(Yicai) July 10 -- China is proposing to revise its e-commerce law for the first time since it took effect in 2019, aiming to fill regulatory gaps around livestreaming, social commerce, and cross-border shopping while also guiding platform operators to shift from "traffic supremacy" to "innovation-driven" growth and from price wars to quality competition.

The draft amendment to the E-Commerce Law, jointly released by the State Administration for Market Regulation and the Ministry of Commerce on July 4, requires platforms operating in livestreaming and social commerce to bear obligations fit to the type of service they provide. It comprises 20 articles and is open for public comment through Aug. 4.

The proposal adds a new "order generation" service category, clarifying that platforms must assume responsibilities based on their service type as long as they substantively organize transactions by controlling key links such as order placement, even if they do not offer a full online storefront. It also brings gig workers such as food delivery riders and livestreaming hosts under a collaborative governance framework for the first time, requiring platforms to safeguard their rights and interests.

The draft also adds and refines several provisions on overseas operations, including that e-commerce activities conducted outside China that disrupt domestic market order or harm the lawful rights of domestic operators or consumers will be handled in accordance with the law. It also authorizes that China can take reciprocal countermeasures if other countries adopt discriminatory measures against its e-commerce, while foreign entities found in violation can be placed on an unreliable entity list.

The new measures help address the law's previous gaps in regulating cross-border e-commerce, but the rules remain too broad and still need further detail on fines, calculation of illegal gains, and civil compensation, said Liu Xu, an adjunct researcher at Tsinghua University's National Institute of Strategic Studies.

Regarding penalties, the draft establishes a four-tier system, with the cap on fixed-amount fines raised to CNY5 million from CNY2 million (USD737,500 from USD295,000). New punitive measures include ordering the suspension of user registration and suspending network access.

For systemic violations deemed especially serious, with especially bad impact and especially severe consequences, fines of up to 5 percent of the previous year's turnover can be imposed.

The proposal consultation paper does not specify whether penalties will be calculated cumulatively based on the number of illegal transactions or imposed as a lump sum across multiple violations of the same type, leaving regulators at various levels under considerable discretion, Liu noted. Fines should be calculated cumulatively by the number of transactions, while the fixed-fine cap can be removed, retaining only the turnover-based percentage cap, to give platform operators clearer expectations of violation costs, he added.

Editor: Martin Kadiev