Preface

On April 20, 1994, China realized full TCP/IP connection with the international computer network through a 64K dedicated international line and became the 77th country on the Internet. At that time, Chinese people would never imagine that the Internet will penetrate into every crevice of their lives with unstoppable momentum, and become indispensable to them. Over the past 23 years, China has quickly emerged as a global Internet power.

According to the 41st Report on Internet Development in China published by the China Internet Network Information Center (CNNIC), as of December 2017, China had 772 million Internet users who spent 27.0 hours per week on the Internet, with an Internet penetration rate of 55.8%. The country has the highest number of Internet users in the world, and most of them are under the age of 40. China’s Internet penetration rate exceeds the global average by 4.6 percentage points. Chinese Internet users spent an average of 4 hours a day on the Internet. What do they do online?

According to the CNNIC, they mainly use 22 Internet services, including (in a descending order of frequency) instant messaging, search engine, online news, network videos, online music, online payment, online shopping, online games, online banking, online reading, travel booking, e-mail, online banking, online stock trading, microblogging, maps & navigation, online food ordering, online education, ride-hailing, webcast, and bicycle-sharing.

Nowadays, online activities of Chinese Internet users are not limited to sending emails, posting or searching for information as in the past. A large variety of innovative Internet apps such as social media apps (QQ, WeChat, etc.), online shopping apps, map & navigation apps, ride-hailing and bicycle-sharing apps, are gaining popularity in China. Rapid growth of the Internet industry has led to the rise of a large number of unique business models in China, greatly benefiting Chinese people.

The digital divide is one of the biggest problems facing the world today, but China has made impressive progress in closing the digital divide. In China, buyers can scan QR codes to pay at village grocery stores; express delivery services (Jingdong Express, Yuantong Express, etc.) can deliver parcels to every corner of the country; 4G mobile broadband connection and smart phone advertisements are all over the country; Chinese people of all ages are hooked on DouDiZhu, online mahjong, online karaoke, webcast, Douyin, Arena of Valor (or Wangzhe Rongyao); many housewives use social media platforms to start micro businesses; moviegoers can use Nuomi and Meituan to buy tickets.

A large number of Internet companies have been growing rapidly. Among them Sina, Sohu, and Netease are the earliest pioneers in China’s Internet industry, followed by Tencent, Baidu, Alibaba, Qihoo, JD.com, and Xiaomi, which have become the backbone of the Internet economy. The Internet has also penetrated into traditional industries, opening up new horizons for traditional industries and creating a remarkable synergistic effect. The “Internet + Traditional Industries” (Internet Plus) model not only has increased the efficiency of traditional industries but also is having a massive effect on transforming and modernizing these industries. Smart factories of Haier, Redcollar, and Homekoo are typical examples of the “Internet Plus” model. The Internet is not just a tool. It has become an approach to business management and transformation, driving supply-side reforms in China.

Alibaba, JD.com, Suning.com, and other e-commerce companies, as well as providers of logistics, warehousing, network design and other related services, have formed a new e-commerce ecosystem, serving as big platforms for online consumption. In 2017, China’s annual e-commerce sales (as of December 2017) reached 1, 715.1 billion yuan, accounting for about 15% of the total retail sales of consumer goods; the number of online shoppers reached 533 million, accounting for 69.1% of the total Internet users. China has become the world’s largest e-commerce market. The fast growing e-commerce industry is now a major engine driving China’s economic growth.

Social networking, videos, music, literature, and webcasts on the Internet have enriched the leisure life of Internet users, shaping energetic online cultural scenes and the expressions of Internet users. Many Chinese people are distributing “red envelopes” (hong bao), posting photos, and discussing current headlines on the Internet. Trendy Internet slang changes so quickly that many people have a hard time keeping up with it.

The Internet, which can make services more accessible and convenient, has also penetrated into the public sector. The Chinese government is seeking to leverage the Internet to innovate on social governance, improve public services and people’s livelihood, and promote social harmony. The Internet has become an indispensable tool for all government departments to collect information, respond to the concerns of Internet users, and handle government affairs involving the public.

More than a decade ago, Thomas Friedman published The World Is Flat. As we can see now, the Internet has indeed made the world flat and smaller. It has become a new international public space. Therefore, the Chinese government and people are calling for global efforts to build a community of shared future in cyberspace. In the future, China’s Internet industry will continue to embrace opportunities and face challenges head on, deliver more benefits to both China and the rest of the world.

The framework of this book is designed by Lu Benfu. Hao Yeli and Lu Benfu are editors-in-chief of the book. Wang Han reviewed the first, second and third chapters; E Erjiang reviewed the fourth, fifth and eighth chapters; Liu Xiaoou reviewed the sixth and tenth chapters; and Xia Boyang reviewed the seventh and ninth chapters. Xu Peixi, Xiong Yeming, Zeng Pengzhi, and Li Jialin participated in literature review and data collection. We would like to express our gratitude for their valuable contribution to this book. We would also like to thank our editor Ms. Cai Jing, without whose support this book would not be published so soon.

This book is part of the “Understanding China” series published by the China Institute for Innovation & Development Strategy (CIIDS); it is also one of the most important outcomes of Project 14AZD044 funded by the National Social Sciences Fund. Here, I would like to express my heartfelt thanks again to each of those who contributed to this book.

Lv Benfu

Vice Chairman, China Institute for Innovation & Development Strategy

Professor, School of Economics and Management, University of Chinese Academy of Sciences (UCAS)