Date: September 15, 2024

Author: Dr. CAO Zhongxiong, Assistant President of CDI, and the Director of the Digital Strategy and Economic Research Center

China's platform economy has evolved through distinct stages, transitioning from unchecked growth to a phase of well-regulated governance and innovative development. Over time, this process has cultivated a group of leading platform enterprises. The last three years have been pivotal, signifying a period of significant transformation. Initially driven by the rapid rise of the "Internet Plus" initiative, platform enterprises expanded into traditional industries, often being equated with e-commerce companies by the public. However, as digital technology increasingly integrates with the real economy, platform enterprises are now venturing into emerging fields such as technological innovation, driving their businesses to new depths.

Consider Alibaba as a prime example. In the last three years, the company has significantly increased its investment in areas such as AI-driven large language models. Its proprietary “Tongyi” model has secured a leading position in the global open-source large-model landscape. Alibaba has also facilitated the development of next-generation models by leveraging its own computational power and technical capabilities. This evolution demonstrates a shift: platform enterprises are no longer merely commercial entities but are increasingly positioning themselves as digital enterprises. As pioneers of the digital economy, platform enterprises are leveraging digital technologies to drive supply-side reform, stimulate consumption, streamline supply chains, promote dual circulation (domestic and international), and foster flexible employment, transforming themselves into comprehensive integrators of digital technology application and advancement.

Although Alibaba’s journey began in e-commerce, it has progressively evolved into a frontrunner in China’s technological innovation. Amid a global wave of advancements, the company has achieved breakthroughs in operating systems and cloud computing, integrating innovation into its operations to enhance technological independence and resilience. Consequently, platform enterprises are now not only key players in commerce but also essential engines of technological progress.

China’s platform economy has now embarked on a new stage of development, necessitating a balance between effective regulation and the promotion of growth for its advancement.

Looking Ahead: The Expanded Role of China’s Platform Economy

1.Platform Enterprises as Leaders in Technological Innovation

China’s emphasis on technology has reached unprecedented heights. For platform enterprises, innovation is not only about their own advancement but also about enabling collaborative innovation across industries and ecosystems—a critical component of their "new journey." New technologies, especially in artificial intelligence, are advancing rapidly. Platform enterprises are uniquely positioned to provide the computational power and infrastructure essential to enhancing the feasibility, scalability, and economic viability of innovation. As major tech companies, they possess resource allocation capabilities, robust R&D capacities, and deep talent reserves, allowing for sustained investment in technological innovation and effective risk management.

2.Platform Enterprises as Catalysts for Emerging Productive Forces

The platform economy, as a novel economic model, is closely aligned with the national objective of fostering new productive forces. Market regulators expect platform enterprises to leverage technological innovation to drive industrial upgrades and assume a greater role based on their transformative outcomes. These enterprises are positioned at the forefront of the market, with profound insights into market demands, industry dynamics, and technological applications. They can overcome traditional constraints of time and space by aggregating, circulating, and sharing innovation resources online, promoting technological advancements across upstream and downstream industries. By empowering ecosystem partners, platform enterprises can stimulate the development of emerging industries and consistently contribute to new productive forces—which is a core responsibility and crucial in the digital economy ecosystem.

3.Platform Enterprises as Exemplars of Fair Competition

Compliance and maintenance of fair competition are crucial for sustainable development, whether achieved through the internal ecosystem or their external role as core players in the digital economy. At this new starting point, platform enterprises must continually strengthen their awareness of fair competition and improve their compliance capabilities. This not only facilitates their own growth but also establishes an industry benchmark. By optimizing the business environment and fostering fair competition, platform enterprises demonstrate a strong sense of social responsibility and commitment.

Navigating Challenges in a Rapidly Evolving Landscape

The accelerated advancement of digital technologies and the transformation of industries and ecosystems are propelling the global economy forward, fueled by computational power. However, technologically advanced nations often create "technology barriers" and "ecosystem barriers," hindering latecomers from catching up. As technological gaps widen, the challenges of addressing them increase exponentially.

China's platform enterprises have a solid foundation characterized by internationally competitive companies and the “scenario advantage” enabled by a unified, large-scale domestic market. Leading firms such as Alibaba have become critical infrastructure and technological platforms for national innovation. Fully developing the platform economy and harnessing the innovation capacity of platform enterprises will revitalize Chinese modernization and facilitate high-quality development.