Impact of cyber security law on economy uncertain
China and the U.S. have become the twin engines of global Internet development, and the Chinese engine is apparently younger and more vibrant than its U.S. counterpart, according to the findings of a white paper on China's Internet economy released on Wednesday.
The average age of Chinese netizens is 28, but the average age of U.S. Internet users is 42, according to the white paper jointly authored and published Wednesday by the Boston Consulting Group (BCG) and the research arms of three Chinese Internet giants - Alibaba, Baidu and Didi Chuxing.
Alongside the age advantage, other areas enjoyed by China over the U.S. include high-growth of Net users and in online consumption, much faster penetration of various emerging applications, notably mobile payments, and greater vitality in China's Internet economy that significantly shortens the time required for local businesses to become unicorns, the report revealed.
The white paper, the first of its kind, is likely to be issued every year just like the much-anticipated annual Internet trends report by U.S. venture capitalist Mary Meeker, Gao Hongbin, head of AliResearch, said at the white paper release event in Beijing.
China's blistering Internet economy, as such, has proven to be a promised land for many Chinese technology companies, while also witnessing the retreat of some international Internet giants that hoped to establish a foothold in the country whose Internet users have reached 710 million - equal to the combined size of the Indian and U.S. online populations, per Wednesday's findings.
The Chinese government has over the years played a part in fostering the Internet sector, and apart from that, Chinese businesses have adopted different approaches to competition which has yet to be fully understood by their international rivals, Li Shu, partner and managing director of BCG, told the Global Times.
Wednesday's white paper highlighted four key elements to success in China's Internet sector - local customization, rapid response to market needs, online-offline integration, and the construction of a viable ecosystem.
Market watchers call for more tolerance toward putting the country's Internet sector under legal oversight, as some technology companies have expressed concern over the impact of China's Cyber Security Law.
The Cyber Security Law came into force on June 1, as the world's second-largest economy ramps up efforts to battle against cyber terrorism and hacking.
"The implementation of the Cyber Security Law will certainly have an impact on the Internet sector development," Gao at AliResearch told the Global Times.
The new law covers almost all major issues of the Internet sector, such as key information infrastructure, personal privacy and data protection, and the security threshold that requires servers to be localized, according to Gao.
Gao believes that both foreign Internet firms and Chinese domestic Internet businesses will face higher standards and are likely to be challenged by tougher regulations which add to their operating costs.
The impact of the new law on the Internet sector still depends on how the regulations will be implemented, Gao noted.
A balance needs to be struck between oversight and innovation, he said, suggesting the new law be implemented in a more tolerant way to foster continued innovation.