Development dimensions of the sharing economy – learnings from China

Event report

[Read more session reports from the UNCTAD E-Commerce Week 2018]

In this session, delegation of Chinese nationals and foreign economists discussed the future of the Chinese sharing economy. The moderator, Ms Shamika N. Sirimanne (Director of Technology, Innovation and Trade Logistics, United Nations Conference on Trade and Development (UNCTAD)) invited Mr Wenliang Yao (Deputy Permanent Representative and Minister Counselor, People’s Republic of China) and Ms Yi Zhang (Deputy Secretary-General, China Chamber of International Commerce (CCOIC)) to the floor. Each speaker gave a recent history of the sharing economy in China and its effects on employment and consumer confidence.

Mr Nan Fang (Director General, Mobile Internet Bureau, Cyberspace Administration of China) defined the sharing economy as the interaction between intermediaries, service providers, and space makers to offset the costs of private ownership. He differentiated between high-speed and high-quality growth for the Chinese economy, stating that the sharing economy closes the income gap. Dr Jianhua Li (Chief Development Officer, Didi) continued by giving an overview of his company’s efforts to target economic inequality. The company has created 21 million jobs in China since its founding in 2012, and according to Li, 2.3 million of the newly employed are women.

Mr Farukh Amil (Ambassador and Permanent Representative of Pakistan to the United Nations) added the importance of education to the conversation. In order to ensure high service quality, Amil claimed, service providers and intermediaries must be well-versed in their trades and in customer service. He also stressed that taxing the sharing economy is important, but noted that doing so could hamper its dynamic prices.

Mr Arun Sundararajan (Professor, New York University’s Stern School of Business) provided a more philosophical view of the sharing economy’s potential. He started by saying that the Chinese sharing economy has seen massive growth because its middle class has been willing to ‘leapfrog’ traditional ownership models and because its public is comfortable with online payment security. Importantly, Sundararajan characterised the sharing economy as a transformation of the social ‘safety net’ –– that is, shifting the root of economic security from government programmes to micro-entrepreneurship.

Furthermore, Sundararajan said that the sharing economy works to decentralise the control of capital. Referencing Marx, he noted that sharing democratises access to lifestyles formerly reserved for the elite, all the while empowering ordinary citizens to capitalise on their individual capabilities. Sundararajan added that the sharing economy’s social compact is in line with the UN sustainable development goal #10, centred on eliminating income equality. He followed by noting that the sharing economy’s humanitarian potential means that conflict between governments and private platforms is counter-productive, urging both sides to consider the other as a strategic partner towards sustainable development.

Dr Lan Xue (Chair Professor, Tsinghua University) noted that policy tends to lag behind technological progress, meaning that unregulated competitors can quickly emerge within the sharing space. Dr Weiguo Yang (Professor, Renmin University) echoed these concerns about regulation, while adding that we must be careful to avoid stifling a system that ‘redefines the paradigm of human economic activities.’

Finally, Dr Janine Berg (Senior Economist, International Labour Organization (ILO)) spoke about the sharing economy’s relationship with the future of work. She expressed concern over the ‘piece-rate economy,’ where workers must spend significant time looking for ‘one-off’ projects that provide little economic security. She also saw issue with ‘algorithmic management’, or the concept that sharing economy workers rarely receive feedback on the quality of their work from a human being, especially if a customer deems it unsatisfactory. In her view, another concerning aspects was the impossibility of collective bargaining within the sharing space, a fact that leaves the door open for worker abuse.

The session concluded as panellists acknowledged the yet unrealised potential of the sharing economy in much of the Western world. Of equal importance, they agreed, is the need to regulate the space intelligently, encouraging sustainable growth while ensuring customer data privacy and workers’ rights.

By Frank Kosarek