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The Internet's Risk-Benefit Ratio
Industry leaders and policymakers seek cybersecurity and efficient governance
By Yin Pumin | NO. 1 JANUARY 7, 2016


Jack Ma, Chairman of the Alibaba Group, talks with foreign attendees at the closing ceremony of the Second World Internet Conference on December 18, 2015 (CFP)

The Second World Internet Conference, the most high-profile Internet-related event in China, was held in the picturesque town of Wuzhen, located on the lower reaches of the Yangtze River, in east China's Zhejiang Province on December 16-18, 2015. The conference ended with the announcement of the Wuzhen Initiative, which calls on all countries to promote Internet development and share its benefits, foster cultural diversity, and ensure peace and security in cyberspace, as well as improve global Internet governance.

When addressing the opening ceremony, Chinese President Xi Jinping urged all countries to respect Internet sovereignty, jointly safeguard cybersecurity, cooperate with an open mind, and improve Internet governance together.

Digital nation  

Since it was first connected to the Internet in 1994, China has witnessed the rapid development of its online industries. China has built the world's largest 4G network and is actively working to make 5G a reality. The Internet has profoundly affected almost every facet of Chinese people's lives including communication, transportation, and entertainment.

According to statistics from the Cyberspace Administration of China, the number of Internet users in China had reached 668 million as of July 2015, the most in the world. All cities and towns, as well as 93.5 percent of villages in China now have access to the Internet.

"Today we are connected to the network as long as we live in society. We are one part of the Internet. No matter if you go online or not, the Internet will impact you in one way or another," said Shen Hao, a professor with the Beijing-based Communication University of China, in an interview with the New Media magazine in November 2015.

The Internet has also become a driving force of the global economy, and China is no exception. New business models, including online shopping, e-commerce, and O2O (online to offline) operations, have developed rapidly and consumers can now enjoy door-to-door services--all arranged online--from car washing to hairdressing and food delivery. The Ministry of Commerce estimated that China's 2015 e-commerce sales could exceed 18 trillion yuan ($2.77 trillion). "The Internet is unleashing young people's creativity and helping them achieve their life dreams," said Tencent founder Pony Ma.

The thriving Internet industry and the gigantic market potential has bred a swath of Internet companies, many of which are now household names domestically, such as Tencent, Alibaba and Baidu. "With such a huge market, China is becoming more of a contributor to global Internet prosperity," said Li Xiaodong, head of the China Internet Network Information Center.


Visitors experience Internet products showcased at the Light of the Internet Expo on December 15, 2015, a major event of the Second World Internet Conference (CFP)

Internet Plus 

The huge transformational power of the Internet also reconstitutes the organizational system of industry. The combination of the Internet, computational intelligence and flexible manufacturing could allow the customization of products, while the Internet of Things could realize unmanned workshops by remote control.

On December 14, 2015, the Ministry of Industry and Information Technology released a guideline of China's Internet Plus plans, saying that the country will further combine the Internet with manufacturing during the next three years. According to the guideline, China will enhance the level of digitalization, connectivity and intelligence of the manufacturing sector by 2018.

The Internet Plus concept is the integration of the Internet and traditional industries through online platforms and IT technology, and is expected to help economic restructuring, improve people's livelihoods and transform government functions, according to Wu Hequan, an academic at the Chinese Academy of Engineering. He was commenting on the government work report delivered by Premier Li Keqiang during the annual national legislative session in March 2015. It is estimated that Internet Plus could help raise China's GDP by 0.3 percent to 1 percent, according to a report by McKinsey & Company.

Wu said that the Internet Plus not only had economic benefits, but will also improve public services. "For example, taxi-hailing apps can help save energy and cut emissions. Online appointments with doctors, telemedicine, and video lectures are also more convenient for busy people," he said.

Tencent's Ma agreed. "The Internet can help unlock the full potential of public services such as healthcare and education by boosting their efficiency and lowering costs," he said. "The Internet Plus is just starting."

The strategy not only links traditional industries with the Internet technology, but also connects the work of individuals to create value for society. One of Tencent's core products, the popular messaging app WeChat, helped 10 million people get jobs in 2014. Many content producers have been using the platform to find their targeted audience, while e-commerce vendors also look for the right customers through the app's social networking functions.

According to Fang Xingdong, founder of and an IT columnist, the Internet is not only reshaping the economy, society and governance, but is also creating new opportunities to connect China to the rest of the world. China has been transforming from a follower into a major player in the world's online industries during the past two decades, he observed.

"The next decade will be a time for the Chinese Internet to broaden its reach globally. With the help of the Internet, China will pursue its development opportunities with a global vision," Fang said.

