POLT 762 Final Thesis

Leonidas Ocampo

Lee72

Chinese Internet Censorship

Senior 2015

Political Science & International Affairs

Morristown, NJ

Other URC Presentation IA 701

Final Draft

I. Problem:

Although China has seen great economic development within its country over the past

50 years, it still has some distance to go before reaching the same levels of market

productivity as the US, EU or Japan. China holds strict regulations over the Internet that

not only grant them considerable control over domestic industries but also over its

citizens and the type of information they deem acceptable for them to absorb.

Internet in China has seen incredible growth since the turn of the 21st century. The

Ministry of Industry and Information Technology estimates that between 1997 and 2008,

the Internet population grew from 630,000 users to 221 million, resulting in an annual

growth rate of 70.36%.1 Later on in 2008, China surpassed the US in the number of users

of the Internet, as announced by the government-linked China Internet Network

Information Center (CINIC), which estimated nearly 298 million users.2 People from all

around China have become more connected as a result of economic development and the

spread of Internet related technologies, with 99.1% of villages having Internet

connections, 95% having access to broadband and an impressive 3G network covering

most of the nation.3 As of 2010, China’s online population reached 404 million users and

no doubt continues to grow.4

The demand for Internet and related skills is high in China. In 2007, “China’s inward

FDI was estimated at $758 billion, ranking it sixth after the United States, United

Kingdom, Germany, France and Hong Kong.5 Of the worlds 500 largest companies, 1 Xin Wang. "Foreign Direct Investment and Innovation in China's e-Commerce Sector." Journal of Asian Economics. 3 (2012): 2902 Anonymous. “China and the Internet: An uphill fight for freedom.” 2009. Harvard International Review. 2 (Jul 2009): 683 Li Dan. “The Internet and Chinese Civil Society.” China Rights Forum. (2010): 14 Ibid5 Wang. "Foreign Direct Investment and Innovation in China's e-Commerce Sector." 287

approximately 490 of them have set up offices or acquired companies in China while

“more than 1160 global R&D centers have been established.”6 The Computer Science

major is the most popular major degree, with nearly 1180 universities in China offering

them and student enrollment exceeding 800,000.7 It is estimated that in the next 10 years,

China will need nearly 1 million IT employees to service China’s technological

infrastructure.8 The amount of growth this country has experienced in the past decade and

a half alone is impressive, thus making it quite the eye opener for foreign Internet

companies.

It is very appealing for westerners to see China and its populace as the next frontier,

however to maintain power domestically and not let foreign intervention diminish the

control the Chinese government has over its domestic enterprises, it issued many

regulations that eventually “effectively declared the illegality of all foreign-invested

businesses of any kind” to operate in China.9 For example, advanced applications from

outside countries are banned or heavily restricted (i.e. Youtube, Word press, Blogspot,

Facebook), while Gmail and Hotmail remain unreliable and slow.10

It is said that “China represents a high context culture,” essentially meaning that the

Chinese require context clues as opposed to the spoken or written word to clarify or re-

assure their stance on a certain situation.11 A simple example of the dichotomy in

character would be the collectivist and individualist mentalities of the Chinese and US,

6 Ibid7 Ibid, 2918 Ibid9 Philip Sohmen, "Taming the Dragon: China’s Efforts to Regulate the Internet," Stanford Journal for East Asian Affairs. 1 (2001): 17-26. 10 Anonymous. “China and the Internet: An uphill fight for freedom.” 6811 Wang. "Foreign Direct Investment and Innovation in China's e-Commerce Sector." 292

respectively.

“Individualist cultures encourage people to look after their own interests and those of their immediate family and differentiate from others, whereas in a collectivistic culture, people generally value social networks and others’ opinions more.”12

What this essentially translates to be is the varying strategies that need to be

considered in order to attract and maintain business within each country. Appealing to the

Chinese citizenry is essential for sustainable business practices but has proven more

difficult than previously expected. There are many barriers to foreign Internet companies

within China that are not solely influenced by the government, but also by the people

themselves. For the purpose of this paper, I will focus on the restrictions given to foreign

Internet companies by the Chinese Communist Party (CCP).

