China’s rapid economic growth has led to technical developments which have been overcoming bureaucratic rigidity by circumventing it. Chinese web-based companies like Alibaba are revolutionising internet payment and bypassing the state banking system. Social media sites are creating online space for public comment in a society where the Party has previously held a monopoly on the public expression of opinion. As the government attempts to keep up, China’s extraordinary rise in digital social and business innovation is racing ahead.
The latest edition of China Analysis by ECFR and Asia Centre focuses on China’s Expanding Cyberspace.
1. The “big three” names in China’s internet industry - Baidu, Alibaba and Tencent – are facing challenges from the same mobile revolution that is shaking up the IT industry worldwide. Competition between the three for mergers and acquisitions has inflated Chinese purchase prices and is leading to the growth of innovative companies and start-ups.
2. China must keep pace with international trends in cyber security. A “digital gap” has emerged between developed countries that are US allies and emerging countries struggling to make their voices heard. Changes to internet governance must take account of the emergence of China.
3. Online finance in China is meeting a need that traditional over-regulated commercial banks are not fulfilling. To fight back, commercial banks must innovate. This could have a transformational effect on China’s financial landscape. Companies like money market fund Yu’e Bao could fundamentally alter the structure of the Chinese financial sector. The online business sector could be a driver for huge growth in the Chinese economy.
4. Chinese government campaigns against what it defines as “online rumours” have resulted in too many government departments involved in “information management” particularly towards some social media outlets. The Chinese Communist Party has been trying to consolidate its control with Xi Jinping taking a central role.
5. Internet manhunts in China, also called “human flesh searches”, have been used in the fight against corruption of local officials and politicians. However they have also led to serious abuses such as violation of privacy and harassment.
“The Chinese politics of the web will remain a negative model for all except authoritarian regimes. Here, as on other issues, the huge contradiction inherent in China’s rise is alive and well.” Francois Godement