From...

September 22, 1999
Web posted at: 3:16 p.m. EDT (1916 GMT)

by Matthew Yeomans

(IDG) -- Here's a global teaser: Name the country that currently languishes at the bottom of the Internet food chain, but will have an estimated 141 million people online by the year 2005 and will be the largest e-commerce market in the world. Hint: It's the most populous nation on earth.

Right now, China counts only 1.4 million Internet users, but that hasn't halted companies like Microsoft, AOL, Yahoo and Dow Jones from plunging into the alluring, but officially off-limits, waters of the Chinese Internet industry. Even Christian broadcaster Pat Robertson is getting in on the act as a major investor of Zhaodaola, a Beijing-based Web portal.

But amid the heady rush to dot-com this vast country lies a nagging question: What will be the electronic boundaries of the Net in China? The answer is of prime concern for Western investors who spend long days strategizing about how to wire the sleeping giant. The person who may hold the answer, at least for the moment, is Wu Jichuan, China's minister of information industry.

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That's why Western politicians and executives were dumbstruck as Wu announced that his government would begin to enforce a 1993 ban on foreign investment in its online industry. Wu's salvo may signal little more than a return to hardball negotiations over China's entry into the World Trade Organization, which the Clinton administration would like to see happen before the end of the year. "This is classic Chinese bargaining," says Peter Lovelock, head of Maverick, a telecom consulting company in Hong Kong.

But other industry watchers aren't as convinced. "The head of MII is seeming to kick the door shut on foreign investment in China's information industries," says Ken Grant, executive editor of Virtual China's China Matrix Web site. "It remains to be seen whether he can keep it closed."

Somewhere beyond all this Beijingology lie two fundamental concerns for China: How does it maintain control of what could be its most influential industry of the next century, and, just as important, how does it control the information passed along the Web? After all, the Internet may be a fine tool for promoting e-commerce in a giant structured market economy, but it's likely to play havoc with the official party line. This hasn't been lost on the ruling technocrats who realize the Internet is their real-life forbidden fruit: They can't wait to taste it, but they dare not.

Not surprisingly, all the major players in the domestic Internet boom are closely monitored by the Chinese government and any offending information, for instance about Taiwan, Tibet or whatever the current bete noire, is quickly blocked by a vigilant team of government Web censors. Both the leading domestic portals Netease and Sina.com rarely run afoul of the authorities because they don't place material that breaks from the party line on their mainland Chinese sites.

Ironically, the government's most high-profile victim of political blocking so far is its own China.com, a strictly controlled Web portal that is traded on the Nasdaq and is 60 percent owned by the state news service Xinhua with AOL holding another 8 percent. Last spring, according to watchers of the Chinese Web, China.com caught the censors' eyes when it ran items about Taiwan on its mainland site. The articles were compiled by programmers based in Hong Kong. China.com has publicly denied being blocked.

But the ever expanding Web universe stretches well beyond the eye of even China's Ministry of Information Industry. Internet users in China report that the government either overlooked or couldn't be bothered to block a U.S. State Department archive site on the 1989 Tiananmen protests. That's just the sort of vast cybersecurity breach which international dissidents and human-rights activists intend to exploit. While they may be able to reach only a small percentage of the Chinese population, activists maintain that in a Chinese society, where Internet access is available only to the rich, the intellectuals and the students, it's not about how many people they reach, but which ones.

"What scares the Chinese government so much is that the people who have access to the Internet right now have historically been the people who have launched revolutions," says Bobson Wong, director of the Digital Freedom Network, a Web site dedicated to airing dissident voices that have been silenced in their own lands.

Leading the charge is a former Tiananmen Square activist who goes by the pseudonym, Richard Long. Everyday, Long publishes a newsletter called VIP Reference that he sends to over 30,000 Chinese e-mail accounts – whether they want it or not. In short, Long is using the scourge of Western e-commerce, spamming, to advocate social change in China. VIP Reference is taken so seriously in China that two weeks ago, one dissident, Qi Yanchen, was arrested and charged with sedition for printing copies of the newsletter to pass around. While some activists complain that Long's political mass mailing alienates people in China and endangers some underground dissidents, Long says VIP Reference feeds "an information-hungry country." With spam, of course.

But is it realistic to expect Internet commerce to bring about democracy in China? After all, telling China that it's morally better to be like the West and here's a new Pepsi ad to prove it is unlikely to change a government that hasn't so much as flirted with democracy for over 5,000 years. At the same time, in a world where Tiananmen Square leader Ling Chai seeks to realize her ideals through a software startup, it's not surprising that someone like Long would seek to make politics and business work together. Long thinks nothing of exchanging his database of 500,000 addresses with young Chinese entrepreneurs in return for a list of their clients. "Everybody knows I have the largest Internet database in China," he says, matter-of-factly.

Despite Wu's concerns over controlling the telecommunications industry, China may well already be on an unstoppable course. While the cost of PCs remains prohibitively high for the ordinary Chinese, the country's cellular and cable network offers the hope of cheap mass connectivity in the near future. And while the Chinese may not surf as much as Americans, they certainly watch TV. There are some 320 million television sets in China, and companies such as the Web portal MyWeb are exploring the possibilities of wiring China via a vast system of set-top boxes.

So even if China chose to pursue its digital future alone, it might still be building a bigger soapbox for Long and other dissidents. You never know, the revolution may yet be televised.