Liberalization & Deregulation

Internet Diffusion

Electronic Commerce

Hardware Manufacturing

Software Development 

Who uses IT?

IT Labor Market

IT Geographics

IT Financing

Government Policies

Legal Environment

Transborder Data Flows 

Analysis: IT Strengths & Weakness

Analysis: Impacts on the Business

Sources and Links

China is industrializing rapidly, Chinese government wants to be committed to increasing Internet access, but it appears to be intent on retaining the highest possible degree of state control. Although Internet usage is growing quickly on both campus and commercial servers, albeit from a low base, the Chinese government is seeking to limit Internet access by keeping costs of local service artificially high while it formulates a long-term policy. 

A sufficiently determined government might be able to achieve considerable control over its citizens' use of the Internet by some combination of strict access control, a ban on unlicensed cryptography, random monitoring of stored data and communications, and draconian punishment for sending or receiving unapproved materials. In time, it might also be possible to create tiered access to foreign materials. 

Behind this hypothetical Great Firewall of China, most users would be allowed to exchange information with foreign sites if they were on the approved list; controls on domestic information exchange also might be possible, although these might be prohibitively expensive unless the default rule were to be no communication at all. Even a firewall aimed only at controlling the content of international communications would require a very significant investment in filtering software and in manpower to keep the approved site list up to date, although it might be able to use simple content analysis to filter out some probably troublesome data (e.g., specific banned words or phrases). 

A content firewall would reduce the economic value of the Internet considerably. Furthermore, since it is impossible to filter only objectionable material, the system will either filter "too little" or "too much". The tighter the filter, the greater the opportunity cost in lost ability to access the rest off the world's data. Nevertheless, a very aggressive firewall combined with the in terrorem effects of some well-publicized punishment of violators might at least allow the government to discourage a large fraction of unsanctioned international information exchanges. 

In order for such a strategy to have any hope of success, however, the government must be prepared to resist domestic pressure, pressure from abroad, and especially pressure from foreign firms with local offices who, like those established in Singapore, are likely to protest loudly at having their data and communications monitored. The Chinese government's re-assertion early in 1996 of the state news agency's monopoly over the transmission into China of all news and business information is only the incident that suggests the Chinese government may be uniquely willing to stand up to such pressure.