Chapter 2

The Fractured Web

A young girl with the Weibo microblog moniker Smm Miao “tweeted” in the early evening of July 23, 2011, “After all the wind and storm, what’s going on with the high-speed train? It’s crawling slower than a snail. I hope nothing happens to it.” Minutes later, during a torrential downpour punctuated by thunder and lightning, the country girl watched as another bullet train rammed the stalled locomotive from behind, killing 40 passengers and injuring hundreds more. The message was the first of 26 million that would be posted and echoed throughout Chinese Internet space. Most of the microblogs were scathing about the country’s government, the quality of the railway infrastructure and its handling of the tragedy. Representative messages included:

The high-speed train accident and the scores of fatalities resulting from the incident proved to be a tipping point in China’s hurried modernization. The contract between citizens, the leadership of the country, and domestic commercial interests on the Internet was coming undone.

The last time the tacit agreement between the leadership and citizens had come under such strain because of a tragedy was in the spring of 2008, during the aftershocks of the Sichuan earthquake just outside the provincial capital, Chengdu. More than 90,000 people died in a matter of minutes. Bloggers and the media blamed the corruption of local government agencies and property developers for the poor quality construction of schools and apartment buildings, and for the death of so many. Commercial Internet operators in China like the search engine Baidu.com and news and entertainment portals like Sina.com and Netease.com quickly fell into line behind government directives to only report on stories of heroism in the face of a natural disaster.

The bullet train incident nearly three years after the Sichuan earthquake was significant in China’s modern history to the extent that citizens and professional media outlets ignored government directives to avoid unofficial investigations and commentary about the incident. The railway incident was also significant in terms of the extraordinary leniency with which the government treated the media outlets—especially the Internet. And finally, the incident exposed the degree to which the CCP’s fortunes had become bound up in the Western-inspired innovations upon which e-commerce in China is based. China had less than 10 million Internet users at the start of 20001 and no sellers or buyers doing business through the Internet. In 2008, China’s commercial interests totaled only US$7 billion and Internet users numbered 200 million, according to the China Internet Network Information Center (CINNIC). By 2011, the number of Internet users in China was nearing half a billion and e-commerce revenues were close to US$80 billion, growing 87 percent year-on-year. IDC, a technology market research company, reported the number of Chinese sellers on the Internet had reached nearly 50 million at the start of 2011. Analysts expect the number of online merchants to reach 100 million by 2012.2

China’s online shopping industry saw revenues of $80 billion in 2010, and grew 87 percent from the year before.3 Deutsche Bank projected that e-commerce, instead of detracting from brick-and-mortar retail sales in China, would actually increase overall retail sales by more than 1.5 trillion yuan (about US$100 billion) by 2014, or about 7 percent of all domestic retail sales.4 In 2010 Chinese Internet users invested a billion hours each day online. Out of a total of 420 million users at the time, 185 million made at least one online purchase. The Boston Consulting Group expected volume to increase fourfold by 2015.5 Seemingly overnight, the balance of power between the CCP and Chinese netizens had tipped in favor of consumer advocacy.

The Chinese government had to tread lightly on Internet channels after the train disaster of 2011, for great wealth derived from China’s Internet was at stake, with thousands of companies creating millions of jobs for Chinese who based their livelihoods on the World Wide Web: web designers, games makers, customer service representatives, marketing mavens, administrators, sales staff, executives, investors, State Owned Enterprises (SOEs), online shopkeepers, and more. Meanwhile, without CCP authorization, shopping on the Internet had become a right—not a privilege—for hundreds of millions of Chinese netizens. Innovation for the sake of commercial gain on the Internet had outstripped the CCP’s ability to control the medium as strictly as it had in the past. Developments in information technology had left the Party with little choice but to curb innovation in Chinese cyberspace to fit its political expediencies while at the same time motivating the leadership to cultivate its own state-owned digital champions. In the meantime, the CCP put privately owned Internet companies in China on notice that their implementation of innovation with Western characteristics had begun to run counter to national interests as the CCP defined them.

Finger on the Button

The private company whose fate hung most on the auspices of the central government after the 2011 train disaster was Sina.com, the platform that supported the Weibo service. Weibo means “microblog” in Chinese. Weibo was China’s answer to Twitter, which China’s censors had begun blocking in China during the Tibetan protest of 2008. Like Twitter, the service restricted users to tapping out 140 characters per message. Unlike English characters, however, a single Chinese character can have multiple meanings—even puns—and hundreds of years of history and context bound up in its expression.

