Sharing Economy Draft Law Released for Comment

The Sharing economy is a newly embraced business model in China. To manage issues that come along with this new business model, better utilize scarce resources, and optimize the environment for innovation and growth,  the NDRC released Guidelines for the Development of a Sharing Economy (Draft for Comment) on February 28. According to the Draft Guidelines, the sharing economy is defined as a new economic model that can improve resource utilization efficiency through the optimized allocation of dispersed resources facilitated by the internet and IT. Resource utilization and credibility plays an very important role in the sharing economy. It emphasizes the elasticity of matching supply and demand side to achieve a dynamic, timely, precise and efficient market.

The Draft Guidelines also cover market access, governance, and data. Since the characteristics of a sharing economy overlap and require integration, industry entry barriers and geographical restrictions shall be eliminated. Administrative permits, business registrations and other issues restricting the development of the sharing economy shall be eliminated, and restrictions on market access for resource providers shall be loosened. However, market access requirements for business models involving life and property safety, social stability, cultural security, financial risks, and etc. shall be strictly regulated.

In the sharing economy, platform enterprises shall be responsible for strengthen internal governance and security, and fulfill more social responsibilities. Industry associations and social organizations shall put out industry service standards and self-discipline conventions. Market players in a sharing economy shall participate in fair competition. Monopolistic activities of platform enterprises shall be strictly regulated and prevented. There will be a crackdown on intellectual property right infringements and counterfeiting, and these guidelines shall promote the lawful use of intellectual property rights such as patents, copyrights and trademarks.

The Draft Guidelines also promote data sharing among governmental authorities and further openness of public data resources. Government procurement of products and services in sharing economy shall be encouraged. Credibility information will be centralized in a national information platform and lastly these Guidelines also will not tolerate the unlawful disclosure of users’ personal information and violation to consumers’ rights.

The comment period closed on March 6, and we are awaiting the final draft.