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China mulls Net investment barriers

It's the Great Leap Backward, claims WSJ

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Beijing has started debating measures that threaten to hinder foreign investment in its budding online economy.

Two draft laws have been put forward that may restrict who is able to operate in China's Internet sector. The first is a general telecommunications law - in its current form it states that anyone wanting to operate "Internet and multimedia network services" would first need a licence from authorities under the State Council, China's cabinet.

The second governs foreign investment. Any joint venture between Chinese and non-Chinese telecom companies will need to get the nod from two government bodies - the Ministry of Information Industries and The Ministry of Foreign Trade and Economic Cooperation.

Both laws put up obstacles to e-business - and could make some existing operations illegal, today's Wall Street Journal reports. They also use vague terms that will not do much to bolster investor confidence overseas claims the paper. On the other hand, the measures will do much to benefit China's home grown Internet operations.

Separate proposals would force foreign investors to have annual sales of at least $10 billion over the last two years. According to today's article, this would rule out almost every company currently working in the sector. The Chinese subsidiary involved in the deal would need sales of $360 million per year and a telecomms permit.

The Chinese government, not known for tolerance of dissidents, would also have the power to fine anyone not abiding by the rules - either $24,000 or three times the "profit illegally obtained". ®

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