For instance, the former President of China, Jiang Zemin did not appear on the parade platform with other leaders during Beijing’s celebration of the Communist Party’s 90th birthday in late 2011. Weibo users in the millions conjectured whether he was gravely ill or if he had actually died. The media muzzle on the condition of the former leader simply created more buzz in Chinese cyberspace. Censors filtered out of Internet communications any mention of Jiang Zemin and deleted blog posts conjecturing on the welfare of the apparatchik. Not to be deterred, Weibo users simply used the ancient Chinese character for river—jiang—to represent his surname, though the character they used was different from that of the surname. Censors quickly caught on to the ploy and filtered out ALL of the characters in the Chinese language that could mean “river,” whether or not they sounded like the former leader’s name.6

With millions of users on the Sina.com platform—and on the vibrant QQ microtext service, supported by the Chinese company Tencent—the sheer volume of texts and permutations of characters used for discussion would have been humanly impossible for censors to respond to in real-time. The only other solution would have been to shut down the services completely. Sina.com’s service supported 140 million users at the time of the train accident, while Tencent’s supported 200 million. Between the two services, users had generated an amazing 26 million messages on the railway tragedy alone.7 The CCP would have potentially alienated nearly one-fifth of all Chinese citizens had it chosen to simply blackout a homegrown service offering. Such a rash action on the part of China’s leadership would have sent a signal to the international business community that the government at a single stroke could destroy companies and offerings it deemed inconvenient to its way of thinking. The action would have been like a cold arctic wind sweeping down from Siberia and ushering in a new ice age in one of the hottest business frontiers in the world—the Internet. Entrepreneurs and investors would naturally recoil from the prospect of collectively sinking billions of dollars into ventures in Chinese cyberspace. It wouldn’t have been the first time, though, the central government would have considered the expediency of absolute control as preferable to a vibrant innovation ecology.

In 2009 the central government had tried to force every computer made in China or shipped into the country to have installed on their hard disks an officially sanctioned copy of censorship software. They called the software Green Dam Youth Escort. The application would block users from pornography and materials on the Internet censors deemed politically incorrect. The software would have put electronic surveillance on every desktop in the country. Millions of users logged onto the Internet to shout down the initiative. Chinese hackers even threatened to crash their own governments’ servers should the authorities actually enforce the software installations on computers. The day before the initiative was to begin, on the last day of June 2009, the central government leadership back-pedaled on the initiative. The government turnabout on implementing Green Dam, however, did not deter censors from more targeted exclusion of international websites and online services it believed politically offensive—or that threatened the profitability of homegrown e-commerce companies.

Filtering for Profit

In 2008 China’s central government blocked the international Internet platforms Facebook, YouTube, and Twitter, among others. Beijing didn’t want protestors in Tibet or in Xinjiang to emulate dissidents in the Middle East who had threatened standing regimes. The beginning of 2010 saw Google withdraw from the field of battle with China’s central authority when Google discovered the government sanctioned penetration of its customers’ Gmail accounts. The attacks targeted foreign journalists and individuals who government authorities deemed dissidents. Google also publicly upbraided China’s leaders for censoring links from search results to online sources the central government deemed illegal. As early as 2008, Chinese Internet minders had been interrupting services on Google so often that it made it difficult for users inside the country to develop the sort of relationship with products that companies seek. Google Docs was one such target. Service denial messages made (and still make, as of 2012) use of the word processing, spreadsheet, and presentation tools a frustrating exercise. The photo album program Picasa was also blocked. Perhaps the government felt the photo sharing program was a convenient vehicle for posting and sharing images that ran counter to how the CCP wanted citizens to view them. Google unilaterally shut down its server base on the mainland and withdrew to Hong Kong. China, in principal, respects the territory’s right to free, unhindered speech and the rule of law.

The Google look-alike Baidu.com benefited directly from government interference with Google. Google’s subsequent withdrawal from the mainland marketplace also provided Baidu with advertising fees Google most likely would have taken. In 2008 Baidu had only 30 percent of the search engine market in China as compared to Google’s 50 percent. By the end of 2010 Baidu had 80 percent of the Chinese search engine market. Baidu hovered at about 3 percent of global market share at the end of the decade, while completely dominating the Chinese marketplace at about 75 percent of the online searches performed in the country.8 Google still held the second position in China, with about 15 percent of the searches performed running through its Hong Kong .hk address. BING—a Microsoft offering—with a worldwide share of the online search market of about 4 percent, overtook Yahoo! in March 2011 to become the second most used online search service in the world; BING’s China slice of the pie was less than 1 percent of the domestic market at the time.9 Google accounted for just over 19 percent of Chinese online searches in the first quarter of 2011.10

At nearly the same time as the dispute the government was having with users and PC vendors, the government was attempting to flex its muscles with Google.cn, the Chinese subsidiary of Google. At the height of the hullaballoo about the Green Dam software, Chinese Internet censors ordered Google.cn to stop posting links to pornographic websites. Google.cn’s closest competitor in the Chinese marketplace—Baidu.com, which held upwards of 70 percent of the Internet search market to Google.cn’s 26 percent—received no such warning.11 Authorities did not censure Baidu.com about the issue, nor were its porn links in any way deleted by either the company or by Baidu.com. The move smacked of protectionism of the Chinese Internet market. According to some industry insiders, though, the relationship between Chinese Internet companies and their Party masters was double-edged.

