China Proposes Limits on Child Smartphone Usage, Tech Shares Plummet

Chinese technology shares experienced a significant drop in value as the country’s cyberspace regulator recommended imposing limits on smartphone usage for children under 18. This proposed law would restrict children to a maximum of two hours of smartphone usage per day, and additionally, they would be prohibited from accessing the internet on mobile devices between 22:00 and 06:00 local time. Shares of prominent technology firms such as Alibaba and Bilibili faced losses as a result of this news.

The Cyberspace Administration of China (CAC) has put forth this proposal, which mandates industry players including mobile phone device makers, apps, and app stores to develop a “minor mode” function that sets usage limits based on age. While children aged 16 to 18 would be allowed two hours of screen time per day, those under eight years old would only be granted eight minutes. This proposal is currently open to public feedback.

The responsibility of enforcing these regulations will likely fall on technology giants, similar to how gaming restrictions were implemented in the past. Ray Wang, the founder and CEO of Silicon Valley-based consultancy Constellation Research, believes that while workarounds may exist, gaming restrictions were fairly well implemented. Although there may be ways for children to bypass these limits by accessing their parents’ devices, the consensus is that the restrictions on gaming have largely been effective.

The impact of this news was felt immediately, as shares of Alibaba closed over 3% lower in Hong Kong, while Bilibili experienced a significant drop of nearly 7% in the territory. By mid-day on Thursday, Alibaba’s shares were trading around 2% lower, and Bilibili was down by 0.5%. On the other hand, technology giant Tencent, although closing around 3% lower initially, saw a slight recovery with a 0.1% increase in Hong Kong.

China has been implementing various measures to combat video game addiction, which authorities believe is detrimental to children’s health. In November 2019, an online gaming curfew was imposed for minors, rendering them unable to play online games between 22:00 and 08:00. Additionally, gaming was limited to 90 minutes on weekdays and three hours on weekends and holidays. Nearly two years later, authorities further reduced the gaming time to a maximum of three hours per week, citing concerns over online game addiction. The state media even referred to online games as “spiritual opium.” These regulatory actions have had a negative impact on Chinese technology companies. Consequently, the US has surpassed China as the world’s largest gaming market by revenue, according to research firm Newzoo.

It remains to be seen how these proposed restrictions on child smartphone usage will be implemented and enforced. Nonetheless, this development has undoubtedly affected the technology sector in China and has raised questions about the future of smartphone usage among children in the country.