance organization, coordinate policy formulation and coordinate policy implementation. At the same time, improve the legal system of the digital economy, formulate the “Digital Economy Law” as soon as possible, and guide the governance policies of the digital economy

In the field of digital economy, there are industry regulatory agencies such as the Ministry of Communications, the People’s Bank of China, and the Ministry of Industry and Information Technology, as well as general regulatory agencies such as the State Administration for Market Regulation and the Cyberspace Administration of China. Most digital economy companies have advanced technology and strong comprehensive business. It is recommended to set up a high-level institution at the State Council level or authorize an existing comprehensive institution. This institution mainly assumes two responsibilities on behalf of the State Council. One is to coordinate digital The formulation of economic governance policies includes liaison with the National People’s Congress; the second is to coordinate the implementation of governance policies, especially to eliminate regulatory gaps and prevent duplication of policies. At the same time, it is also necessary to grasp the rhythm of new policies introduced by different agencies.

my country has promulgated many laws and regulations related to the governance of the digital economy, including the “Consumer Rights Protection Law”, “E-Commerce Law”, “Anti-Unfair Competition Law”, “Anti-Monopoly Law”, “Network Security Law”, and “Data Security Law”. And the “Personal Information Protection Law”, some of which are not specially formulated for the digital economy, and there are still problems with the connection between different laws. It is recommended that the National People’s Congress promote the formulation of a programmatic “Digital Economy Law” that can cover all digital economic fields as soon as possible. In the future, it will serve as the basic law in the digital economic field and guide the governance practice of the national platform economy.

(3) Establish a three-level digital economic governance framework. The first level is anti-monopoly law enforcement to correct market failures and restore market efficiency; the second level is economic regulation to maintain effective market operation; the third level is corporate compliance management. Ensuring that business activities are consistent with laws, rules and guidelines

The three-tier structure is guided by the same set of governance rules and pursues common compliance business goals, but the functions of the three should be properly separated, and there can be both division of labor and cooperation in operation.

The purpose of anti-monopoly law enforcement is to restore market order as soon as possible, especially to enhance the “contestability” of the industry. At present, this responsibility mainly rests with the State Anti-Monopoly Bureau and the Anti-Monopoly Committee of the State Council. In the process of implementation, it is recommended to focus on the “contestability” condition, and market share may not accurately reflect monopolistic behavior. If you pay attention to consumer welfare, you need to make a comprehensive and detailed calculation of the various explicit and invisible costs and benefits of consumers in the digital economy. The “Anti-Monopoly Guidelines on the Platform Economy Field” clearly stated that for behaviors such as “choosing one of the two” and “differentiated pricing”, it is necessary to carefully analyze their economic rationality. However, under normal circumstances, rigid means such as anti-monopoly enforcement should be used with caution.

The main responsibility of economic regulation is to maintain the effective operation of the market, including ensuring fair competition and protecting the interests of consumers. The regulatory functions of digital economy enterprises should also be appropriately centralized to change the phenomenon of “water control in Kowloon”. Compared with anti-monopoly law enforcement, economic regulation is more flexible and normalized. Considering the highly innovative nature of digital economic regulation, it is recommended to adopt a “responsive” regulatory approach, maintain daily communication between regulators and enterprises, discover and resolve problems in a timely manner, and at the same time give regulated objects the opportunity to appeal. It is also possible to adopt the “regulatory sandbox” approach that is common in the field of digital finance. Digital economy companies propose innovative plans, and then try to operate new businesses under the supervision of the whole process.

Compliance management is an important part of the modern enterprise system, and its purpose is to ensure that business activities comply with the requirements of laws, rules and guidelines. Compliance management is especially important in the digital economy, because the business of most enterprises involves massive amounts of data, rich scenarios, and complex algorithms, and it is very difficult to rely entirely on external resources for supervision. Through compliance management, enterprises actively cooperate with regulatory authorities to overcome technical obstacles and implement governance policies. Enterprises can take the initiative to file algorithms with regulatory authorities and provide technical conditions for regulatory authorities or third-party independent institutions to implement algorithm audits. Enterprises should also formulate scientific and technological ethics guidelines to put forward higher standards for “science and technology for good”.