It is often noted that the legal foundation regarding foreign enterprise’s involvement

and capabilities within China is largely ambiguous or non-existent. China accepts foreign

Internet firms whom are willing to remain compliant with their laws and procedures for

regulating information and content. The purported goal with Internet controls for the

Chinese government is to “limit pornography, gambling and other harmful practices,”

however this type of content is usually easier to access than political or religious groups,

human rights violations and alternative news sources.”13 This however extends far deeper

into more case-sensitive topics that the Chinese government can’t afford to let proliferate.

“Among the most censored Information on the web remains criticism of top leaders, independent evaluations of China’s rights record, violations of minority rights in Tibet and Xinjiang, Falun Gong spiritual group, 1989 Beijing massacre, various dissident initiatives that challenge regime on a systemic level (i.e. Nine Commentaries and Charter 08.)”14

The government seeks to limit all unfavorable information and content from

12 Ibid13 Anonymous. “China and the Internet: An uphill fight for freedom.” 6914 Ibid

circulating, therefore they have established complex systems of filtering and blocking

information by use of the infamous Great Firewall. Provisions exist not only within

multiple agencies and their enforcement jurisdictions, but also within basic entrance

agreements outlining full promise for compliance as well as psychological tactics of

“encouraging” self-censorship.

Foreign involvement in the Chinese economy exists only with compliance to their

domestic policy objective of censoring information and content from their citizens. It

almost seems that if a business wants to have any economic success within China, and

it’s not a national, then it has no choice but to comply with the government’s

predetermined procedures for censorship. This is where a big problem lies, between

politics and economic growth; therefore the issue involves the balancing act between

domestic economic growth and foreign investment and involvement. The question that

fascinates me and creates the foundation for this study is why does the Chinese state

control the Net?

This paper seeks to understand, on a more fundamental level, why the Chinese

government has restrictions on foreign Internet firms and their involvement in their

domestic economy. Why is this question so important? China being a rising power in the

world is currently leading the largest campaign of Internet censorship the world has ever

seen. This Internet policy is acting as both a catalyst and inhibitor of domestic economic

growth. I feel it necessary to study their relationship with Google to see just how

determined they are in maintaining a strong grip on the Internet, how difficult (or easy) it

is for foreign Internet companies to establish branches within China and how it has

affected their economic growth potential. China has shown no signs of slowing down, so

for the purposes of understanding international political economies, I feel that researching

a country that manipulates the supply and demand of their own economic potential could

be a rewarding and informational experience.

II. Possible Hypotheses:

A) Individual Decision Maker:

In examining the first level of analysis, the individual decision maker, one must

take into account the various experiences a person of power will draw from for decisions.

Many factors like the individual’s up-bringing and previous experiences can contribute to

the final decision made on a certain policy or issue. Amid growing tensions regarding

global Internet policy, China is attempting to maintain control over the Internet while

achieving consistent economic growth and preservation of social order and confidence

towards the party. Chinese President Xi Jinping has a unique perspective on governance

and first hand experiences brought about during the Cultural Revolution in China. His

father, Xi Zhongxun, having been both a “revolutionary” and a “reformist” at different

points in China’s development, was a big influence to Xi’s level of commitment to

Chinese economic and political success.15 Xi Jinping’s reflections on the role of the west

and the collapse of the Soviet Union has molded his perceptions and given him cause to

pursue strong, authoritative public policy in relation to the economy and media. This is

because of his fear to what heavy western influences can do to a society. My first

hypothesis states If Chinese President Xi Jinping seeks to diminish western influence over

China’s people and economy for fear of a “great leap backward,” then the restrictions

on foreign Internet companies will be stringent. I will not focus on this particular

15 P. H. Yu. "What Kind of Leader Will Xi Jinping be?" American Foreign Policy Interests. 6 (2012): 297

hypothesis due to my inability to find enough reputable primary and secondary sources to

make an intelligent assessment of Xi’s influence over policies regarding foreign Internet

companies.

