Introduction

Recent events illustrate the difficulty China's government is experiencing in creating a coherent and stable legal framework for the local Internet. On the one hand, Chinese leaders clearly recognize that the Internet can contribute to the country's economic development. On the other hand, they want to protect relatively weak local operators from premature foreign competition. They also fear that the Internet, because it facilitates the circulation of information, may induce an intensification of political debate and opposition.

General regulations General regulations

To address this fear, Beijing has issued a barrage of new rules governing the use of the Internet (see Table). Under regulations issued by the State Council in October 1999, anyone using software or other products with encryption capabilities had to register with the State Encryption Management Commission by January 31, 2000. Some thousand enterprises, mostly Chinese, have already complied. Even software in general use, such as Microsoft's Internet Explorer or Netscape's Internet browser, are subject to the regulations.

Yet another official initiative has apparently prohibited websites from disseminating news not previously disclosed through official news agencies, thus outlawing news collection through their own "cyber-reporters." And regulations issued in January 2000, if actually enforced, could require prior approval of chat room exchanges and seriously stunt the growth of the vibrant local "intertainment" market.

More generally, businesses would do well to remember that China's public security organs have the authority to pursue individuals and organizations using the web to spread pornography, to commit an array of political offenses--which are not always well-defined in Chinese law--or to commit Internet-specific offenses, such as "harming other people's information systems and network security." According to the Computer Information Network and Internet Security, Protection, and Management Regulations, no unit or individual may use the Internet to create, replicate, retrieve, or transmit information that

Incites violation of the Constitution or laws, or resistance to the implementation of administrative regulations; Incites the overthrow of the government or the socialist system; Incites division of the country, or otherwise harms national unification; Incites hatred or discrimination among nationalities or otherwise harms the unity of the nationalities; Makes falsehoods, distorts the truth, spreads rumors, or destroys social order; Promotes feudal superstitions, sexually suggestive material, gambling, violence, or murder; Promotes terrorism, incites others to criminal activity, openly insults other people, or distorts the truth for purposes of slander; Injures the reputation of state organs.

Net endusers' responsibilities

According to State Council December 1997 regulations (articles 6 and 11), Internet users must:

Obtain proper approval (from the Ministry of Public Security) before using computer networks or network resources; Complete and return to their Internet service provider (ISP) a form designed by the local Public Security office (under article 12, the ISP must transmit the information in this form to the Public Security office within 30 days); Refrain from entering computer information networks or using the resources of the network without permission; Refrain from changing network functions ("gong neng") or adding or deleting information without prior permission; Refrain from adding to, deleting, or altering the information stored, processed, or transmitted through the network without prior permission; Refrain from deliberately creating or transmitting [computer] viruses; Refrain from all activities that harm the network.

ISP and corporate intranet operator responsibilities

Also according to the 1997 regulations (articles 10 and 13), ISPs and corporate intranet operators must:

Establish a management system for network security and protection; Implement security techniques and protection measures; Provide security education and training for network users; Inspect the content of information released on behalf of someone else and register the unit or individual on whose behalf the information was released; Establish a system for registering users and managing the information of electronic bulletin boards; Report violations of the regulations within 24 hours of their discovery to the local Public Security office; Remove web addresses and directories and close servers as required by regulations; Establish a system for registering users of public accounts; Refrain from lending or transferring accounts.

How China's regulations compare

The general regulations protecting state security are to be expected and no doubt conform with the requirements of such international treaties as the International Covenant on Civil and Political Rights. But their application in individual cases may raise concerns. If China considers any element of information not previously disclosed by official media a state secret, then the rights enshrined in such laws become meaningless.

Most of China's Internet-specific regulations mirror provisions likely to be found in the laws of other countries. Still, some are specific to China, for example, the prohibition of "promoting feudal superstitions." And the Chinese regulation "to refrain from lending or transferring accounts" appears extreme by international standards, but it is also difficult to imagine how the Chinese police will enforce this prohibition.

Other aspects of the Internet-specific regulations also go beyond what would be considered standard practice elsewhere. Most important, outside China, civil authorities or economic branches of government--not the police--usually administer the Internet. Outside China, ISPs are generally not expected to review information before posting it to the web. The Chinese regulations could be applied to hold ISPs responsible for their unwitting dissemination of illegal information.

Most countries do not require ISPs to establish a system for registering with the police users and managing the information of electronic bulletin boards. As a practical matter, however, ISPs would probably seek to register parties communicating through their offices, not only for marketing purposes, but sometimes to comply with local tax laws, as well as to minimize the risk of being suspected of collusion with criminal elements.

The most recent measures, however, go far beyond what would be considered standard practice elsewhere. Requiring any user of software containing encryption to register with anyone, let alone the police, is unusual. Prohibiting websites to employ their own journalists seems to contravene the International Covenant on Civil and Political Rights. Article 19 of the covenant protects a person's "right to seek, receive, and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of his choice."

The requirement that all encrypted applications used in China be produced in China appears objectionable mostly on economic grounds. Whether such a prohibition would stand after China's entry into the World Trade Organization (WTO) depends on the exact language of the text. Given China's predilection for classifying seemingly anodyne matters as touching upon "state security," the authorities will no doubt lend a broad meaning to the national security exceptions that are stipulated in most treaties, including the WTO and the International Covenant on Civil and Political Rights.

E-edgeball, anyone?

With China's World Trade Organization (WTO) accession pending, foreign investors can hardly be criticized for venturing into the interstices of China's web regulations, especially considering the ways in which Beijing practices its own version of "distinctions without differences" to allow, indeed to encourage, experimental promotion of electronic commerce on a limited scale. Even after the Unicom debacle (see The CBR, May-June, 1999, p.16), foreign players remain willing to invest in agreements on the margins of applicable legal texts. These agreements, though sometimes approved at local levels, are often exposed to subsequent correction by central authorities.

For instance, just as Minister of Information Industry (MII) Wu was publicly insisting that the prohibition of foreign investment in telecom ventures applied to foreign investors in Internet content providers (ICPs), Yahoo! executives were announcing in Beijing the opening of their China portal in a local joint venture.

Though Wu has been quoted as considering telecommunications "value-added" services and thus off-limits to foreign investors, MII has reportedly granted a business license to a joint venture with 50 percent US ownership to provide online trading between Chinese brokers. For its part, Shanghai has authorized foreign investment by "sole investors in an information service enterprise if they have achieved certain fame, have total equity of at least $1 million, and operate a technology-development institution in Shanghai."

Since the US-China WTO agreement grandfathers arrangements existing at the time of accession, some operators may even be allowed to maintain positions more favorable than those agreed to in the accession process. Such bonuses for testing the limits of the regulations are hard to resist.