China's tech innovation focus shifts to real economy

Significance

Consequently, corporate compliance costs are rising and firms’ ability to extract value through, for instance, targeted advertising is falling. This has led to questions about China’s commitment to entrepreneurialism and innovation, its ability to develop new leading technology firms and the extent to which these will play a significant role outside China.

Impacts

• EU and US policymakers will not criticise business model adaptations mostly targeting the Chinese domestic market.
• Business models more friendly to users would help Chinese firms gain popularity in overseas markets.
• Revenue of Chinese ‘big tech’ will decline compared to their less regulated Western counterparts.