Internet Companies in China: Dancing between the Party Line and the Bottom Line Asie Visions, No. 47, January 2012
With over 500 million Internet users and 900 million mobile-phone subscribers by mid-2011, the Chinese Internet is an enormous market that has produced the spectacular rise of many Chinese Internet companies and attracted substantial foreign investment. This paper argues that, despite a great degree of liberalization of its market over the past 15 years, the Chinese Internet remains authoritarian in nature. Not only did the central government actively shape the infrastructure and rules of China's information superhighways, but recently it has also vigorously built state-controlled Internet companies, including a national search engine.
The paper starts with an overview of the landscape of the Chinese Internet industry, followed by a review of the developmental trajectories of three important search companies in China - Baidu, Google, and Jike (the national search engine), whose stories are illustrative of the experiences of domestic, foreign and state Internet firms operating in China. The paper then outlines the Chinese government's regulatory policies towards the Internet industry, which it is argued have undergone three stages: liberalization, regulation, and state capitalism.
It is recognized that the great prospect of the Chinese Internet is shadowed by, and often overshadowed by, the government's insistence on weaving a China Wide Web. Domestic and foreign Internet companies are invariably used, or restricted, for social control as the government painstakingly transplants its ideology into cyberspace. Such practice is not only morally degrading but also unsustainable in the long run. An assessment of Chinese government policy toward Internet firms operating in China is not merely an academic exercise; it raises ethical and policy concerns for foreign governments, international organizations, and investor communities in China's expanding Internet market.