The Internet in China

If you listen to academic theorists (e.g., Fukuyama 1989), China should be the world's newest and greatest democracy by now; free market economies are, after all, supposed to be incompatible with authoritarian regimes. But China's booming economy has, if anything, solidified the Communist Party's control.
Managing the Internet's Growth, One Step at a Time

Let's take as a given that the Internet really does enable people living within authoritarian regimes to engage in undetectable, anonymous communications that enable them to publish and read seditious material. According to Michael Froomkin (1996), this capability alone is bad news for totalitarian regimes: "they will be forced to choose between, on the one hand, limiting access [as Singapore does] and paying a substantial price in economic growth or, on the other hand, letting go of their control of information, a traditional tool of social control." Froomkin, like others who believe that the Internet inevitably favors democratization, believes that governments will eventually learn that they have to give up. They'll hold back their economies if they limit access, and they'll fail in their attempt to control Internet content.

China may well prove Froomkin wrong. In China, as you'll see, the regime has adopted a go-slow, managed growth policy that enables them to deal with Internet problems one step at a time. By carefully controlling the Internet's growth and weaving it deeply into the fabric of the Party's complex network of business and regulatory relationships, the regime is building an Internet user base that has little incentive to use the network for seditious purposes; on the contrary, most Internet users in China have everything to gain by supporting the government line.

That's the carrot. And as you'll see, there's a stick, too--a big one.

The Carrot

Terrified of the open information access that the Internet enables, authoritarian regimes worldwide seek to limit Internet access to selected and easily controlled populations, those who have a lot to lose by challenging authority (and much to gain by keeping connected). For example, Saudi Arabia allows universities, selected businesses and medical institutions to connect to the Internet; there's no concept of providing access to the entire population (Mendels 1996). In Singapore, the government achieves much the same effect by limiting ISP competition to three state-entitled firms. By eliminating competition from the ISP sector, the Singapore government  slows the pace of growth and simplifies content-monitoring tasks.

The Chinese strategy is a blend of these: the state wants to control and manage the Internet infrastructure in China so social penetration can be managed step-by-step; the result is that Internet access in China has been limited thus far to the population that, as will be seen, is least likely to challenge the status quo. In the meantime, the state plans to implement a massive and repressive security infrastructure (Chen 2000) that will enable precise content monitoring when the network grows too large for manual supervision.

The perils posed to the regime by rapid, uncontrolled growth are amply illustrated by the newest Chinese craze, chat rooms. Previously unsupervised, chat rooms enabled the now-outlawed Falun Gong movement to coordinate its April, 1999 protest, when 10,000 Falun Gong members appeared at the gates of the Zhongnanhai leaders' compound in Beijing to protest the government's actions in harassing the movement and its leaders (Lestz 1999). Having learned its lesson, the regime now requires all Internet chat rooms to be supervised by a government monitor who deletes comments that are critical of the Communist Party. The result is that discussion is skewed in ways that favor the official view. For example, in the wake of NATO's action of bombing the U.S. Embassy in Belgrade, government-censored chat rooms allowed all comments that accused the U.S. of undertaking the bombing deliberately; messages questioning this view were promptly deleted. Despite the prohibition on using the Internet to plan demonstrations, most observers believe that the government not only encouraged but actively aided students who used the Internet to plan days of violent protests outside the U.S. Embassy. Still, too-rapid growth could allow chat rooms to spiral out of control. As one Party censor commented, "That is a problem for us. Right now we don't know just what we will do." (quoted in Rosenthal 1999)

To hold back the pace of growth so that it does not  overwhelm the censors, Beijing regulators initially adopted policies that held back (and even prevented) foreign investment in China's telecommunications infrastructure, thus ensuring slow growth and high access fees (Sautede 1996). Catherine Mann, an economist who urged Chinese officials to open the telecom system to foreign investment, noted with dismay that the czars of Internet and telecommunications development in Beijing seem to want to "slow down the development of electronic commerce, or manage [its] development, or perhaps look more inward" (quoted in McMahon 1999). The regime's motive for the foot-dragging strategy? Foreign analysts emphasize the greed dimension; after all, the regime is a major owner of the Chinese Internet's infrastructure. "There is a lot of money to be made here," says a Hong Kong-based investment analyst (quoted in Anonymous 2000b); the regime "doesn't want to lose it". The value of Internet-based transactions in China is expected to reach US $11.7 billion by 2004 (McMahon 1999). But the foot-dragging reveals another motive.  Beijing may want to profit from the country's Internet, but they also want to control the pace of growth to make sure the network evolves slowly until the regime is convinced that the technology exists to enable effective broadband content monitoring.