"The Internet has brought about a great many wonderful things and benefited the people while revealing the enormous potential of China as a leading Internet country," said Lu Wei, head of the Cyberspace Administration of China, the country's top Internet regulator, when he addressed the opening ceremony of the Light of Internet Expo on December 15, 2015. The expo, showcasing a smorgasbord of the latest technical inventions, was a key component of this year's Internet conference.


Employees of online retailer prepare commodities to be delivered to buyers at a company warehouse in Beijing (CFP)

Not without risks 

While having confidence in the country's Internet development, Chinese leaders also remain sober-minded about the risk of cyber attacks. "Without cyberspace security, there is no national security," President Xi warned back in February 2014.

China is in fact a major victim of cyber attacks. According to the latest PricewaterhouseCoopers (PwC) Global State of Information Security Survey, the average number of detected security incidents on the Chinese mainland and in Hong Kong surged 517 percent to hit 1,245 instances over the last 12 months, compared with the average of 241 recorded in the previous year.

The report showed that a Chinese company had to respond to more than 1,200 information security incidents on average in 2015, five times higher than that of 2014. Customer data, internal records and intellectual property were the most targeted information and Chinese companies spent large sums preventing data theft as a consequence. Information security budgets for Chinese companies neared $8 million in 2015, significantly higher than the global average of $5.1 million, according to PwC.

"In 2015, major network security breaches have become more frequent and increasingly serious due to technological advances, which calls for upgraded emergency responses to safeguard our country's cybersecurity," said Yun Xiaochun, chief engineer with the National Computer Network Emergency Response Technical Team Coordination Center, China's top Internet monitoring center.

"We should respect the rights of individual countries in choosing their own Internet development path, Internet governance, and Internet policies and take part in cyberspace governance on an equal basis and not push cyberspace hegemony or interfere in other countries' internal affairs or engage in or support online activities that jeopardize the national security of others," Xi said at the opening ceremony of the conference. The Internet should not be a place to promote rivalry among different countries or a seed beds of crime, and the international community needs to work together to combat terrorism, drug trafficking and money laundering, the Chinese leader added.

Regarding the overall management of cyberspace, Xi said there needs to be a proper balance between freedom and order. "We should respect Internet users' rights to exchange their ideas and express their minds, and we should also build order in cyberspace in accordance with the law as it will help protect the legitimate rights and interests of all Internet users," he stated.

Since the establishment of the Cyberspace Administration of China in April in 2014, the country has been accelerating Internet-related legislation, while at the same time encouraging Web-based companies to provide more innovative products. Chinese top legislature has also sped up the enactment of cybersecurity and anti-terrorism laws. For example, the authority issued a rule curbing the spread of fake information on WeChat after abundant examples of deception were reported by users.

Cooperation is key 

China has also expressed its interest in participating in the international governance of cyberspace as it has the largest number of netizens in the world. The international community should seek common ground and promote cyberspace regularities for the benefit of the people, according to Wang Xiujun, Vice Minister of Cyberspace Administration of China. So far, China has maintained good relationships with 59 countries and 127 organizations in the fight against cyber attacks.

2015 saw important progress in the governance of cyberspace. For example, in June, the first council meeting of the Global Internet Governance Alliance was held in Brazil, and Alibaba's Chairman, Jack Ma, was elected co-chairman. In November, the UN held its 10th Internet Governance Forum to solicit a variety of public opinions on how to govern the Internet better to keep its sustainability, robustness, security, stability and development.

Additionally, China signed landmark cybersecurity pacts with the United Kingdom and the United States, pledging greater cooperation in attempting to thwart and combat cyber attacks. Keeping in line with the spirit of the latter agreement, China arrested a group of hackers at the request of the U.S. Government.

"All countries should step up communication and exchange, improve dialogue and consultation mechanism on cyberspace, and study and formulate global Internet governance rules, so that the global Internet governance system becomes more fair and reasonable and reflects in a more balanced way the aspiration and interests of the majority of countries," President Xi said.

Jia Xiudong, a research fellow with the China Institute of International Studies, said in an article of People's Daily that Xi's views are in accordance with the common interests of the international community and conducive to the Internet's orderly development. As the largest developing country, China needs to express its views in face of global challenges as it can reflect the interests of other developing countries, bringing equity and justice to international governance, he added.

In a Xinhua News Agency article, World Economic Forum founder and executive chairman Klaus Schwab said that Xi's remarks reflected the need for global cooperation. "We should keep the Internet open and we have to work together on a global level which brings the dedication of the governments, businesses and individuals to shape the Internet in such a way that everybody has access and that Internet can really serve as an engine and catalyst for economic development."

"The Internet has flattened the world with its dialogue platform for governance, utilization and benefits," added He Zheng, Chairman of AsiaInfo's Security Department. "Only by joining hands can we achieve global Internet governance," He said.

Copyedited by Marra Lee Durrell

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