China Moves to Curb Food Delivery ‘Subsidy Wars’

China’s State Administration for Market Regulation (SAMR) has released draft rules to rein in excessive subsidy practices on food delivery platforms, targeting the destructive “subsidy wars” that have distorted competition among industry giants Meituan, Ele.me, and JD Food. The proposed “Ten Provisions on Regulating Food Delivery Platform Subsidy Behavior” were published on June 17 for a 30-day public consultation period ending July 17, 2026.

Context

The draft rules mark the latest regulatory intervention in China’s platform economy, following years of intensifying competition among the country’s major food delivery platforms. Beginning in 2025, Meituan, Ele.me (owned by Alibaba), and JD Food (launched by JD.com in 2025) engaged in an unprecedented subsidy war, offering extreme discounts such as “0 yuan milk tea” and orders where discounts exceeded the purchase price. Industry estimates suggest the three platforms collectively burned nearly 800 billion yuan in subsidies during the first half of 2025 alone.

According to Xinhua News Agency, the platforms have engaged in “competing on subsidies, prices, and controlling traffic,” harming merchants, delivery riders, and consumers while squeezing the real economy. The State Council’s Anti-Monopoly and Anti-Unfair Competition Committee conducted an investigation that found platforms were using capital advantages to seize market share and coercing merchants into participating in subsidy programs.

Key Provisions

The draft rules, released by SAMR, are built on China’s Anti-Monopoly Law, Anti-Unfair Competition Law, Price Law, E-Commerce Law, and Food Safety Law. As reported by China News Service, the regulations cover four main areas:

General Principles: Platforms are prohibited from using long-term, large-scale subsidies to exclude or restrict market competition.

Specific Requirements: Platforms must not force merchants to participate in subsidy activities or bear subsidy costs. Below-cost sales are banned, and platforms cannot use capital advantages to engage in monopolistic or unfair competition practices.

Transparency Measures: Platforms must publicly disclose subsidy information at least seven days in advance, allowing for public oversight.

Legal Risks: The rules outline legal consequences for violations, referencing existing competition and pricing laws.

Impact on Stakeholders

The subsidy wars have had far-reaching consequences across the food delivery ecosystem. Small and medium-sized restaurants were particularly hard hit, with platforms often forcing merchants to bear part of the subsidy costs. Some merchants reported their share rising from 2-3 yuan per order to 7 yuan per order, while platform algorithms would reduce visibility for those who refused to participate.

As People’s Daily economic commentator Lin Lili noted: “Some consumers think the subsidy war is a ‘benefit’ to them, but they don’t realize that below-cost, large-scale subsidies that coerce merchants could lead to consumers not consuming without subsidies, producers losing positive incentives, and a downward spiral in price and quality.”

Delivery riders faced increased pressure on delivery times and volumes without proportional compensation, while consumers — despite enjoying short-term low prices — faced potential long-term consequences including reduced food quality and food safety risks.

Analysis

The regulations do not ban subsidies outright but seek to redirect competition from price-based to quality-driven. Zhong Zhiwei, a commentator for Shenzhen Special Zone Daily, wrote: “A good market ecosystem is never created by burning money, but by survival of the fittest. Subsidies can buy orders and burn for scale, but they cannot buy quality or competitiveness.”

The move aligns with China’s broader policy push to curb “involution” — excessive zero-sum competition — and promote high-quality development. It follows the revised Anti-Unfair Competition Law passed in June 2025, which introduced fines of up to 2 million yuan for involution-style competition, and subsequent regulatory talks with major platforms in July 2025.

What’s Next

SAMR will refine the draft based on public feedback received by July 17 before finalizing the regulations. In the short term, platforms may reduce subsidy intensity, potentially leading to a decline in order volumes and higher consumer prices. However, over the medium to long term, competition is expected to shift toward quality, service, and innovation — with platforms investing more in technology, logistics, and merchant services.

The Worker’s Daily reported that the rules aim to “promote the formation of a market order where quality goods have fair prices and良性 competition thrives.” The key question remains how effectively enforcement will address algorithmic practices and prevent cost-shifting to merchants — issues that will determine whether the new rules succeed in reshaping one of China’s most competitive industries.