The internet has fundamentally transformed China. Internet-based technologies help drive China’s ongoing economic development, connect its massive population to one another, and support research and development. Beijing also employs the country’s complex communications network to clamp down on political dissidence and freedom of expression. Understanding the opportunities and challenges presented by the internet in China is critical when evaluating its long-term development.
Getting Online in China
China established its first permanent connection to the internet on April 20, 1994, making it the 77th country in the world to go online. While adoption soon spread to China’s major metropolitan areas, it was not until more recently that the internet became a part of everyday life in China. Over the last decade, the percentage of Chinese using the internet has more than doubled, rising from 22.6 percent in 2008 to 59.6 percent in 2018. China’s large population also means it has the greatest number of internet users in the world.
Although modest, China’s internet penetration surpasses the global average. The World Bank reports that in 2017, the global internet penetration rate was 48.6 percent, compared to 54.3 percent in China. When measured against other BRICS countries, China’s internet penetration rate was higher than that of India (34.5 percent), but lower than Russia (76 percent), Brazil (67.5 percent), and South Africa (56.2 percent). China also lags behind advanced economies. OECD countries boasted an average internet penetration rate of 79.3 percent in the same year.
Wealthy countries with small populations, such as Luxembourg and Denmark, have achieved close to universal levels of internet access. Some highly advanced countries with larger populations, such as South Korea, have also managed to provide access to nearly all their residents. This level of coverage is typically harder to achieve for countries like China, which has a massive population spread across a vast geographic area.
Economic disparities across China have resulted in uneven access between rural and urban areas. The internet penetration rate in China’s cities reached 74.6 percent in 2018, which was comparable to that of Portugal and Poland.1 This is markedly higher than the internet penetration rate in rural regions. At just 38.4 percent in 2018, rural communities in China have levels of access similar to that of Cambodia and Côte d’Ivoire.2
To a certain degree, this inequality is also reflected in broadband subscription rates. Broadband access is the lowest in China’s less developed areas, such as Guizhou and Yunnan. While less pronounced, some advanced economies also struggle with bridging the digital gap between urban and rural areas. An estimated 35 percent of rural Americans lacked broadband access in 2017, compared to just 3 percent in US cities.
Mobile phones have helped to expand internet access across the country. China has the largest number of mobile phone subscribers in the world, averaging more than one mobile phone per person. In 2017, mobile phone subscribers reached 1.47 billion. This was considerably higher than India, which had the second highest number of subscriptions in the world with 1.17 billion.
Beijing has implemented measures to address the rural-urban gap. In 2015, the State Council announced that it would invest $22 billion by 2020 to provide rural areas with broadband access. A similar initiative was launched in 2018 to target China’s poorest communities. There is some indication that these efforts may ultimately prove successful. The number of rural residents with broadband access jumped from 25 million in 2010 to over 93 million in 2017.
The Quality of China’s Internet
Key measures of internet quality include the speed at which content can be downloaded or uploaded, network reliability, and consumer satisfaction surveys. Data on download speeds is widely available and serves as a useful point of comparison for the quality of internet access between countries. According to a late 2018 report cited by People’s Daily, China experienced an average download speed of 28 megabits per second (Mbps), an almost 50 percent increase from 2017.
Country-level internet speeds, however, can be difficult to measure as there are notable discrepancies between different testing services. According to the March 2019 Global Speedtest Index, China ranked 22nd out of 178 countries with a national average download speed of 90.6 Mbps. In comparison, a 2018 report by M-Lab3 recorded China’s mean download speed at only 2.4 Mbps, which placed China 141st out of 200 countries. A report cited by CGTN argued that some sources measure speed using internet platforms that have little presence in China or that are blocked outright, such as Facebook and Google.
|Top Broadband Download Speeds by Location (2018)|
|Sources:Broadband Development Alliance|
There are pronounced differences in internet speed between China’s urban and rural areas. China’s Broadband Development Alliance reported in late 2018 that more developed coastal areas generally have faster broadband speeds than inland provinces. Jiangsu, for instance, had an average download speed of 30.9 Mbps in 2018 compared to 26.9 Mbps and 24.9 Mbps for Shaanxi and Yunnan, respectively. Xinjiang and Tibet, which are subject to extensive government restrictions, have average download speeds of around 20 Mbps.
Given the hundreds of millions of Chinese that access the internet via smartphones, mobile internet speed should also be considered. Supported by the country’s far reaching 4G network, which provides coverage for some 1.1 billion subscribers, mobile download speeds in China averaged 28.9 Mbps in a March 2019 test. This same test recorded a global average of 26.1 Mbps and ranked China 53rd out of the 139 countries, just above Georgia (28.8 Mbps) and behind the UK (30 Mbps).
Work is already underway to bring next generation 5G coverage to China. Telecommunications leader Huawei, which has secured over 40 contracts to supply 5G equipment abroad, is expected to be one of the driving forces of 5G adoption in China. Beijing has plans to roll out commercial 5G services between 2019 and 2020 and intends to invest $411 billion between 2020 and 2030 in 5G network infrastructure. Pilot programs have already been launched in more than a dozen cities, including Beijing, Tianjin, Shanghai, and Suzhou.
China’s Growing Digital Economy
The internet has transformed China’s economic landscape. According to a 2019 IMF report, China’s digital economy constituted 6 percent of its GDP. Figures released by the China Academy of Information of Communications Technology (CAICT) estimated the total value of China’s digital economy at $4 trillion in 2017, or roughly a third of its GDP. While CAICT uses a much broader definition of “digital economy,” which includes the entire ICT sector and other digitized industries, their calculations are helpful as a point of comparison. The same CAICT report pegged the size of the US digital economy at $11.5 trillion.