B) International Environment:

Considering the international environment requires us to first examine China and its

Internet policy in relation to other countries. Their flexibility or rigidness in cooperating

with foreign companies provides evidence to the association between China and foreign

Internet enterprises. China’s increasing measures in Internet regulation is a form of

protectionist policy that is designed to manipulate the information accessible to the public

as well as to minimize risk of advanced foreign firms from taking advantage of domestic

enterprises and subverting their power relationship with China. Inhibiting certain foreign

firms from entering the Chinese market has allowed domestic innovation and enterprise

growth to flourish by developing Chinese equivalents that in turn make the Chinese

economy on the international stage more competitive. It has provided a medium for

Chinese creativity to blossom at the expense of certain liberties the Internet has to offer.

If China desires to prevent foreign penetration into domestic Internet technology

companies, then the restrictions on foreign Internet companies will be stringent. This

hypothesis doesn’t allow me to focus on the primary reasons for strict regulations on the

Internet as does analyzing the CCP’s policies; therefore I choose to direct my study’s

focus on the domestic determinant of stringent policy towards foreign Internet

companies.

III. Principle Hypothesis:

C) Domestic Determinant:

Examining the domestic determinant leads us in the direction of reviewing the CCP’s

stance towards Internet regulation and censorship domestically, their application of those

standards to foreign Internet companies and their willingness to cooperate with them. The

Information Technology industry contributes 10% to China’s total GDP, thus making the

control of the Internet, media/news and the telecommunications industries of paramount

importance to all sorts of policy.16 One aspect of controlling information in the eyes of

the CCP is to limit the amount of dissident ideas and movements from coming about in

light of western democratic principles and thoughts of a less-regulated market. Foreign

involvement into China’s market can be a catalyst not only for foreign investment and

economic growth but also for information sharing and social change which can be

detrimental to the CCP’s policy objectives. Internet regulation within China, its economy

and the political climates are closely tied.

“Internet firms are required to follow Chinese legal provisions to enforce filtering of information of a

wide range, from the kinds threatening international security, unity and stability to those spreading rumor,

pornography and violence, often vaguely defined.”17

For fear of a populace influenced by a free flow of information that provides radically

different perceptions to issues of all varieties, the Chinese state has increasingly imposed

tight canons to reduce the amount of Internet freedom the public has access to. If the

Chinese state views foreign involvement within the Chinese economy as detrimental to its

legitimacy as a governing body, then the restrictions on foreign Internet companies will

be stringent.

16 Min Jiang, “Authoritarian Informationalism: China’s Approach to Internet Sovereignty” SAIS Review. 2 (2010): 71-8917 Min Jiang. "The Business and Politics of Search Engines: A Comparative Study of Baidu and Google's Search Results of Internet Events in China." New Media & Society. 2 (2014): 215

For this reason I am choosing to focus my research on the CCP’s domestic Internet

censorship and regulation policy and how it has manipulated it in an effort to undermine

foreign Internet companies’ influence within China. Reviewing the case of Google’s

involvement in China will grant me better understanding of the CCP’s position towards

foreign Internet companies. Examining the relationship between Google and China in

business will provide me quality evidence to the advantage or detriments of their

cooperation. This study hopes to then analyze the end result of their collaboration in

order to judge whether or not the CCP will pursue stringent restrictions on foreign

Internet companies.

