Illustration: Lu Ting/GT

Considered one of the key engines for China's economic transformation, the so-called "Internet Plus" initiative has immediately become a buzzword in the domestic financial markets following the conclusion of the two sessions. While some listed companies are seriously planning to apply new technology to their main businesses, others are simply swarming to catch up with the trend to boost their share prices in the short-term. With the rise of the Internet-related sector, investors need to watch out for risks and bubbles behind the opportunities.

As Chinese Premier Li Keqiang said in his government work report earlier this month, an "Internet Plus" action plan would be made to propel the integration of the modern manufacturing center with the mobile Internet, cloud computing, big data, and the Internet of Things. The goal is to advance the healthy development of e-commerce, industrial networks and Internet finance, as well as boost the competitiveness of Internet companies in the international market.

The "Internet Plus" idea is not new. Actually, Pony Ma Huateng, chairman of Tencent, has been an ardent supporter of the "Internet Plus" initiative since he introduced the concept in 2013. The "plus" character of the Internet is supposed to give rise to Internet finance, Internet education, Internet medical services, Internet tourism and other industries that didn't exist before. Then, an infinity of potential industries based on the "Internet Plus" initiative would promote China's economic growth by helping transform the traditional manufacturing sector to a modern one, thus injecting new vitality to its economic cycle.

As such, analysts expect that the initiative would become an important engine in transforming the economy. In the past, the central government gave a lot of attention to strategic emerging industries to restructure the country's economy. However, as China's economy can no longer simply reply on cheap labor and massive investment and has to shift to one driven by consumption in the coming decade, economic transformation at the current stage requires traditional sectors to upgrade with new technology. Given problems like the lack of transparency, too many intermediate links, long industry chains and poor user experience, traditional sectors are supposed to apply Internet technology to distribute market resources more efficiently.

Against this backdrop, it seems justified that the capital markets have been taken with Internet-related companies recently. For instance, shares of the Shenzhen-listed online education platform operator Guangdong Qtone Education Ltd surged above 300 yuan ($48.29) Tuesday, making it the most expensive stock on the A-share market in terms of share price. On the same day, ChiNext, China's NASDAQ-style board for high-tech and emerging start-ups, hit an all-time high of 2,363.05 points. The board is up nearly 60 percent this year.

Encouraged by such an active market response, many traditional companies have been rushing into similar deals. On March 12, Shanghai-listed auto maker SAIC Motor Corp announced that it would cooperate with e-commerce giant Alibaba Group Holding to invest 1 billion yuan in developing smart cars, with the first series to be launched in 2016. Meanwhile, Baosteel is reportedly planning to enter the e-commerce business to better facilitate steel transactions. And on Sunday, Fu Chengyu, chairman of China Petrochemical Corp (Sinopec), said six new innovative businesses including car networking and Internet financing would become the main focus of its non-oil business this year. In addition, China's sole listed fireworks maker Panda Fireworks Group Co recently announced it would open a new frontier in Internet finance as a key development aspect. And Shanghai DZH Ltd has jointed forces with Xiangcai Securities to form the first Internet brokerage.

While all the abovementioned companies have been serious about how to stay afloat in the Internet era, the securities market has never been short of speculators who are trying to catch up with the "Internet Plus" trend to jack up their share prices. Investors need to watch out for risks and bubbles when it comes to investment in the Internet-related sector.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn