Growth Dragons Weekly: Tech Crackdown Again? PDD, Meituan and Xiaomi Report Growth and IPO Rush on HKEX
What happened in China this week:
Is China’s Tech Crackdown Making a Comeback?
PDD Plunges 17% After Q1 Profits Drop 45%
Meituan Delivers: Q1 Profits Up 87%, Revenue Up 18%
Xiaomi Breaks Records: Revenue Soars 47%, Tops RMB 100B Again
IPO Boom: More China A-Shares and US ADRs Flock to HKEX
#1 Is China’s Tech Crackdown Making a Comeback?
Investors who lived through China’s tech crackdown would naturally remain cautious about the possibility of a resurgence. However, the market’s sensitivity appears to have diminished. A new set of draft rules for digital platforms was recently released for public consultation, yet investor reaction has been muted. This could be because the proposed regulations appear more measured and less punitive, with no signs that the government is targeting tech companies this time around.
China’s top market regulator, the State Administration for Market Regulation (SAMR), has released a draft regulation to improve fairness and transparency in commission fees charged by e-commerce platforms. Titled the "Compliance Guide for Online Trading Platform Fees," the draft targets major players like Alibaba, JD.com, PDD Holdings, Meituan, and ByteDance’s Douyin, along with other digital transaction platforms.
The proposed rules aim to ease the financial burden on merchants—especially small and medium-sized enterprises—by encouraging reduced fees or exemptions under specific conditions. Platforms would also be required to lower or waive commissions during public emergencies such as natural disasters or health crises, as part of their social responsibility.
Transparency is a central theme. Platforms must:
Clearly display commission fees on their homepage.
Disclose deposit management and refund procedures.
Announce any fee changes at least seven days in advance.
Keep historical fee records for at least three years for merchant reference.
The draft reflects growing concerns about opaque pricing and high commissions in China’s vast digital economy, which supports tens of millions of merchants and over 900 million consumers. SAMR says the new rules are grounded in existing price and e-commerce laws and are designed to protect merchant rights and foster healthy market development.
These guidelines are timely—and necessary. Deflationary pressures in China are being exacerbated by the power these platforms hold. With rising unemployment, many citizens turn to gig economy work as a quick and convenient solution, only to find platforms using algorithms to squeeze margins: analyzing merchant costs, offering minimal pay, and pushing deep consumer discounts. Yet the platforms still post strong revenue growth thanks to soaring transaction volumes.
A recent interview with a Chinese taxi driver summed it up: traditional taxi fares are now twice as expensive as rides from Didi. To truly address deflation, China needs to raise wages and move more workers into stable, full-time employment—not rely on the gig economy. But that’s easier said than done.