China’s Soft WWW Policy – Access Only through Chinese Servers

October 9, 2011 Posted by China Briefing Reading Time: 3 minutes

Potential implications for all online sales, marketing and publishing platforms targeting China

Op-Ed Commentary: Chris Devonshire-Ellis

Oct.9 – Spending the National Holiday week relaxing in Beijing, one thing that became immediately apparent was the worsening of connections to the worldwide web. Overseas web sites that were previously always accessible are now erratic in terms of performance, and even our webmail server (based in the United States) has had access problems.

The web access situation began to worsen at the beginning of the year, itself a slow downgrade from the so-called “freedom of access” promised by China for the 2008 Beijing Olympics. Indeed, one of the Olympic legacies was intended to be greater opening of China’s internet to the world. It’s hard to say that the Olympics did not succeed, but the event turned out to be more of a platform to promote the legitimacy of China’s one party state than one bringing a lasting legacy of openness.

Since 2008, the ability to access the internet in China has increasingly come under state control. Nowadays, just typing into state-friendly search engines (such as Microsoft’s Bing for example) carries a caveat: “Due to legal obligations imposed by Chinese laws and regulations, we have removed specific results for these search terms.” My attempted search? “Beijing Olympics.”

As China has increasingly moved towards censoring and restricting access to the worldwide web, and has blocked entire websites and social media such as Facebook and Twitter, it has also become apparent that China can selectively approve access to otherwise restricted sites as and when it wants. The block isn’t a total firewall. International schools, for example, may still give their students access to Facebook upon signing agreements directly with the public security bureau. The ability to turn “access spigots” to specific buildings on and off is an interesting development and shows just how far and sophisticated the web restriction techniques are.

Over time, constant overseas web site access problems suggest that the government is herding overseas web sites that want to access readers in China towards hosting on China-based servers. To register to host a web site on a China-based server requires ID and proof of residential address. In doing so, you effectively make yourself personally liable for the content of that web site and accountable should you break any of China’s “laws and regulations” concerning internet usage.

The problem is that China’s “laws and regulations” concerning internet usage in the country lack coherence. While there are a wide variety of laws and administrative regulations (more than 60 internet regulations), internet censorship is more of a grey area. A variety of censorship systems are vigorously implemented by provincial branches of state-owned ISPs, business companies and organizations. In short, it’s difficult to say what illegal use of the internet in China amounts to and keeping related laws unclear allows easier action against perceived offenders.

While herding web users towards total reliance on web sites that are hosted on China-based servers is hardly a published or officially-recognized policy, I suspect that a frustration with internet access is being deliberately introduced to train people in China to gravitate towards such sites. This has serious implications for China’s foreign investors and for all media or communication businesses whose sales/marketing platforms are based on servers outside China.

To create a situation in which China’s foreign investors and media or communication businesses transition to China-based servers, China needs to add in additional layers of laws related to internet security and access. Such amendments could include:

Laws to allow foreign media and related businesses to place a China-only site on Chinese servers. Such sites would, in many instances, contain different content from their international versions, thereby forcing some media to either self-censor or forego access to Chinese readers.
Laws and improved infrastructure to permit products to be purchased online and for payment to be processed through China’s banking system. This is currently available, but is relatively undeveloped in terms of services and the online security that is offered. This would make such income generated in China, in RMB, and taxable in China.
Laws related to the establishing of foreign-owned bank accounts in China. Not all businesses wanting to sell online in China need a physical presence in the country, but such a presence is required if a corporate bank account is needed. It is possible this requirement could be relaxed to both accommodate and tax RMB-derived income.
Laws relating to online payment systems operated by foreign companies. At present, this is restricted, however (in conjunction with point 3 above), one can assume payments would be directed through China’s own banking system.

No mention of the China-based server push can be expected in official media, however businesses affected by this – and that includes all companies whose email and servers are sited externally from China – should take heed. My advice? It’s time to start looking at hosting part, if not all, of your corporate communications and marketing platforms that involve China on Chinese servers.

Chris Devonshire-Ellis is the principal of Dezan Shira & Associates, publisher of China Briefing, and Vice-Chair of the Business Advisory Council for Northeast Asia. He may be contacted at chris@dezshira.com