A spate of measures restricting internet access in China risks isolating it from the rest of the world and is hitting business sentiment, according to a new survey by the European Chamber of Commerce in China.
China operates one of the world’s most sophisticated online censorship mechanisms, known colloquially as the “Great Firewall of China”, and things have become tougher since Xi Jinping became president in 2013.
China likes the business opportunities offered by the internet but censors from the Cyberspace Administration of China (CAC) keep a tight grip on what can be published online, particularly anything that seems to challenge the ruling Communist Party, and overseas services such as Facebook, Google, Twitter and YouTube are banned.
Recent weeks have seen virtual private networks (VPN), which allow people to get around online censorship of websites, come under pressure, while 133 accounts on the WeChat social network were shut down for “distorting history”.
‘Internet tax’
New measures could turn its domestic networks from an internet into an “intranet”, the survey showed, and both foreign and Chinese businesses were affected by what amounted to a corporate “internet tax”.
“These worrying trends illustrate how excessive tightening of internet controls can choke business growth and stifle investment in technology and R&D – areas which are crucial for China’s development,” said European Chamber president Jörg Wuttke.
“This is compounded by the fact that these measures are also discouraging much-needed foreign talent from relocating here. Restricted access to key internet tools is not merely an unfortunate inconvenience for individuals – it is an increasingly onerous cost of doing business here that many companies are finding harder to bear.”
In the chamber’s survey, which was carried out over the past few weeks, 86 per cent of companies reported a negative effect on their business as a result of certain websites and online tools being blocked, a 15 per cent increase on June 2014.
Some 80 per cent of respondents have recorded a worsening business impact as a result of the recent further tightening of internet controls beginning in early 2015,
Some 13 per cent of respondents have recently deferred R&D investment or have become unwilling to set up R&D operations in China since internet restrictions were tightened in early 2015, the report showed.
“It’s obvious that information-based, global-facing businesses will fuel China’s growth in the years ahead, and it is in China’s own interests to ensure that internet supervision does not hamper legitimate, value-added commercial activity.
“Remember, this is not just a problem for international business – we know from extensive conversations with the Chinese public and the private sector that many domestic companies are just as frustrated as our members,” said Mr Wuttke.
He said it was “hugely dispiriting” to see member companies scaling back investment and expansion and diverting spending to other markets. “The consequences of excessive internet control are unnecessary and avoidable, and if left unaddressed will only get worse as more business activity moves online.”
