China’s tech sector has grown far faster than the Chinese cyber-security industry. Stimulus for the latter comes as much from a government policy push as external threats, exemplified in the US by ransomware attacks. This should give a boost to overlooked local cyber-security stocks.
Beijing’s new cyber-security plan requires key industries such as telecoms to spend at least a tenth of IT budgets on cyber security in the next two years. The same applies to government agencies and state-owned enterprises. Meanwhile, a new data security law creating a comprehensive legal framework for data usage comes into effect in September.
The push is part of a broader effort to tame the tech sector, which previously grew amid benign neglect. Denying spies access to Chinese data is likely to be a bigger driver than protecting the privacy of citizens. The rising cost of hacking to business is a further issue.