24 Mar

What Did the 2017 ‘Two Sessions’ Say About China’s Cybersecurity & Information Technology?

The 2017 annual sessions of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) took place in Beijing from March 3rd to 15th. Each year’s ‘two sessions’ are commonly regarded as the weathervane of China’s political, economic, social and technological development. Among many of the topics discussed this year, the issues around cybersecurity and information technology remain in the spotlight.

Cybersecurity

With China’s Cybersecurity Law coming in force on June 1st, 2017 and the National Cyberspace Security Strategy published in December 2016, President Xi Jinping has reaffirmed the importance of cybersecurity in a recent national security meeting on February 17th, pledging to further ‘strengthen the protection of key information infrastructures, increase the R&D investment of core technologies, enhance the cybersecurity early warning and monitoring systems and to ensure the security of big data.’

In the Report on the Work of the Government delivered at the 2017 NPC session, Premier Li Keqiang also stated that ‘in the age of the Internet, faster, safer, and more cost-effective information networks are crucial to the development of every sector.’ In addition, Zhang Dejiang, Chairman of the Standing Committee of the NPC, openly endorsed the Cybersecurity Law during the two sessions by calling it the ‘legal foundation of China’s cyberspace.’

Observers speculate that the niche markets of information security and ‘autonomous & controllable’ IT systems & hardware (e.g. self-developed OS, mission-critical industrial software, data storage devices, CPUs and other related IT services, etc.) will continue to be propelled by these preferential policies and increasing demand from sectors such as government, military, finance, industrial control and telecommunications to see a significant growth in near future.

Motions and proposals concerning the protection of online personal information and privacy, internet fraud prevention and safer mobile payment were also put forward by NPC and CPPCC deputies. The CEO of Tencent and Deputy of NPC Ma Huateng proposed to establish national standards for internet data security to better protect online personal information and privacy; Yan Wangjia, CEO of Venustech and Deputy of CPPCC, proposed that the position of CISO (Chief Information Security Officer) should be widely introduced and adopted by companies in various sectors.

Information Technology & ‘Made in China 2025’

Having taken further steps to implement the ‘Internet Plus’ action plan as well as the national big data strategy in the past year, China is now more determined than ever to transform and upgrade the real economy and improve its performance and competitiveness through innovation. Whilst taking actions such as better protecting intellectual properties and attracting talents to encourage innovation, China will also accelerate R&D and the commercialization of strategic emerging industries such as material science, renewables, artificial intelligence, integrated circuits, bio-pharmacy and 5G mobile communications. Improving telecommunications infrastructure, increasing the broadband speed and lowering rates for Internet and mobile services are among the practical measures proposed this year to boost penetration and application of information technologies domestically.

At the heart of this grand strategy is the ‘Made in China 2025’ initiative (an equivalent for Germany’s Industry 4.0) which was announced in 2015 and aims to shift China to a strong manufacturing country by the year 2025 with greater emphasis on innovation, and to expand the use of a new-generation of information & intelligent manufacturing technology. Under ‘MIC 2025’, 2017’s Report On the Work of the Government has set clear goals to promote and accelerate the application of big data, cloud computing and the Internet of Things to bring about the transformation in the production, management and marketing models of traditional industries.

Premier Li Keqiang reassured in the report that foreign-invested firms will be encouraged to get listed and issue bonds in China, and will be allowed to take part in national science and technology projects. Foreign firms will also be treated the same as domestic firms when it comes to license applications, standards-setting and government procurement, and will enjoy the same preferential policies under the ‘MIC 2025’ initiative.

During the ‘two sessions’, NPC and CPPCC deputies also indicated that the ecosystem of industrial software platforms is critical in terms of reaching the goals of intelligent manufacturing under ‘MIC 2025’. CEO of Inspur and Deputy of NPC – Sun Pishu pointed out that the lack of scale, R&D capabilities, quality control, core technologies and commercialization methodologies in industrial software-related fields is currently holding Chinese firms back from upgrading and transforming to intelligent manufacturing. Nevertheless, In The Guiding Opinions of the State Council on Deepening the Integration of Manufacturing and Internet issued by the State Council in 2016, industrial software platforms are given the critical role to ‘support and define manufacturing’. The Development Plan for Software and Information Technology Service Industry 2016-2020 issued by the MIIT also acknowledged the concept of SDX as an important trend. It is believed that the industrial software platforms in China, driven by policies, capital market and increasing market awareness, will see a rapid growth. According to Li Guangqian, researcher at Information Department of the Development Research Center of the State Council (DRC), ‘both industrial internet and industrial software platforms are of strategic importance not only for China, but also critical for major manufacturing powerhouses such as the U.S. and Germany. Therefore, China should leverage as much resources as possible to compete in this area on the global stage.’

Influence Matters, as a strategic communication agency in Beijing focusing on B2B tech, keeps a close eye on trends and policies affecting technology businesses in China. Get in touch to discuss how we can support in building and maintaining a thought leadership position in China.

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