Tech shares fall as China mulls child smartphone limits

Chinese technology shares fell after the country's cyberspace regulator recommended limiting smartphone usage of children under 18.

Shares of firms like Alibaba and video-sharing site Bilibili fell on August 2 and saw more losses early on August 3, BBC reports.

The proposed law would see children being only allowed to use their phones for a maximum of two hours a day.

It comes four years after children in the world's second-largest economy were subject to gaming restrictions.

The rules proposed by the Cyberspace Administration of China (CAC), will also see children banned from accessing the internet on mobile devices from 22:00 to 06:00 local time.

The CAC's proposal requires industry players including mobile phone device makers, apps and app stores to develop a function called "minor mode" to set usage limits - which vary by age.

While children between the ages of 16 to 18 will be allowed two hours of screen time a day, those under the age of eight will only be allotted eight minutes.

The proposal is currently open to public feedback.

Technology giants will likely be made responsible for enforcing the rules, much like how it worked with gaming restrictions, Ray Wang, the founder and chief executive of Silicon Valley-based consultancy Constellation Research, told the BBC.

"Of course there are workarounds. Kids can get the passwords to their parents' devices, but the general consensus is that gaming restrictions have been fairly well implemented," Mr Wang said.

Shares of Alibaba closed more than 3 per cent lower in Hong Kong on August 2. That of Bilibili tumbled by close to 7 per cent in the territory.

By mid-day on August 3, Alibaba was trading around 2 per cent lower while Bilibili was down by 0.5 per cent.

However, shares of technology giant Tencent, which closed around 3 per cent lower, were 0.1 per cent higher in Hong Kong.

China has implemented several measures to curb video game addiction, which officials say is damaging to children's health.

In November 2019, the country imposed a curfew on online gaming for minors.

Gamers under 18 were banned from playing online between 22:00 and 08:00. They were also restricted to 90 minutes of gaming on weekdays and three hours on weekends and holidays.

Almost two years later, authorities banned children from gaming for more than three hours a week.

A state media outlet had branded online games as "spiritual opium".

The moves have hurt Chinese technology companies. Increased regulation of the industry helped the US overtake China as the world's biggest gaming market by revenue, according to research firm Newzoo.