World Internet Conference

Wuzhen Summit

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World better off with China's embrace of Internet

2015-12-15Source:   Wu Jiangang

The Second World Internet Conference (WIC) will be held in the river town of Wuzhen in East China's Zhejiang province on Dec 16-18. The number of attendees will be more than two thousand, half of whom will be foreign guests from over 120 countries and regions.

The host country, which has the world's largest 4G network and is soon expected to be the leader in 5G and largest group of Internet users reaching 668 million, may have the qualification to play a bigger role in the world of Internet community. China also has about 20,900 websites providing education, health care and other professional Internet information services. Four out of the world's top 10 Internet companies are from China, namely Alibaba, Tencent, Baidu and, with the other six all from the United States.

Though the foreign representatives include prime ministers of several neighboring countries, UN senior officials, some big Internet companies such as Apple, Microsoft and Nokia, there is still space to improve the representation.

Discussions may be raised towards China's prudent regulations on Internet. But China, with the largest population, unique system and special development scenarios, would reasonably have its own strategic interests and own laws for foreign firms that want to enter China to consider or abide by.

A stabilized China is in line with global interests, which is especially true comparing China's security, prosperity and vibrancy with chaos in some places around the world. Considering that the Internet can be an amplifier of those who speak more or speak louder but not more correct or better, China's prudent regulations are not without wisdom. It is especially true in such a country whose development is not well balanced in different provinces and groups in its particular stage of development.

Tortured by wars and social unrest for about a century, Chinese people cherish the hard-won stabilization epoch and want to use such a window of strategic opportunity to solve challengeable social and economic problems and any distraction can be regarded as annoying or even unbearable. Such feelings are difficult to understand for people who stay in rich society.

Just as freedom is not totally free, the Internet is a tool that can either do good or bad. While China may seem to be too prudent in preventing the Internet's bad effect, its attitude to let it do good is obvious.

With President Xi Jinping expected to attend this year's WIC, which makes the industry conference somewhat special. It shows the determination of the government to support the society in benefiting from Internet. As Internet is essentially pluralistic and open, China is actually on its way to a more open society.

Though the government's "Internet Plus" strategy, which encourages applying Internet to any other industry, seems ambitious, the truth is that China has to rely more on Internet.

China's economy used to be driven mainly by investment and export, but the exhaustion of demographic dividend and decrease in investment return rate make the old pattern difficult to provide employment or economic growth.

As the consumption can hardly support a new pattern, China has to restart reform from supply-side, which means not only to improve the efficiency of existing industries but also to use new supply to create new demand. In the process, Internet can surely play a key role.

Internet has been around for 25 years and became industrially applicable only about 15 years ago. The industry is growing exponentially under the Moor's Law, but its potential is unlimited.

The magic power of Internet can mainly be viewed technically, economically or socially.

In technology, Internet actually means several things: Data collecting, based on various terminals such as computers, mobile phones, intelligent watch, monitors and many other sensors; data storage, locally or in the cloud; data processing, by all kinds of models or even machine learning; communication, which is related to data transmission. Internet, armed by artificial intelligence, can become so smart that experts are predicting that we may be the last generation since the possible "Singularity" can come to resolve all problems or finish all human beings.

In economy, Internet plays a key role in business world. As Ronald Coase first pointed out in 1937 in The Nature of Firm that both markets and companies (as "special market") have its cost, on the margin there is a balance by decisions of manufacturing themselves or buying from markets. Many scholars believe that transaction costs are the basic reason of how organizations including markets, enterprises and politics evolve. While information technology can dramatically reduce the costs of both market deals and company management by reducing information asymmetry. It is not difficult to see the strategic importance of China's choosing "Internet Plus" to start the supply-side reform.

However, the technology will change the social decision process and even eventually the politics by applying big data analysis in society management, which may make the critiques of China's unique politic system outdated and not applicable.

Internet is so important that people coined 'Digital Gap' to express the massive difference between societies with Internet and ones without. Fortunately, the world's largest group of people is desperate to embrace of the Internet, which may mean not only that the possibility of becoming a burden to other societies is lowered but also the possibility of making more contribution is increased.

Observing around the world, we may find that China's single huge market is much unique. With 1.3 trillion people speaking the same language, sharing the same culture, and moving freely by the much advanced modern transportation system, connected by intelligent mobile devices that almost everyone has one China is not only the biggest Internet community but also a place where magical things happen.

People outside China can hardly understand that the online sales are more becoming the prevailing way of shopping. Chinese even invented online shopping festivals such as Double 11, in which day the online payment can reach about 100 billion RMB yuan only for one of many e-commerce websites.

Some article critiques that Internet companies in China copy ideas from the Silicon Valley, such as search engine, instant messenger and so on. But if they observe more closely they may find that many new technology or commercial innovations evolve in China—they are not only localized but also reinvented.

Taobao was founded by a middle school English teacher, it worked very hard to survive and eventually overtook eBay. Now it seems that eBay has disappeared in China. QQ survived by many micro innovation and eventually created WeChat that brings convenient services to more than 500 million of people around the world. Other successful examples are 360, Baidu, Xiaomi, LeTV, Huawei and so on.

New technologies need application scenarios and large-scale use to support their many improvements before they can usher great innovations or come to maturity. China's unified huge market provided such requirements. China's diverse geographical conditions and market demand have pushed China to create new technologies and massive applications have in turn provided customers' feedbacks to improve these technologies further, which provide environment for even newer business innovations.

The reasoning has actually been proved in areas such as China's high-speed rail, bridge construction technology, wireless communication technology and so on. China is turning high-end technologies more advanced, easier to use and dramatically cheaper.

On the occasion of the upcoming Second World Internet Conference, we may expect that China will bring more to the table to share with the Internet community.

The author is a lecturer at the Management School of the Shanghai University and a research fellow at the China Europe International Business School Lujiazui International Finance Research Center. The views do not necessarily reflect those of China Daily.