China Sets Goals To Improve Laws Governing E-Commerce

On October 26, China’s Ministry of Commerce, along with the National Development and Reform Commission and the Cyberspace Administration of China, issued the Development Plan for E-Commerce in the 14th Five-Year (link in Chinese). The document sets out the goal of improving e-commerce-related laws, regulations, and standard settings by 2025. In particular, it offers plans to revise and refine the rules for antitrust and unfair competition, strengthen intellectual property protection, and remove barriers to market access.

To ensure fair competition, the document emphasizes accelerating the revision of the Anti-Monopoly Law, promoting the revision of the E-Commerce Law, formulating the supporting regulations for data security, personal information protection and others, and improving rules for platform governance. It also refers to researching and formulating rules on the rights, collection, use, transaction, flow, and share of data, as well as AI and algorithm application.

China already started the work on revising its Anti-Monopoly Law, which took effect in 2008. The first draft was released in 2020 and now the draft amendment (link in Chinese) is published on the National People's Congress website for public comments until November 21, 2021.

The proposed amendment adds new rules for e-commerce platforms. For instance, the draft states that “platform operators shall not exclude or restrict competition through abusing data and algorithms, technology, capital advantages, platform rules and others,” or “organize or provide substantial assistance to others to reach monopoly agreements.” It adds “platform operators with dominant market positions using data, algorithms, technology, platform rules and others to create obstacles and imposing unreasonable restrictions to other businesses” as one of the scenarios of companies abusing their dominant market position. It also increases the punishment for antitrust violations. The proposed fine is up to ten times (5 million yuan) the current cap. Fines will be levied on personnel in charge too, according to the proposal.

In addition, the development plan document mentions the strengthening of rules to supervise e-commerce platforms to establish and improve the protection of intellectual property, and implement the main responsibility of platform operators in intellectual property protection.

Last year, the State Administration for Market Regulation and National Intellectual Property Administration issued the national standard for intellectual property protection on e-commerce planform (link in Chinese), which sets out rules governing the responsibilities of platform operators, business users of the platforms, and other supporting parties in managing IP related information and dealing with IP related complaints. The document took effect on June 1, 2021.

To safeguard and improve the e-commerce business environment, the document requires checking and removal of unreasonable access restrictions and hidden barriers for market access, according to the negative list of national market access.

In 2013, China decided to lift the restrictions on foreign capital in the e-commerce market. As an experiment, in 2015, China’s Ministry of Information Technology (MIIT) started a pilot program in Shanghai, which allows foreign investors to register wholly owned e-commerce companies in the Shanghai free trade zone. The pilot program was later extended to the entire nation (link in Chinese). In 2016, China issued the first e-commerce license to a Japanese-owned company (link in Chinese).

In reviewing e-commerce development in China, the document notes that the total scale of e-commerce reached 37.2 trillion yuan (5.8 trillion USD) in 2020 (a figure which it is estimated will reach 46 trillion yuan (7.2 trillion USD) by 2025). The e-commerce related employment reached more than 60 million people, a 13% growth rate compared to the year before. The imports and exports of cross-border e-commerce retail amounted to 1.69 trillion yuan (260 billion USD) last year, according to the document.