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Real Economy Must Not Replicate Money-Guzzling Internet Models

If China's real economy picks up capital-oriented Internet economy practices, a crisis could result, an analyst warns

By Xu Mouquan Updated Feb.12

If China’s bricks-and-mortar commerce and manufacturing industries follow the "money-guzzling models" pursued by capital in the Internet economy, China will face its largest-ever economic crisis, warns Internet analyst Ma Jihua writing for an opinion site run by Chinese search giant Baidu. 

While it is reasonable for capital to flow from the Internet economy to the real economy as part of the so-called "Internet plus" model, the rules of the game for the real economy must not be changed, or the capital-oriented practices of the Internet economy could harm its development. 

If internet models are mimicked by real economy players, firms could shirk research or management in favor of capital operations – pursuing mergers and acquisitions through price wars or based on the advantage of scale, Ma writes.

This would strangle innovation, see medium and small companies lose the impetus to develop, and leave the entire economy controlled by a handful of trusts, he warns. Furthermore, those who have the money and skills will be able to copy the ideas and technologies of others at an extremely low cost, meaning China won’t be able to improve its fundamental scientific and technological capacities in the long run.