IV. Case Study:

1) Policy Direction

Quickly pointing out the foreign policy direction the fifth generation of PRC leaders

will be taking will serve as a means to explaining certain rationale within the CCP. Why

is this important? It’s necessary to understand the policy maker’s perspective to foreign

policy and foreign actors when attempting to understand policies being implemented that

are relevant to them. Although the focus is a domestic determinant analysis of foreign

Internet companies in China, to not acknowledge the CCP’s perspective on future

Chinese growth and their potential cooperation with foreign actors would be unwise in

attempting to gain a more theoretical background of the issue.

The fifth generation of PRC leaders seem to have aspirations of “continuity and

innovation” present within their foreign policy strategy.18 This means that as part of the

“Chinese Dream” (中国 们), there are two goals the Chinese government wishes to

18 Vladimir Portyakov. "Outlines of the Foreign Policy of the Fifth Generation of PRC Leaders." Far Eastern Affairs. 1 (2014): 23

achieve. 19 Attaining a moderate level of prosperity by 2021 and to join the ranks of

developed nations by the PRC’s centennial in the year 2049.20 This is important to note

because the new leadership in the CCP have taken a stance to develop independently,

both economically and politically. Controlling the Internet and all business that requires

its use allows them to manipulate the extent to which businesses succeed. Creating an

ultimatum for compliance to their restrictive Internet policies grants them considerable

power over the success or failure of companies within China. Moving forward, it is

important to remember their strong stance on being the makers of their own destiny. This

may come as a result of events in China’s history so their position on Internet regulations

to foreign Internet companies isn’t likely to change, regardless of international pressure.

2) Overview of the Internet and Censorship System

An overview of the system itself is beneficial to paint a picture of exactly what types

of barriers foreign Internet companies must comply with in order to conduct business in

China. I will briefly cover a few pieces of legislation that granted the government

widespread control over the telecommunications and high tech industries, news/media

outlets and specific information and content. I will then layout different methods of

censorship and their corresponding organs of regulation and enforcement.

In 1994 a piece of legislation dubbed the “Rules of Security Protection of Computers

Information Systems” effectively established “the basis for government control over and

surveillance of computer networks.”21 In 1997 the “Computer Information Network and

Internet Security, Protection and Management Regulations” piece of legislation made it

so the government could physically limit the access of information and content of the 19 Ibid20 Ibid21 Sohmen, "Taming the Dragon: China’s Efforts to Regulate the Internet." 19.

Internet.22 Wu Jichuan, the minister of the MII announced that “Internet Businesses

would be classed as value-added telecommunications services” falling under provisions

of the 1993 regulations governing telecommunications industries, dubbed the “PRC

Interim Provisions on the Approval and Regulations of Businesses Engaging in

Telecommunications Services.”23

Two regulations form the backbone for the censorship of information and content.

The “Measure on the Administration of Internet Information Services” as set forth by the

State Council sets out three systems for websites to operate legally through a permission

request, approval and specialized approval process.24 The “Provisions on the

Administration of Internet News and Information Services,” as shaped through the joint

efforts of the Ministry of Information Industry (MII) and the Information Office of the

State Council, created a qualification permission system for defining appropriate methods

for news to be spread.25 It identified which news websites and entities were allowed to

divulge the type of information (i.e. commentary on social and public affairs, politics,

economics, military affairs and diplomatic affairs).26 The legislation on Measures and

Provisions held 9 and 11 categories, respectively; of “harmful information” that forms the

basis for the censorship of information and content.27 In light of this specific information

there is often uncertainty and vagueness of policy and legislation. This is due to a lack of

transparency because of the issue of multiple state groups enacting policy over Internet

censorship.28

22 Ibid23 Ibid, 22-2324 Bei Feng. “China's Internet Censorship System” China Rights Forum. 2 (2010): 40-4625 Ibid26 Ibid27 Ibid28 Sohmen. "Taming the Dragon: China’s Efforts to Regulate the Internet." 17

The government attempts to control information and content accessible online by

using a combination of seven tactics to censor material.

