China Hits Brakes, but E-Commerce Isn’t Slowing Down
With its latest series of rules regulating Internet use, the Chinese government has sent another strong signal of its desire to control the burgeoning world of cyberspace--and its relative inability to do so.
In recent weeks, the Communist regime has stepped up its drive to clamp controls on the Internet, making it a crime to leak “state secrets” electronically, requiring companies to register their sensitive encryption software and warning “dot-coms” against hiring reporters to provide news not approved by the government.
Yet such is the fast-changing nature of the Internet in China, and the spottiness of the government’s enforcement of its myriad regulations, that Internet and computer firms are continuing with business as usual in spite of the new measures.
“Like a lot of things in China, if they follow through on everything that’s suggested, it could be damaging” to the industry, said Ted Dean, a partner with BDA China, consultants on the Internet and telecommunications. “But also like most things in China, I don’t think they actually will.”
Since Internet access began to grow here, the Beijing regime has shown itself to be deeply ambivalent about the medium, acknowledging both its economic importance and its potential for undermining Communist Party supremacy with the unfettered flow of information.
To keep the Internet in check, government agencies have introduced a host of rules--in piecemeal and sometimes contradictory fashion--on who can have access to the Internet and how cyberspace is to be used.
Few of those edicts have been well enforced. For example, a policy that all Internet users register with the police, a requirement greeted with alarm when it was issued some time ago, has gone virtually ignored.
Although the latest batch of rules also has sparked concern, many of China’s “netizens” believe they also will not be strongly enforced.
In fact, some of the latest demands, such as the requirement that all companies register their encryption software by next Tuesday and this week’s injunction against spreading state secrets, seem so broad and confusingly presented that observers are baffled as to just what the government is trying to accomplish.
“We all try to comply with the regulations, but when you’re not sure what they’re trying to get at, it’s hard to comply,” said Fengming Liu, director of legal and government affairs for Microsoft in China.
Microsoft’s popular Web browser, Internet Explorer, which is in widespread use across China, contains a form of encryption software. So do China’s millions of cellular phones. Such software allows users to encode information such as credit card numbers and e-mails to prevent eavesdropping and are considered essential for financial transactions and e-mail privacy over the Internet.
Even the new U.S. ambassador to China, Joseph Prueher, told foreign reporters Thursday that he did not fully understand the issues involved.
Revealing encryption details could affect the operations of the U.S. Embassy just as it would impact e-commerce companies and other firms.
Chinese Foreign Ministry spokesman Zhu Bangzao acknowledged that e-commerce companies will be “affected somewhat” by the new regulation, but he insisted Thursday that the new rules will not “hamper the process of foreign companies entering into China.”
Despite a strong protest lodged by the American Chamber of Commerce here over encryption registration, online entrepreneurs such as Micah Truman, the founder of Madeforchina.com, a marketing Web site, are forging ahead.
“If you look at the individual laws, that would be kind of troublesome,” said Truman, a transplanted Seattle resident. “Instead, look at what’s happened over the last three years. The government has absolutely not impeded the flow and development of the Internet, any time, anywhere, ever.”
Costs for going online continue to drop, and the number of Internet users in China more than doubled in the last six months of 1999, from 4 million to nearly 9 million.
Beijing’s wary response to new technology has precedent. When fax machines were introduced to China, the government required that all owners register with the government, a rule that it was hard pressed to enforce with the explosion of users.
Events in the past year prompted a fresh wave of concern by government officials over the potential threat of the Internet.
China’s Internet chat rooms and bulletin boards became venues for harsh attacks against the government for its allegedly weak performance after North Atlantic Treaty Organization warplanes last May bombed the Chinese Embassy in Belgrade, the Yugoslav capital, during the Kosovo conflict. Likewise, Premier Zhu Rongji was denounced as a traitor in online newsgroups by Chinese who felt he had made too many concessions to the United States over China’s accession to the World Trade Organization.
Moreover, the outlawed Falun Gong spiritual sect used the Internet to spread information to members and foreign journalists about protests, arrests and government harassment after the group was outlawed last July.
The new rules governing the release of “state secrets,” issued by the shadowy State Bureau of Secrecy on Wednesday, can be seen as a response to these events. China’s broad and fluid definition of secrets allows the government to nail anyone perceived as an enemy of the state.
But few online companies see the regulation as an immediate impediment to their businesses.
“From a commercial point of view, nobody’s trying to build a business by trafficking in state secrets,” said Dean.
The bulk of China’s Internet users, like those in the U.S., turn to cyberspace for purposes that are not overtly political, from shopping to entertainment to finding romance.
