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November 30, 2000

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FEBRUARY 4, 2000 VOL. 26 NO. 4

New Medium, New Rules
China takes a hard line on Internet discourse
By R.J. MICHAELS Beijing

China's online population soared from 2.1 million to 9 million last year. E-commerce start-ups on the mainland are forming rapidly. Foreign venture capitalists are lining up to pour money into the market. And to all appearances, dot-com fever has become too virulent for China's authoritarian government to comfortably cope with.

While leaders in Beijing recognize the economic importance of information technology, new efforts to control the flow of information over the Internet suggest the government is leaning towards muzzling, rather than actively promoting, the Net. Late last month, China's State Bureau of Secrecy published new rules against the dissemination of state secrets that are aimed squarely at operators of domestic Web sites. China's definition of a state secret is so general it can include virtually any information not cleared by government censors or published by the controlled media (the law has been used in the past to jail journalists for writing stories that displeased the Communist Party). According to the new rules, Chinese websites must undergo security checks, and those that fail to block sensitive material from chat rooms, bulletin boards and news groups can be shut down.

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China already restricts access by its citizens to overseas pornographic websites as well as to foreign news sources (Time Warner's AsiaNow site, which includes Asiaweek, is among those blocked). Additional curbs on content being drafted by the State Press and Publication Administration look to curtail domestically produced content as well. The number of websites catering to mainlanders is exploding in China and Hong Kong, and popular portals depend to a large degree upon news to draw viewers. Many depend upon paid freelancers, operating outside the bounds of the state media apparatus, to produce entertainment, sports and travel stories.

It is that nascent class of independent reporters, operating sans government sanction and sans credentials, that China wants to nip in the bud. According to The Shanghai Daily, rules will soon be published that will outlaw what the state is calling "cyber-reporters." It's unclear who falls into that category, but the move may have a chilling effect. "If you can't hire a Web reporter, then you can kiss all the portals goodbye because they depend upon people like us to provide the content," Dave O'Dell, executive producer of Soundnet China, told Reuters News Service. Based in Beijing, Soundnet China has a team of unsanctioned music industry reporters.

Some site operators say that they already steer clear of political news, so the new rules should have little impact., the number one Chinese-language website, developed its own in-house content guidelines and already screens postings for sensitive material, according to general manager Paul Jin. Adds Michael Robinson, CEO of "Our site is so far away from [political] issues." He says Beijing's clampdown worries him "not a bit."

Regulations governing China's Internet have been expected, and are even welcomed by some who hope that clarity will spur foreign investment in the country's emerging Internet infrastructure. But the new rules - which hold site operators responsible for "chaotic" web pages - do little to set clear guidelines. "It looks like [the Internet] is going to be governed more by rules in the near future, but is it going to be more black and white as wished?" says Gary Chen, director of content development with China Online.

Instead, government agencies acting independently of each other are giving off threatening and confusing vibes. On Feb. 1, Shanghai officials ordered the closure of 127 unlicensed Internet cafes the government said were not paying taxes and were spreading pornographic CDs. Meanwhile, a Beijing ministry is requiring that all companies and individuals using encryption technology, which shields electronic communications from evesdropping, register with the government. The state has also outlawed the use of foreign software with encryption capabilities.

The registration requirement appears unwieldy at best. The ban on foreign encryption software runs afoul of China's attempts to join the World Trade Organization. The use of data-scrambling encryption software can prevent law enforcement agencies from monitoring criminal communications, but encryption is also essential to electronic commerce to prevent electronic theft of financial information. The technology is commonly used in "server" computers, cellphones, laptop computers, ordinary Internet browsers and cable-TV networks. To comply with the law, companies such as Microsoft would be forced to strip products of their own encryption systems and replace them with Chinese-made software to sell them on the mainland. U.S. Trade Representative Charlene Barshevsky reportedly plans to take the matter up with Chinese officials.

China's policy towards the Internet remains perched between encouragement (for the sake of economic development) and discouragement (out of fear that unfettered information will destabilize society and politics). While not an ideal atmosphere, many say the mainland's dot-com expansion will thrive nonetheless. Says Chen: "Internet users and operators in China do not seem as worried as non-Chinese."

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