“1) Filtering and Blocking, 2) Deletion and Removal of Content, 3) Cyber Attacks, 4) Device

Level and Local Controls 5) Domain Name Controls, 6) Localized Disconnection and Restriction, and

lastly 7) Self-Censorship due to surveillance.”29

The most pertinent to foreign Internet companies as seen through Google’s

involvement within China are the Filtering and Blocking, Cyber attacks and Self-

Censorship tactics. The filtering and blocking strategy is often the most talked about

when considering Chinese censorship policy because it is the foundation to the Great Fire

Wall (GFW) that targets “keywords/phrases, certain domains, internet addresses,

home/school/university/corporate networks, Internet service providers (ISP) or even

entire countries.”30 Google is a search engine above all else therefore the GFW played

heavily into Google’s ability to conduct their business in China. Cyber attacks are also a

notable example and was a driving factor to Google’s retreat from China due to military

organized attacks launched at Google’s Gmail accounts targeting “human rights activists,

whistle blowers, dissidents, journalists etc.”31 Lastly, the intense tactic of self-censorship

has evolved over time to become more of a psychological deterrent among both citizens

and businesses in China due to the heavy surveillance of their networks.

The State Council Steering Committee on National Information Structure (SCSCNII),

which coordinates with several bureaucratic bodies according to different areas,

“formulates strategy, principles, rules and regulations in developing national

29 Rebecca MacKinnon. “China’s Internet Censorship and Controls: The Context of Google’s Approach in China,” China Rights Forum. (2010)30 Ibid31 Ibid

informatization, coordinating projects and establishing standards.”32 The MII is

responsible for the day-to-day regulation of the telecommunications and high tech

industries.33 Under the MII are six self-declared functions:

“I) The formulation of strategy, policy and plans for the information, telecommunications and software

industries, II) to draft and enforce regulations governing these industries, III) to plan, build and manage

public networks for government and military, IV) to allocate and coordinate bandwidth, V) to supervise

telecommunications and information services markets and implement licensing and VI) to assist the

development of the information industry.”34

In outlining the censorship system of information and content, different tactics used

to restrict material and enforcement agencies relevant provides us a brief summation to

the type of system foreign Internet companies are entering in China. The aforementioned

system and its goals are what foreign Internet companies must be aware of prior to

agreeing to compliance.

3) Google in China

As part of my case study on Google’s involvement in China I will separate my

argument into four different sections. First I will go over the intentions of Google for

entering the Chinese market and initial successes that boosted its image. Next I will go

over issues it faced after establishing itself and reasons for Google exiting the mainland

economy to Hong Kong. Lastly I will go over the implications of their departure on

international politics and future foreign Internet enterprise’s endeavors in China.

China is a country with a population of mobile and Internet users that is nearly three

times larger than that of the US’ Internet users. The use of mobile and Internet services in

32 Sohmen. "Taming the Dragon: China’s Efforts to Regulate the Internet." 1833 Ibid34 Ibid

China range from online shopping, social networks, news/media outlets to email and

instant messaging services and search engine queries. Daily life in the urban centers of

China revolves around the ability to access the Internet and communicate for both

professional and social purposes. It is estimated that overall Internet penetration of

China’s total population as of 2010 was nearly 28.9%.35 In a study analyzing Google’s

involvement in China, as cited by Tan, “the Chinese market is simply too important for

any major search engine to miss out on, regardless of the cost, and [if] US

companies...withhold their expertise, then firms from other countries will just step in.’’36

As part of Google’s corporate mission they wish “to facilitate access to information

for the entire world, in every language.”37 Their intentions for entering the Chinese

market in 2005 weren’t limited to intelligent foresight but matched that of other search

engines like Baidu and Tencent (both domestic Chinese companies) as well as Yahoo!.38

Statistically speaking, “the aggregate value of China’s search industry rose as much as

73.1 %, to 5.02 billion RMB (about US$735 million) in 2008 and 6.95 billion RMB in

