China to Curb Food Delivery ‘Subsidy Wars’ with New Rules
China’s State Administration for Market Regulation (SAMR) has released a draft regulation targeting excessive subsidy practices in the country’s food delivery industry, taking direct aim at the costly “subsidy wars” that have pitted Meituan, Alibaba, and JD.com against one another. The proposed rules, published on June 17 for a 30-day public comment period, seek to end what regulators describe as “involution-style” competition that has distorted the market and squeezed small businesses.
The New Rules
The draft regulation, formally titled the “Ten Provisions on Regulating Subsidy Behavior of Food Delivery Platforms,” was published by People’s Daily and establishes four main areas of compliance. It bans platforms from using long-term, large-scale subsidies that exclude or restrict competition; prohibits forcing merchants to participate in subsidy programs or bear their costs; outlaws the use of capital advantages for monopolistic behavior; and requires public disclosure of subsidy activities before and after implementation.
The regulation draws on China’s Anti-Monopoly Law, Anti-Unfair Competition Law, Price Law, E-Commerce Law, and Food Safety Law, signaling the government’s determination to bring the fiercely competitive sector under control.
The Subsidy War’s Toll
The regulatory crackdown follows a year-long price war that began in early 2025 when JD.com entered the food delivery market, challenging the dominance of Meituan and Alibaba’s Taobao Flash Purchase (formerly Ele.me). According to investment bank Goldman Sachs, the three platforms collectively spent approximately 25 billion yuan ($3 billion) on subsidies in the second quarter of 2025 alone.
The financial damage has been severe. Meituan posted a net loss of 23.35 billion yuan in 2025, swinging from a profit the previous year, as its core local commerce business went from a 52.4 billion yuan operating profit to a 6.9 billion yuan operating loss. JD.com’s net profit fell 52.66% to 19.6 billion yuan, while its new business segment — which includes food delivery — posted an operating loss of 46.64 billion yuan, a 1,528% year-on-year increase. Alibaba’s net profit declined 31.3% over the first three quarters of fiscal 2026.
Industry expert Zhuang Shuai of Bailian Consulting told China Industry News that Meituan has suffered the most because its core business is concentrated in food delivery, making it difficult to offset the cost of the subsidy war. “JD.com and Alibaba, with diversified businesses, have other profitable operations to ‘cover’ the costs of burning money on food delivery,” he said.
Platform Responses
All three major platforms issued statements on June 17 expressing support for the regulation. Meituan said it “firmly supports this regulation” and pledged to “earnestly study, actively cooperate, and promote the implementation of all regulatory requirements,” noting that long-term, large-scale subsidies had “disrupted normal market order.”
Taobao Flash Purchase stated that “a healthy industry ecosystem cannot be separated from the protection of rules,” while JD.com said it “highly endorses measures against involution” and supports maintaining fair market competition order.
Regulatory Escalation
The draft regulation represents the culmination of a steadily escalating regulatory response. The State Council Anti-Monopoly and Anti-Unfair Competition Committee Office launched a formal investigation into food delivery market competition conditions on January 9, 2026, as reported by the SAMR. Prior to that, regulators had conducted multiple rounds of talks with the platforms throughout 2025 and released several preliminary draft rules.
Pan Helin, a member of the Ministry of Industry and Information Technology’s Information and Communication Economics Expert Committee, explained in an interview with Sina Finance that the policy is not about prohibiting subsidies entirely. “It’s about ensuring that subsidy costs are borne by the platforms themselves, not passed on to merchants and riders, and not using false subsidies to fool consumers,” he said.
Implications for the Industry
The regulation is expected to reshape competition in China’s food delivery market, which currently sees Meituan holding approximately 67% market share by rider app usage, followed by Alibaba at 23% and JD.com at 10%, according to UBS reports. Analysts predict that with price-based competition constrained, platforms will shift toward competing on service quality, delivery speed, and technological innovation — including AI, drone delivery, and autonomous vehicle technologies.
Small merchants and delivery workers, who have borne the brunt of the subsidy war’s pressures, stand to benefit from the new protections. The regulation explicitly prohibits platforms from forcing merchants to participate in subsidy programs or pass on subsidy costs, addressing a key grievance among small restaurant owners.
What’s Next
The public comment period runs until July 17, 2026, after which SAMR will finalize the regulation. The move is part of a broader “15th Five-Year Plan” (2026-2030) focus on platform economy governance, and could serve as a template for addressing similar “involution-style” competition in other sectors of China’s digital economy. Key questions remain about enforcement mechanisms, particularly regarding algorithmic pricing and hidden subsidy structures, and whether the regulation will ultimately lead to higher consumer prices for food delivery services.