Recently, under pressure from World Trade Organization (WTO) negotiators and internal pressure from capital-starved Chinese web sites such as sina.com, the regime grudgingly granted permission for mainland sites to sell up to 49% of their stock to foreign investors; the figure will rise to 50% after a two-year "waiting period" (Anonymous 2000b). Still, the regime fully intends to manage the flow of foreign investment in such a way that it can continue to shape the Chinese Internet's political impact. For example, foreigners cannot invest in the woefully overtaxed telecommunications infrastructure that links China to the rest of the world (Anonymous 2000a), for one simple reason: the regime does not want the Chinese Internet to have more external bandwidth.

The combination of high access fees and slow infrastructural growth initially combined to restrict Internet access to a well-defined and political apathetic user community, one that, like Internet users in Saudi Arabia, had much to lose by challenging government regulations. According to recent studies, the typical Internet user in China is male, young, single, university educated, relatively affluent and works in the rapidly-expanding IT sector (China Internet Consumer Report, quoted in Anonymous 2000c). Such users have little to gain from undertaking actions that would lead the government to crack down on the Internet; in contrast, their futures depend on rapid Internet growth and keeping out of trouble with the government.

To be sure, the Chinese government insists that it wants the Internet to grow, but it also wants the growth to occur on its own terms. For example, the recently announced 169 network offers inexpensive access (approximately 22 U.S. cents per hour) prevents access to external Web sites; the network uses a non-standard addressing system which, the regime claims, creates more network addresses for Chinese users (U.S. Embassy, Beijing 1998). With low-cost access finally available, less educated Chinese are finally beginning to show up on the Chinese Internet (Greenberg 2000), but they're accessing an Internet that is technically designed to prevent access to external Web sites.

For Chinese Internet users, the incentives to avoid any criticism of the regime aren't abstract; they're personal and immediate in a way that foreigners may find hard to understand. The lubricant that smoothes the gears of China's booming economy is called guanxi, a Chinese world that is usually (and incorrectly) translated as "connections" (e.g., see Sheff 1999). As anthropologist Duran Bell points out (Bell 2000), the concept is much deeper than the word  "connections" implies; guanxi implies a web or nesting of mutual and personal relationships that amounts to extending the emotional depth of family relations to persons and organizations outside the family. If you've got guanxi with powerful Party members and bureaucrats, you go places. For example, Beijing-based CCIDNet.com, which specializes in electronics industry news, is run by a 39-year-old ex-government bureaucrat named Li Yang; the company's main shareholder is a subsidiary of the Ministry of Information Industry (MII). CCIDNet.com has a "big edge," says Li, because the "MII really trusts and believes in us" (Anonymous 2000).  As many foreign investors have learned to their profit, it's very wise to invest in Chinese enterprises that are loaded with guanxi.  For example, Hong Kong-based Chinadotcom Corp. is known to have the blessings of Beijing's official Xinhua news agency. Surprise! Chinadotcom was the big winner in the Chinese IPO sweepstakes; the company raised over $450 million and is now getting 16 million hits per day (Anonymous 2000b). From the tycoon level down to the CGI Joes in web production shops, there's every reason to stay on the government's good side: Your future depends on it.

______________________

White Paper
Linux Management with Red Hat Satellite: Measuring Business Impact and ROI

Linux has become a key foundation for supporting today's rapidly growing IT environments. Linux is being used to deploy business applications and databases, trading on its reputation as a low-cost operating environment. For many IT organizations, Linux is a mainstay for deploying Web servers and has evolved from handling basic file, print, and utility workloads to running mission-critical applications and databases, physically, virtually, and in the cloud. As Linux grows in importance in terms of value to the business, managing Linux environments to high standards of service quality — availability, security, and performance — becomes an essential requirement for business success.

Learn More

Sponsored by Red Hat

White Paper
Private PaaS for the Agile Enterprise

If you already use virtualized infrastructure, you are well on your way to leveraging the power of the cloud. Virtualization offers the promise of limitless resources, but how do you manage that scalability when your DevOps team doesn’t scale? In today’s hypercompetitive markets, fast results can make a difference between leading the pack vs. obsolescence. Organizations need more benefits from cloud computing than just raw resources. They need agility, flexibility, convenience, ROI, and control.

Stackato private Platform-as-a-Service technology from ActiveState extends your private cloud infrastructure by creating a private PaaS to provide on-demand availability, flexibility, control, and ultimately, faster time-to-market for your enterprise.

Learn More

Sponsored by ActiveState