2009, regardless of the influence of the global recession.”39 This coupled with the fact

that of China’s 538 million netizens in 2010, 79.7% reported using search engines,

making online search the second most popular online activity.”40 The significance to

mentioning these figures is that at the time in 2005, the market for search engines was

35 Li “The Internet and Chinese Civil Society.” 136 J. S. O’Rourke, B. Harris, A Oglivy. “Google in China: Government censorship and corporate reputation.” Journal of Business Strategy. 3 (2007). 17.37 Justin Tan, Anna Tan. "Business Under Threat, Technology Under Attack, Ethics Under Fire: The Experience of Google in China." Journal Of Business Ethics. 4 (2012): 47138 Ibid 47039 Ibid40 Min. "The Business and Politics of Search Engines: A Comparative Study of Baidu and Google's Search Results of Internet Events in China." 213

still young and not established enough to have a dominant player. Seeing as Google is a

primary search engine in the US and many countries around the world, reaching out and

establishing a foothold in China would not only contribute to their overarching goal, but

also be a sound investment into a population that rivals most developed countries in

Internet use.

Although Google had created a Chinese version of “google.com” in 2000, they had

not officially set up and launched the “google.cn” search portal in China until 2006.41

Their presence in China was seen as a new beginning for the Chinese users due to their

awareness of Internet regulations. Google was at a disadvantage due to their inherent

distance from Chinese culture and ideology. Domestic enterprises have an advantage to

business due to their ability to understand basic Chinese principles of consumer

tendencies and services desired. In order to live up to high expectations Google ended up

investing a lot in itself for the purpose of coming out strong and appealing. In 2007 they

began cooperating with large Chinese firms like China Mobile and Tanya in order to

establish a user base.42

Even though they are a household name across the world, they needed to build

credibility and trust from the Chinese people for them to set themselves up for success.

They began developing products that were unique to the Chinese market and focused on

the needs of the Chinese user. Developing products such as “the Google Pinyin Input

Method, Google Life China, and Google Maps China” created an entirely new perception

to their business in China.43 The Chinese people saw Google as a caring enterprise that

41 Tan et al. "Business Under Threat, Technology Under Attack, Ethics Under Fire: The Experience of Google in China." 47242 Ibid 43 Ibid

was attempting to accommodate to the Chinese market for the long haul. These specific

technologies and services built up support from local businesses and consumers and gave

Google the upper hand for a short period of time.

Upon arrival there was skepticism towards their ability to produce an ethical

search engine service for the Chinese populace in light of the Chinese state’s strict

Internet censorship on information and content. A big issue that foreign Internet

companies faced in China was catering to the Chinese users and their habits, preferences

and cultural customs. As mentioned before, entering the Chinese market as a foreign

Internet company will bring about problems that can only be solved with a deep cultural

understanding of Chinese society and its people. This idea was in the background of most

of the issues Google faced after entering China. The Chinese, being a “contextually

driven culture” thrives on loyalty and trust in any business transaction. There is a need for

a relationship to be built between the supplier and consumer in order for continued

business to occur in China. In a survey designed to gauge the trust perceptions among

Chinese Internet users, it was found that 88% “believe it is necessary to provide a “trust

label” to trustworthy business and individuals in online transactions.”44 As a result of

Baidu’s extremely high user awareness and usage rate, Google had a difficult time in

China, adapting and competing against domestic search engine companies due to their

distance from the culture.45 This created the realization that investment alone would not

suffice for sustainable business practices in China, they needed to diversify a bit more

and attempt to understand the local populace.