E-commerce is a major growth industry for China. According to McKinsey, China accounted for 42.4 percent of the global e-commerce market in 2016, surpassing $811 billion in retail e-commerce sales. This placed China well ahead of the US, which accounted for 24.1 percent ($462 billion) of the global market.
Highly digitized consumers are the backbone of China’s e-commerce market. Chinese shoppers spend an average of almost 30 minutes a day on Alibaba’s Taobao, three times longer than American consumers typically spend on Amazon.
One of the most visible e-commerce events in China is Single’s Day, an online shopping holiday that takes place annually on November 11th. Since first marketed by Alibaba in 2009, Single’s Day has come to surpass all other online shopping holidays in retail sales. In 2018, online sales on Single’s Day totaled more than $45 billion. The combined online sales of the three biggest shopping days in the US — Black Friday, Cyber Monday, and Amazon Prime Day — earned roughly $16 billion in 2018.
Online shopping is expected to continue to displace traditional brick and mortar stores in China. More than 35 percent of retail sales in China are projected to happen online in 2019, the highest rate in the world. This translates to nearly $2 trillion in expected e-commerce sales and constitutes roughly 56 percent of the global e-commerce market.
The prevalence of online shopping has led to the popularity of digital payment platforms, such as Alibaba’s Alipay and Tencent’s WeChat Pay. These apps enable consumers to pay for a variety of goods and services, and even tip street musicians. Almost half of the world’s digital payments in 2017 were made in China, amounting to $15.4 trillion – 40 times that of the US.
|Retail E-commerce Sales in China|
|Year||Retail E-commerce Sales (USD Billions)||% of Worldwide Retail
China’s digital economy is also vital to employment. In 2017, it supported 171 million jobs and accounted for 22.1 percent of the country’s total employment. While the US boasts the world’s biggest digital economy, it only provided 5.1 million jobs or 3.3 percent of total US employment in 2017.
The internet has also given rise to new forms of entertainment. China’s two leading video streaming platforms, Tencent Video and iQiyi, both garnered more than 80 million paid subscribers in 2018. Netflix and Hulu had roughly 60 million and 25 million US subscribers, respectively, in the same year. When accounting for international customers, however, Netflix approaches roughly 150 million subscribers.
How Beijing Locks Down the Internet
China is notorious for restricting access to online information. Freedom House’s Freedom on the Net report, which measures the “level of internet and digital media freedom” in countries around the world, placed China at the bottom of the 65 countries surveyed in 2018. Other authoritarian regimes — including Iran, Syria, and Ethiopia — rounded out the bottom of the list. Open, democratic states performed the best, with Iceland, Estonia, and Canada taking the top three spots.
By the time China’s first internet café opened in November 1996, Beijing had already implemented its first series of regulations. These restrictions specified the need for the government to approve all international web traffic. Additional laws were introduced in 1997 and 2000 that further clamped down on online activities.
Perhaps the most infamous component of China’s internet governance efforts is the “Great Firewall.” Launched in 1998, the Great Firewall is designed to prevent those within China from accessing websites that the government deems undesirable. As of January 2019, 135 of the 1,000 most trafficked websites in the world were banned in China.
|Major Websites Blocked in China|
Until recently, many Chinese used Virtual Private Networks (VPNs) to circumvent or “scale” the Great Firewall, but this has become increasingly difficult. The Ministry of Industry and Information Technology launched a 14-month campaign in January 2017 to crack down on VPNs, which left some users with fines for accessing illegal VPNs. One individual was sentenced to serve five and a half years in prison and to pay a ¥500,000 ($72,790) fine for illegally selling VPN services. Following a request from Beijing in 2017, Apple removed over 650 applications that provided VPN services from the Chinese version of the App Store.
New laws passed under President Xi Jinping have intensified government censorship and control. These measures include the 2015 Counter-Terrorism Law, which requires telecommunications and internet providers to offer “technical support and assistance” upon government request. In 2017, the Cybersecurity Law was implemented to force users to verify their identity when accessing various apps and websites.
Since the Cybersecurity Law came into effect, there have been several reported cases of local police detaining individuals for comments they made online. In late 2018, the Cyberspace Administration removed nearly 10,000 accounts from popular social media platforms like WeChat and Weibo for either “spreading harmful political information” or “violating good social customs.”
Internet censorship and regulatory laws are also used to hold corporations accountable. Industry giants like Baidu, Sina, and Tencent were all fined in 2018 for violating the Cybersecurity Law. To avoid such penalties, many companies have implemented systems for self-censoring online content.
China is also seeking to promote its internet technology abroad. The Belt and Road Initiative has expanded to include the Digital Silk Road (DSR), a $200 billion plan to install Chinese internet and communications technology within BRI countries. The DSR has raised concerns that it may promulgate technology that could be employed to inhibit free speech. Others suspect the technology utilized by the DSR may provide a backdoor for Chinese intelligence gathering and propaganda dissemination.
Beijing is not alone in its desire to censor online content. Authoritarian regimes across the globe have implemented similar systems. In Saudi Arabia, for instance, people who post or share material that satirizes religion face up to five years in prison. Vietnam enacted a far-reaching cybersecurity law in early 2019 that makes it a crime to criticize the government online.
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