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Policy to support private sector hasn't changed

By Yao Yang | China Daily | Updated: 2021-09-23 07:09


Some people have wrongly assumed that the measures to strengthen regulations on the platform companies and private tutoring providers suggest harsher policies targeting private businesses are likely to follow and the private sector may be dealt a big blow.

The call for common prosperity has added to such concerns fostering the belief that to more equitably distribute national wealth, the government may seize from the rich to pay the poor.

These concerns are baseless. They have resulted from the misreading of the government's policies. The regulations on internet platform companies and the private tutoring sector are unrelated, and they serve different concerns and purposes. More important, realizing common prosperity is the long-term goal of socialism with Chinese characteristics.

The regulations on platform companies were implemented essentially for three reasons. First, they are aimed at curbing monopoly. The companies targeted by the new regulations are dominant in their respective sectors. Being a large company does not necessarily mean enjoying monopoly, but some large Internet companies have shown monopolistic tendencies.

For example, some of the large platform companies have introduced aggressive promotion plans and shifted their operational costs to the businesses that trade on their platforms. And many large platform companies use progressive algorithms to reduce the time for delivery, forcing deliverymen to engage in risky driving.

Second, the regulations are aimed at better protecting data privacy. The platform companies often use the huge amounts of personal and geographical data they have collected for aggressive and discriminatory pricing. And since such companies, when being listed on foreign stock exchanges, have to observe foreign laws to disclose data, they may compromise national security.

Third, the regulations are aimed at checking a business-political nexus. During the anti-corruption campaign, many high-profile cases revealed that corrupt government officials had been bought by large businesses. So the central authorities decided to take measures to end the alliance between businesses and officials.

Many other countries have also decided to crack down on the business-politician nexus. Platform companies have become powerful players in many countries' social and political life. Take for example Twitter's ban of former US president Donald Trump's account. True, many of Trump's tweets were divisive and full of hate for certain sectors of society, but the fact that Twitter has not blocked the Taliban's accounts have forced people to think whether Twitter's decision against Trump was politically motivated.

The strengthened regulations on platform companies are not meant to curb their growth, but to create a cleaner and fairer playing field and better protect consumers' privacy and national security. In fact, platform companies lead China's high-tech sectors, and their healthy development is necessary to strengthen China's competitive edge in international markets.

The regulation on the private tutoring sector is a completely different story. Over the years, competition in high and middle schools has increased. Parents have been forced to spend huge amounts of money to ensure their children excel in high school and the national college entrance exams. The pressure has percolated to primary schools and even kindergartens. Using this to their advantage, the private tutorial sector had become one of the largest service sectors in China.

The recent government move to restrict the sector is part of its efforts to reduce the burden on students and end wasteful competition. Unfortunately, that has been interpreted by some on social media as a sign of the government becoming more conservative on education.

Of course, private tutoring can supplement school education if it is managed well, and imposing a total ban on private tutoring will only limit the learning opportunities for students from ordinary families. That's why the government has not completely banned it.

Lastly, common prosperity is not a new concept. It is the long-term goal of socialism with Chinese characteristics. The authorities are reiterating it only because China, after realizing the goals of eradicating absolute poverty and building a moderately prosperous society in all respects, is in a better position to achieve common prosperity. In addition, the central leadership is committed to developing China into a fully modernized socialist country by 2035, and common prosperity is part of this grand design.

To realize common prosperity, redistribution of wealth is necessary. But the aim of redistributing wealth is not to "rob the rich to pay the poor", but to improve the livelihoods and living standards of the poor. More precisely, it is to raise the income capability of the poor, which can be achieved through more equitable investment in education, and on-the-job training.

The author is a liberal arts chair professor at the National School of Development, Peking University.

The views don't necessarily reflect those of China Daily.

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