Software industry bounces back - but for how long? 

Chinese firms’ return to growth after coronavirus slowdown overshadowed by prospects under international sanctions  

Software industry bounces back - but for how long? 

(ATF) China’s software industry expanded in the first half despite the slowing effect of the coronavirus. But the industry’s outlook remains clouded by bans on Chinese technology by the US, India and other nations. 

During the first six months of 2020 software company profits rose 1.3% year-on-year to 424.1 billion yuan ($60.7bn), ending a five-month losing streak, according to the Ministry of Finance.

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Software companies raked in almost 3.6 trillion yuan in revenue, up 6.7%. The sector employed 6.73 million people during the January-June period, up 0.1%, while its gross payroll increased 1.4% from the same period last year, the ministry said. 

China’s software and software-as-a-service (SaaS) industry has seen considerable growth in the past decade. The SaaS market alone was estimated in March to reach 47.34 billion yuan this year, from 3.5bn in 2013, according to Asia Briefing data. That figure is likely to rise as many businesses were compelled to increase their digital activities as coronavirus lockdowns made some operations difficult and as greater numbers of staff began working from home.

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The nation’s wider tech industry, however, is fighting against a rising tide of protectionism in the global digital market and specific sanctions against its companies. After slapping bans on the use of American technology in its products, Shenzhen-based hardware and software maker Huawei now faces further sanctions imposed a White House convinced that its products will be used to spy on American citizens.

India also recently directed that a slew of mobile apps made in China, including the popular TikTok, similarly posed a national security threat and banned their use.

Similar moves are being considered elsewhere, including the UK, which recently back-pedalled on a deal to allow Huawei into its 5G infrastructure market.

In a possible sign that sanctionsare hitting companies, software exports slid 0.4% to $22.3bn in the first-half of the year.