Shares in Chinese technology firms have fallen after the country’s online regulator announced plans recommending smartphone use for children be limited to a maximum of two hours a day.

The rules proposed by the Cyberspace Administration of China (CAC) will require device makers, operating systems, apps and app stores to introduce a so-called “minor-mode” capping time spent on screens, increasing the pressure on local tech companies already grappling with tight government controls.

The proposals, which are still subject to public feedback, would limit users aged 16-18 to two hours usage a day, while those under 16 would be limited to one hour. Children under eight would be restricted to just eight minutes.

Under the scheme, devices with minor mode on would be mostly unusable between 10pm and 6am, with only emergency calls and approved apps working. Pop-up messages would remind children to rest once they had used their phones for 30 minutes.

The consultation announcement spooked investors and caused the share prices of large local tech companies, which would probably be responsible for enforcing the rules, to fall. Shares in the big social media company Tencent ended down 3% on Wednesday while video service Bilibili tumbled 7% and Chinese e-commerce group Alibaba dropped 3%.

Video sharing platforms including TikTok owner ByteDance, as well as Bilibili and Kuaishou already offer “teenage modes” that restrict how long users can use their apps, as well as limiting certain content. ByteDance’s Douyin app, which is similar to TikTok, blocks teenagers from logging on for more than 40 minutes a day.

The proposals came two years after the Chinese government imposed restrictions on children’s video game and online game play to just three hours a week, in 2021, in order to curb what the authorities described as “youth video game addiction”.

The move hit revenues for online gaming companies, which had become a hugely profitable business in China as a result of the large number of young gamers across the country.

However, it also motivated Chinese online gaming companies to expand into international markets and co-develop content with foreign companies. Analysts at Goldman Sachs said in May that there was still “substantial overseas potential” for video game firms even amid the restrictions.

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“These moves have helped China-domiciled mobile game makers raise their aggregate market share in the overseas mobile games market from less than 10% in 2017 to 22% by the end of 2022,” Goldman Sachs said. “GS Research forecasts that share could rise to as high as 30% by 2025.”

The public consultation over the new child smartphone restrictions will close on 2 September.


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