Source: Xinhua.
China’s internet industry faces profound change. Seizing digital opportunities, iterating new technologies, products and models and steadily expanding the application ecosystem, internet development has entered a new stage of high-quality growth. The China Internet Society recently released the China Internet Enterprise Comprehensive Strength Index (2021), which concludes that the internet industry is developing steadily and that internet-based next-generation information technology has become an engine of innovation and growth, playing an important role in stabilising the economy, benefiting people’s livelihoods, boosting vitality and promoting development.
Good momentum; a key driver of jobs and tax revenue
Comprehensive strength has risen year by year: the 2021 index reached 616.5 points, up 16.6 percent from the previous year and up 516.5 percent from 2013.
Revenue has hit new highs and profitability keeps strengthening. Total internet business revenue of the top 100 enterprises, ranked on scale, profitability, innovation, growth, risk control and social responsibility, reached 4.1 trillion yuan in 2021, up 16.9 percent year on year. Their total operating profit reached 442.69 billion yuan in 2020, up 39.4 percent, an acceleration of 5.4 percentage points.
R&D investment keeps climbing and the share of invention patents has risen sharply. R&D spending of the top 100 reached 206.9 billion yuan, up 16.8 percent, and their patent total reached 193,000, up 76 percent. Companies are also paying more attention to talent, fostering open innovation and respect for expertise to spark employee creativity.
Online entertainment is thriving and geographic clustering is more pronounced. In 2020, 28 of the top 100 ran online game businesses and 20 ran online audio and video, the most widespread business types. More than 80 percent of the top 100 are concentrated in the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Pearl River Delta: 39 in Beijing-Tianjin-Hebei and 29 in the Shanghai-centred Yangtze Delta.
Risk control is healthy and listings show a trend of returning home. The top 100’s average debt coverage ratio reached 83.4 percent in 2020, showing strong solvency and risk control.
The industry’s contribution to the economy and public finance is significant, and integration with the real economy keeps deepening. Total tax paid by the top 100 reached 103.16 billion yuan in 2020, up 8.5 percent, making the internet a key driver of employment and tax revenue. Big data, cloud computing, AI and the internet of things are creating large numbers of jobs and entirely new occupations. The top 100’s internet business revenue rose from 9.8 percent to 10.5 percent of the digital economy between 2019 and 2021, underlining their growing weight.
Toward regulated, healthy and sustainable development
As data security threats grow, data governance has become a core issue of global internet governance. The report says China will keep strengthening network data and personal information protection and pay attention to data security risks in emerging fields; platforms will act more consciously on their legal and social responsibilities, promoting the regulated, healthy and sustainable development of the platform economy.
Digital consumption is flourishing and adding momentum to the dual circulation. New digital products span work, learning, consumption, entertainment and social scenarios; online booking, payment and results inquiry are fully developed, and a safe, efficient and orderly digital consumption environment is taking shape.
Industrial internet innovation will support the digital transformation of the real economy. The report argues that the industrial internet, on one hand, spreads a data-driven, intelligently optimised new industrial paradigm that upgrades traditional industries, and on the other, spawns related industries such as supply chain finance, the platform economy and the sharing economy, extending value chains and supporting high-end, intelligent development.
Digital currency pilot scenarios keep expanding and application may accelerate. As key financial infrastructure of the digital era, the digital yuan has made phased progress. The report predicts that future exploration will focus on new financial services built on the digital yuan, the improvement of financial regulation, monetary policy transmission, internationalisation and new application models, with the digital yuan ecosystem entering a fast lane.
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