Cybersecurity sector growth falls short of state official expectations

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Top-level government ministers expect China’s cybersecurity industry to exceed RMB 60 billion ($8.5 billion) and hit an annual growth rate of more than 20% by year-end, though the sector remains too small and under-developed, according to speeches at a high-level forum held on Monday.

Why it matters: Top-level forums like the 2019 China Cybersecurity Industry Development Summit Forum are channels for highlighting problems, and indicate which industries could receive supporting policies and funds.

Details: The scale of China’s cybersecurity sector only makes up 6% of the global industry, Zhao Zhiguo, head of the Ministry of Industry and Information Technology’s Cybersecurity Bureau, said at the forum in Beijing as reported by Chinese media.

  • Cybersecurity development is still uneven, according to Vice-Minister Chen Zhaoxiong. He puts this down to core technologies remaining “in the hands of others,” likely a reference to China’s reliance on technology developed by non-Chinese companies, and a shortage of quality talent.
  • China lacks leading enterprises and core tech such as components, equipment, and general software, Zhao said. Its capacity to innovate remains inadequate and the international recognition of its companies and products is low.
  • Chen said that China must strengthen research and build a better industrial ecosystem.

Context: Attacks on government agencies and mid- to large-sized enterprises increased substantially, according to a report by cybersecurity company Qi’anxin. Demand for emergency response services shot up by more than two-thirds compared with the previous year, it said.

  • Demand from government and enterprises for cybersecurity operations and services employees increased 32.7%, outstripping that of research and development employees for the first time.
  • China’s cybersecurity market remains dominated by hardware and software with services making up 13.8% of market volume, according to a CCID white paper (in Chinese).
  • The Cybersecurity Law and ensuing regulation such as the “Multi-level Protection Scheme 2.0 Standard,” which governs security standards for what the government deems critical infrastructure, stipulate higher security requirements for internet enterprises.
  • The Cryptography Law, which comes into effect on Jan 1., will boost demand for related tech.
  • Some 10 government agencies released guiding opinions to strengthen industrial internet security in August (in Chinese).

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