27 February 2020

Internet security investment theme heats up

Shifting from its environmental and social focus in the past few years, the Chinese People’s Political Consultative Conference (CPPCC) has taken up the allocation of technological resources as the first item on its agenda for this year.

The move by the country’s top political advisory body to focus discussion on technology must have also surprised China watchers who predicted that urbanization would top the CPPCC agenda. But although the issue has become a key talking point, this does not imply that technology will be given top priority in government policy, according to Hong Kong Economic Journal’s EJ tactics column, which traces how it came about.

The issue was first raised by the Central Committee of the Jiu San (September 3rd) Society, which analyzed certain problems regarding the allocation of technological resources. It noted, for example, that the government’s “visible hand” has quite often overtaken the market’s “invisible hand” in directing the development of the sector. It also said the budget put into foundation research accounts for less than 5 percent of the research expenses, way below the 15 percent level seen in countries with strong innovative activities.

And although fiscal spending on technology has skyrocketed more than 100 times over the past 35 years to 560 billion yuan (US$72.16 billion) at the end of 2012, it is not clear how effectively the resources are being used since the money comes in the form of grants.

The society, therefore, suggested that the government switch to a project-based lending system like the one adopted in the United States and Europe.

The government should set up a performance evaluation mechanism to assess the various innovative projects, while allowing market forces to play a bigger part in using these research outputs through the provision of capital and creation of relevant enterprises, it said.   

The society also called for the establishment of a cross-departmental national technology and information system.

Meanwhile, a leading group chaired by President Xi Jinping on internet safety and information sharing was set up last Thursday. In the group’s first meeting, Xi stressed on the importance of internet security to national security. He also said the country has the biggest number of internet users but it remains relatively underdeveloped in terms of independent innovation, with large discrepancies among various regions, and between cities and rural areas, especially on per capita bandwidth.

While netizens worry about tighter state control of the internet, including the news and opinions circulating online, the stock market appears to have ignored concerns over its implications to the freedom of speech and focused instead on the earnings potential, sending related counters skyward.

CITIC Securities forecasts a 35 to 40 percent compounded annual growth rate for the industry in the coming three years as the government increases its investments in the sector.

– Contact us at [email protected]



Freelance journalist