E-commerce is China's trump card, official says

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March 17, 2000
Web posted at: 8:21 a.m. EST (1321 GMT)

by Stephen Lawson

(IDG) -- China's government will focus on electronic commerce as the key to its global competitiveness, a high-level government official said at a conference in Hong Kong.

"Economic development will be the strategic measure for China to meet the global challenge," said Song Ling, director general of the Ministry of Information Industry's Department of Informatization Promotion, in a forceful opening address to the Hong Kong Information Infrastructure International Conference. She spoke through an interpreter.

Song described e-commerce as so critical to China's future that it will guide the reconstruction of China's economy into a market-based system, eliminating some remaining structures of the planned economy.

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"In order to develop e-commerce, some of them may stay and some may have to go -- so long as they promote e-commerce," Song said.

She said the motion presented last week at the National People's Congress calling for a comprehensive e-commerce law has helped to spur high-level discussions on the government's plan for Internet-based business, which will be presented in an official paper now being developed.

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China's government hopes not just to catch up with other countries' Internet development but jump ahead of current technologies, she said.

"Can we do a leapfrog development so we can develop our future? This is our thought," Song said.

The comment reflected what some industry observers see as a real potential for China, which in many areas has a "green field" opportunity to build a communications infrastructure for the first time.

The Department of Informatization Promotion is chartered with developing high-technology industry, not just technology, Song said.

"We can buy the computers and the equipment, but we can't buy informatization," Song said.

Informatization will be included as a topic in the development of China's Tenth Five-Year Plan, she added, the first time it has appeared in one of the plans.

Vendors and industry observers welcomed the National People's Congress motion for e-commerce law, which the Web site of the official People's Daily newspaper reported would cover a wide range of issues including security, taxation, and establishment of an electronic payment system.

The motion's sponsor, Zhang Zhongli, a senior National People's Congress deputy from Shanghai, said he favored taxation of e-commerce as a rich source of government revenue, according to the People's Daily report.

The establishment of a cohesive set of laws would help to create confidence for investing in China Internet ventures, the observers said.

Such a law might ease investors' uncertainty, after a series of contradictory edicts and regulations were handed down from different parts of the government, said Joe Sweeney, a Hong Kong-based analyst at Gartner Group.

"What's happened in the past year and a half has been a land grab by policy makers," Sweeney said. "The government has realized they have to put some sensible control over this, and the way they're doing it is by bringing out a new set of legislation."

Implemented properly, such a law could improve the situation, but if it isn't written to amend existing laws, it could add to the confusion, he added.

"Governments that bring in a whole set of legislation rather than simply amending perfectly usable existing laws usually botch it up," Sweeney said.

A Beijing-based executive of RSA Security was unfamiliar with the proposal, but said the time is ripe for clear regulation.

"This is clearly needed right now, because you know that in China the Internet is growing at an incredible rate," said Henry Lam, RSA's country manager for China.

Similarly, a Beijing-based official at mobile phone vendor Nokia expressed cautious optimism while admitting he did not know the details of the proposed law.

"Rules are needed, otherwise it's a chaotic situation," said Esko Kippo, senior marketing manager for Nokia's Mobile Internet Marketing Program. "To have rules is a good thing, but it depends on the rules."

The mobile e-commerce market, now in its infancy in China, is not chaotic now, Kippo added.

"It's more like a deep learning process ongoing now, where everybody is finding the way," he said.

Another analyst also acknowledged the sudden boost of interest in e-commerce by the Chinese government.

"It shows now at least it [e-commerce] is taking national priority," said Matthew McGarvey, a Hong Kong-based analyst at International Data Asia-Pacific.

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China Ministry of Foreign Trade and Economic Cooperation

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