Until recently, China’s Great Firewall, the laws and regulations that the Chinese Communist Party uses to control the internet, had significant cracks in it. Virtual private networks (VPNs) allowed about 100 million people, 14% of China’s online population, to circumvent blocks on Google Scholar, Dropbox, Facebook, and Youtube, among other sites.
Yet recent laws have clamped down on the use of VPNs. In July, Apple stopped selling VPN apps in China to comply with the new laws. Further, the Communist Party employs about 100,000 people to police the internet, removing posts the Party deems undesirable or dangerous. This is on top of the up to 2 million people the state employs to steer online conversations and debate down a more Communist-friendly path.
The CCP has taken another step to rein in the internet: online forums and communities must, starting October 1, ensure that all users are registered with “proper identification.” In addition, these forums must implement a system of “approve-first-then-post” to ensure that all posts are in-line with the CCP. “Obviously, the forbidden items are so broad and vague that any criticism could be included in the categories.” Internet companies are to promptly report any illegal behavior to the authorities. Another cyber-security law, which went into effect in early June, forces companies to collect their users’ information and store it on servers within China. Keeping the information on servers in-country will allow the government to more easily track and prosecute internet users it believes have violated the laws.
That same law was expected to increase the costs of doing business in China by “increasing costs to foreign firms, exposing multinationals to cyber-espionage, and giving domestic companies an unfair edge.” While large multinationals will be able to absorb the costs of these new regulations, smaller businesses may now be outclassed by Chinese firms.
While always heavily censored, the internet has also been praised as a bastion of free expression and government criticism in China (see: Yang, “The Co-Evolution of the Internet and Civil Society in China,” 2003). Chinese have often used the internet to voice disapproval of local government and spur reforms on a range of issues, from the environment to public transportation. The national party’s tacit permission for activists to use the internet in this way led Stephen Halper to claim that the managed use of the internet is part of a new “Beijing Consensus” of authoritarian government (see: The Beijing Consensus, 2010).
The internet as a check on Chinese officials seems more threatened now than ever. The end of anonymity on comment posts will stifle criticism of the government, since illegal actions can be so broadly interpreted. This will slow the pace of local-level reforms that have produced a number of benefits for everyday Chinese people (see: Matsuzawa, “Citizen Environmental Activism in China,” 2012).
The laws mandating that companies must store information in Chinese servers will also be a detriment to trade. While corporate and cyber espionage will likely increase from such regulations, which will benefit Chinese companies, the American Chamber of Commerce in Shanghai claims that the new laws could have a negative impact worth billions of dollars.
These new internet regulations will only increase the pace and volume of criticism over China’s trade practices. In April, before these regulations, the US Trade Representative labeled Chinese internet censorship as a trade barrier for the first time. The new laws will lend more credence to that label.
While these laws will allow the Communist Party to more effectively control the internet, and the people’s use of it, the economic ramifications could be steep, especially if the United States and others threaten trade retaliation against China. Such a trade war is increasingly possible, and these new internet regulations will not help advocates’ case of unhindered trade.