(4) Incorporate the digital economy into the country’s fiscal and taxation system, first try out the “dual-pillar” digital tax plan that has reached an international consensus in China, improve the distribution rules of digital economy income among different elements, and standardize the order of income distribution and wealth. Accumulation mechanism to promote common prosperity

Some businesses of the digital economy have not yet been included in the formal statistical system, and it is very difficult to collect taxes. However, the coverage of the digital economy by fiscal and taxation policies is not only conducive to the realization of a fair tax burden, but also conducive to the effective allocation of resources in the whole society. Recently, the tax department has increased the punishment for tax evasion activities such as platform companies and webcasts. It is recommended to start with the implementation of the “dual-pillar” plan to allow the fiscal and taxation policy system to completely cover the digital economy, distribute the tax revenue of super-large platforms according to the level of economic activities of platforms in various places, and determine the minimum actual tax rate level at the same time, so as to avoid vicious competition for the headquarters of platform companies in various places. These can not only promote the balanced development of the regional economy, but also pave the way for future integration with the international tax system. In addition, it is recommended to improve fiscal and taxation policies according to the characteristics of the digital economy, including making full use of digital technology, improving the distribution rules of digital economy income among different elements, and standardizing the order of income distribution and wealth accumulation.

(5) Actively participate in the formulation of international digital economy and digital trade rules, promote the high-level and institutional opening of my country’s digital economy, vigorously promote the development of digital trade, and create conditions for my country’s digital economy enterprises to show their talents in the international market

The opening up of the digital economy is an important part of my country’s high-level opening up policy. Whether enterprises are going global or bringing in, or participating in digital trade, they must be based on the convergence of domestic and international rules. At present, the United States and the European Union have respectively put forward demands for digital trade rules. As a major country in the digital economy, my country should put forward proposals on cross-border data flows, intellectual property rights, consumer privacy, territorial restrictions, monopoly and digital taxes as soon as possible, and actively join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), digital economy, etc. Multilateral agreements such as the Partnership Agreement (DEPA) should be in line with European and American countries with advanced digital technology as much as possible, so as to avoid being excluded from the process of formulating new rules. Vigorously promote digital investment and digital trade with countries along the “Belt and Road”, improve the rules while practicing, and help the smooth opening of my country’s digital economy.

(The speaker is the deputy dean of the National School of Development of Peking University and the director of the Digital Finance Research Center of Peking University)

1 State Council, “The 14th Five-Year Plan” Digital Economy Development Plan, Guofa (2021) No. 29, December 12, 2021.

2 National Bureau of Statistics, “Statistical Classification of Digital Economy and Its Core Industries”, National Bureau of Statistics Order No. 33, May 27, 2021.

3 Peking University Platform Economy Innovation and Governance Research Group, “Platform Economy: Innovation, Governance and Prosperity”, CITIC Press, 2022. The “digital economy sector” calculated by the research group mainly includes information and communication technology (ICT) manufacturing, as well as manufacturing and service industries that intensively use ICT. This range may differ from the definitions of the National Bureau of Statistics and China Academy of Information and Communications Technology.

4 China Academy of Information and Communications Technology, “China’s Digital Economy Development Report (2022)”, July 11, 2022.

5   China Academy of Information and Communications Technology, “Global Digital Economy White Paper (2022)”, July 29, 2022.

6 “Report of the State Council on the Development of the Digital Economy”, National Development and Reform Commission Chairman He Lifeng, Thirteenth National People’s Congress Standing Committee Thirty-seventh Session, October 28, 2022.

7  Antonin Bergeaud and Cyril Verluise, “The Rise of China’s Technological Power: A Frontier Technology Perspective”, POID Working Paper, POIDWP039, 14 October 2022, LSE.

8 Huang Yiping and (US) Du Dawei, “Digital Financial Revolution: China’s Experience and Enlightenment”, Peking University Press, December 2022.

9  UK Digital Competition Expert Group (Chair: Jason Furman), ‘Unlocking Digital Competition’, March 2019.

10 Anti-monopoly Commission of the State Council, “Guidelines on Anti-Monopoly in the Field of Platform Economy”, State Anti-Monopoly (2021) No. 1, February 7, 2021.

11 Wu Xiuming, “The Curse of the Giants”, Columbia Global Report, 2018. (Tim Wu, 2018, The Curse of Bigness: Antitrust in the New Gilded Age, Columbia Global Reports, New York.)

12 Baumol, William J., 1982, “Contestable Markets: An Uprising in the Theory of Industrial Structure”, American Economic Review, 72(1):1-15.

13 National Internet Information Office, “Digital China Development Report (2021)”, July 23, 2022.

14 Shen Yan, Zhang Junni, “Data Governance in the Platform Economy”, Peking University Platform Economy Innovation and Governance Research Group, “Platform Economy: Innovation, Governance and Prosperity”, July 2022, CITIC Press.

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