44 Wang. "Foreign Direct Investment and Innovation in China's e-Commerce Sector." 29345 Ibid 298

Another issue that came about was the competition faced between Baidu and

Google. Although Google had entered the market before Baidu, there was a big

difference in the way they conducted business in adherence to Internet censorship

policies. While Google did adhere to censorship policies, its competitor “stood in stark

contrast to the unquestioning compliance of local search engines such as Baidu, which

actively comply with Internet censorship and follow all governmental laws, rules, and

regulations to achieve stable growth with the backing of the government.”46 Google

managed to circumvent certain policies in an effort to remain as close to their mission

statement as possible but their unwillingness to completely conform was to their

detriment. As a result they began to see increased pressure from the government in GFW

filtering and blocking and they came under fire from cyber attacks.

Google fell victim to a series of cyber attacks that targeted their company’s

intelligence and private information. Rumored to be a military action, “Operation

Aurora” aimed to “gain access to and modify the company’s core technologies and

source codes as well as obtaining vast components of their source code.”47 Although a

failed attempt, this act of espionage was an early sign of adversity to Google’s mission

and presence within China. If that material had been accessed, the actors involved may

have had the capacity to manipulate Google’s source codes and maintain a more vigilant

eye on their operations in the event that Google attempted to further circumvent Chinese

Internet censorship policy. Another attack on Google targeted Gmail accounts of certain

dissident political thinkers. Also a failed attempt, this was an attack that hit more to home

than the other due to its relationship to individuals and their basic human rights. Google

46 Tan et al. "Business Under Threat, Technology Under Attack, Ethics Under Fire: The Experience of Google in China." 47547 Ibid 473

is a strong supporter of freedom of speech and although they have adhered to the Chinese

Internet censorship system, they weren’t inclined to reveal the information of individual

users that might implicate them in a crime down the road. They did not agree and did not

want to be responsible for the imprisonment of a free thinker in China. The constant

pressure from the government, its competitors and these cyber attacks began to change

the Chinese people’s perception towards Google in China.

Following these cyber attacks, an air of uncertainty plagued the company. The

Chinese people began to create perceptions of an unstable and incapable foreign Internet

company that would not be able to provide consistent and appealing services. As stated

by Tan, “This uncertainty drove away some users, pushing them to switch to the

significantly less tumultuous Chinese competitor Baidu. Google’s user base in China thus

eroded, causing a drop in its global market share from 65.5 % to 65.1 % between January

and March 2009… its share in China’s search market dropped to roughly 15 %, while

Baidu’s market share soared to 75%.”48 Clearly the importance of the user has an impact

on the overall productivity and level of success a company can have and Google was

experiencing this first hand. They were battling on three different fronts: attempting to

satisfy the Chinese user’s desires in services, competing with domestic search engines,

and navigating political processes that would allow them to legally conduct business as a

foreign Internet company in China. Their situation was grim and only grew worse as

Baidu saw increased growth and user involvement.

Due to the self-censorship provision in Internet policy being a “non-negotiable

legal requirement” as well as the factors discussed before, Google decided to cease all

48 Ibid

operations in main land China and move to the prosperous city of Hong Kong.49 There

has been much debate over the exact reason to Google moving from the main land to

Hong Kong but they generally revolve around the issues of for-profit business goals and

business ethics. In terms of for-profit business goals, they were losing a large share of the

market over a period of three years, which made their potential for sustained business

practice in China increasingly difficult. Their inability to adapt to the Chinese consumer’s

needs, compete with domestic companies and circumvent political processes was costing

them money. Investments made into Google services and technologies, although useful

and widely cherished, simply did not suffice. Ethically speaking, Google needed to move

due to their inability to maintain business in China without going against their mission

statement and ethical code. They would lose support not only within China but also

around the world if they had decided to wholeheartedly adhere to Chinese Internet

censorship policies.

Their departure from main land China had a few implications on international

politics and future foreign Internet companies. In regards to international politics, it led to

criticisms from the US towards China in regards to their level of openness to economic

development. It was also in deep contention with human rights advocacy groups, which

not only targeted the Chinese state for enforcing such stringent and limiting policies but

also Google and their decision to adhere to these policies after entering China. Many felt

that Google had “sold out” to the Chinese government in an effort to increase profit

margins. A common question and answer often prompted is whether Google’s primary

focus should be on profits as a business or enforcing moral and ethical codes of conduct

in Internet use. The Chinese claim to have a constitution founded upon principles of

49 Ibid 474

freedom of speech and other civil liberties, similar to those of democratic societies

however their legal interpretation and enforcement is far different from reality.

