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A lot of phone calls with the Public Security Bureau

Firms are required by law to display their web licence and registration number at the bottom of the site so that the authorities can get hold of them in the event that objectionable content is found, and with rules changing on a weekly, daily or even hourly basis it can involve a lot of phone calls with the Public Security Bureau, he added.

Ditching UGC may be do-able for ecommerce sites, but it could be harder for those reliant on engaging on a deeper and broader basis with their customers. There could be wider implications for China’s own burgeoning digital industry and those foreign VCs who have shown themselves to be enthusiastic investors thus far.

“Some in the business community have made remarks that [censorship] may create a disincentive to innovate outside the box, because with some things you can’t predict how they will play out,” said MacKinnon.

“There’s a feeling in the industry it is stifling experimentation and innovation. If you’re doing anything related to user-generated content you’re in a very tough business.”

Hong Kong Internet Society founding chair Charles Mok agreed, claiming that the effect on local companies over the past 10-15 years has been that they don’t feel they have to innovate.

“They just need to put a spin on what others are doing with Chinese characteristics – Western companies can’t do this,” he told El Reg. “There is a sense that ‘I just need to do what you are doing and not get shut down’.”

For the time being the VCs are happy to invest, and there have at least been isolated pockets of innovation – for example the weibos have managed to vastly improve on the usability and functionality of Twitter, said Mok.

Jurisdictional overlap

Ironically, the government recently published a report claiming that it wants to turn China into an innovation-oriented country by 2020, but whether it can reconcile its need to control the internet with this desire to spur innovation remains to be seen.

In any case, the power of the Great Firewall, Mok added, is not just in the pretty basic technology or the army of government and in-house censors, but in the country’s legal regime.

“In most countries there are few laws which have been applied to the internet, but in China the tendency is to put in many laws, in many different states and provinces, both horizontally and vertically, so you get this great jurisdictional overlap,” he argued.

“The effect, cynically, is that if I want to catch you, I will be able to find a law somewhere that I can do it with.”

Putting the genie back in the bottle

The political reality is that with over 520 million web users it is China who is in the driving seat now, and the truth is it doesn’t much care what the rest of the world thinks. Even Google co-founder Sergey Brin recently admitted he was wrong to question China’s long-term ability to restrict the free flow of information online, saying “the genie has been put back into the bottle”.

As Charles Mok explained, with over a quarter of the world’s internet population living within its borders, who are others to question the way China runs the web? “The last thing the internet community wants to see is China breaking away, so it has a lot of leverage,” he said.

It’s certainly likely that as scrutiny of China on the world stage grows, its clampdown on web freedoms at home will intensify, pushing some domestic online firms closer to breaking point. It is in the interests of the Party to at least have a fully functioning, if highly regulated, social media operating in the country as it can provide an excellent means for covert state surveillance.

“It provides a useful way of checking the temperature of public opinion and mechanisms to deal with local governance problems and abuses,” said MacKinnon.

“Because central government controls social media companies with censorship, then the effect is that it is strengthened while local government is weakened.”

One thing is clear, though. While the government is happy to reap the economic benefits of the internet, and although VCs are ploughing unprecedented sums into Chinese web firms, no industry is bigger than the Party.

It has in the past cut the internet entirely in areas where social unrest threatened its rule, such as Tibet in 2008 and Xinjiang in 2009, and wouldn’t think twice about throwing the switch again if its censorship regime failed to stem the free flow of information.

“Internet censorship and the ingenuity and creativity of the Chinese people in expressing their ideas online is a constant cat and mouse game,” said Philem Kine, senior Asia researcher for New York-based Human Rights Watch.

“The government has extremely deep pockets and almost limitless personnel and the bottom line is its over-riding priority is to maintain its monopoly on power. There’s nothing it’s not willing to pay for that.” ®

Magic Quadrant for Enterprise Backup/Recovery