Regarding future foreign Internet companies, it creates a three-pronged issue of

politics, business and ethics. Due to the strict regulation of the Internet censorship system

within China, and the likelihood that all domestic companies will be unreservedly

compliant, foreign Internet companies must make a choice of going all in or not at all.

They must be ready to accept provisions that limit their capacity to share information and

content to the public as restricted by the government. They must be ready to adapt and

cater to the Chinese user in order to compete with equivalent local companies and

maintain growth and stability in China. They must finally make sure that going into

China will not be counter-productive to their company’s image and purported mission

statement. There are far reaching implications that can contribute to the collapse of a

business entity in China if foreign Internet companies are not well informed and

prepared.

Entering the Chinese market is entering an atmosphere far different than what

foreign Internet companies are used to. Due to the nature of China’s government being a

command and control society where there is heavy centralized power to the CCP,

democratic principles and free market economic rules are scant applicable. Unlike

conducting business in the US or EU where there are not only laws in place to promote

individual civil liberties but also protecting companies and their rights to business; doing

business in China brings about a slew of issues not easily understood. In reflecting upon

Google’s involvement within China it is important to note the difference in political and

economic structures when comparing it to other nations. Although it may be appealing

for a foreign Internet company to redirect its focus to this emerging market, embarking

on that journey unprepared will certainly lead to failure as evidenced by an incredibly

important and influential company such as Google.

V. Conclusion

Throughout my research I found there were some limitations to me understanding

Google’s involvement in China. There was more info on the ethics and human rights

issues of Google’s involvement then there was on the implications to international

political economies. There was far less literature on the rationale of the CCP towards

Internet censorship policy and restricting foreign Internet companies entering China then

there was of particular information and content restrictions. I think this study does well to

illuminate the general nature of Internet censorship in China and basic issues foreign

Internet companies face when conducting business there. For future studies I would alter

my study’s focus to the Chinese “netizen” and the restrictions they face, how it affects

daily life and what initiatives/movements have come about in opposition of Internet

censorship policy.

The role China will be playing in the next half century will mirror if not surpass that

of their role over the last half-century. They are a power that cannot be overlooked and

will be increasingly embedded in economic and political decisions within the 21st

century. The purpose of this paper was to study Google’s involvement within China

considering its intentions for joining, initial successes, problems faced, reasons for

departure and future implications on politics and other foreign Internet companies. I

argued, “If the Chinese state views foreign involvement within the Chinese economy as

detrimental to its legitimacy as a governing body, then the restrictions on foreign Internet

companies will be stringent.” In analyzing the content covered, I conclude that the CCP

will continue on with stringent regulations to foreign Internet companies whom do not

agree to comply with Chinese Internet censorship and regulations over business. The

Chinese state established Google’s involvement within China as detrimental due to their

capacity to spread information and content to the public. As part of China’s Internet

censorship policy, they were not at liberty to see a company divulge information that

might be detrimental to their governing body, therefore they imposed strict restrictions,

enacted cyber attacks and increased pressure unto Google for self-censorship that

eventually forced Google out of the main land economy. Following their departure the

Chinese state did not alter their Internet censorship provisions but made it more difficult

for foreign Internet companies to enter the market and circumvent the censorship system

by increasing overall pressure on foreign Internet companies to compliance. Also their

hardline stance on their Internet policy throughout the deliberations with Google over

their conduct in business reinforced their position and made it widely known

domestically and throughout the world. Moving forward, analyzing the story of Google in

China is highly recommended for any future business endeavors into China.

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VII. Additional References

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