One Chinese source told me under condition of anonymity, “The technochiks vex us pretty badly, too.” Technochiks are the CCP officials who put in place censorship policies, filters, and staff to ensure information they deem politically incorrect does not leak through to the people. He continued, “I’m absolutely convinced that we’re more a source of aggravation to said masters than we are a prop for them to pay as protection money to stay in business. As long as funds stream to the officials responsible for censorship and a range of business approvals, Chinese Internet companies can continue to operate. There’s lots and lots of constant envelope-pushing going on here.” Envelope-pushing is an allusion to the graft that many domestic companies have to pay government officials to operate. He continued, “I have loads of admiration for Google saying fuck you to the censors; but again, we don’t have the leisure.” One of the most vibrant industries in China, reliant on an e-commerce marketplace shielded from international competition, is the Internet cafe business.

Just the Internet, Please; Hold the Coffee

At one Internet cafe I visited in Suzhou, a city near Shanghai, I scanned nearby monitors to see what others were up to. Many had the popular QQ Instant Messaging window up and were typing and reading messages with friends. QQ users seem to take pride in the degree to which they can customize the long, narrow window that displays their list of friends—invited and uninvited. A user’s most important decision, though, is choosing from among the scores of cartoon personas QQ provides through which users can chat with others in QQ-space: handsome warriors, winsome princesses, huggable pandas, and more.

In the West when we log onto the Internet we typically check our Facebook updates or email first. When a Chinese user sits down at home or in an Internet cafe the first thing she does is to log onto her Instant Messaging (IM) system, where friends are likely chatting away through a variety of text, audio, and video channels. The most popular IM system in the United States is AIM, which at the end of 2011 had 53 million users. In China, the most popular IM application is QQ, which, as of September 2011, boasted a whopping 700 million active user accounts. Chinese users will register themselves under several identities. Henry Jenkins from MIT performed a survey that observed that almost five times as many Chinese as Americans will manage a parallel life in cyberspace.

In the West users usually check up on the latest news and sports updates after they’ve read their email or Facebook updates. Chinese netizens, however, will go directly to their favorite web portal after checking QQ to see if any of their friends are online to chat with. Chinese use of the Internet looks something like this, according to a 2008 report by the China Internet Network Information Center (CNNIC): downloading (usually pirated) music (86.6%); Internet Messaging (81.4%); watching online movies (76.9%); reading online news (73.6%); using search engines (72.4%); playing online games (59.3%); and then email (56.5%). Most Internet cafe users are less than 30 years old; three-quarters of which have a high school education or less. It is not unusual for most users to be playing online games on one side of the screen, watching a movie (usually pirated) stream on another portion of the screen, while chatting with their friends through QQ about some trivial aspect of their lives—all at the same time. The Chinese, it seems, are true multi-taskers when it came to navigating cyberspace. In 2005 QQ was able to leverage its instant messaging (IM) interface into the most popular web portal in China, QQ.com.

To open the home page of a Chinese portal is to understand a bit of the frenzied life of the average Chinese. Pages are dense with photos of movie and singing stars; the latest gossip scrolls up bordered windows; advertisements square and round, rectangular and oblong scream for precious real estate; sponsorship bubbles float around the page, chasing after the user’s cursor like a hungry fish chasing a mosquito skimming the water. “There’s something for everybody [on QQ.com],” one 20-something-year-old user enthused at the Internet cafe I visited, “young and old; and we can all share with each other!”

Into the Fray

Western companies like Yahoo! that tried entering the Chinese market with their Copy-2-China business models did not find the success they sought. Chinese users consider Western-style sites boring. Western sites err on the side of simplicity in their appearance and messages; Chinese sites satisfyingly overwhelm the Chinese user with a smorgasbord of functions that rivals any Chinese dinner banquet. Baidu.com runs counter to the cluttered look offered by most websites for Chinese consumption. Baidu’s interface is Google-simplistic: a white screen with the bare minimum of Chinese characters to point out what to do to search for keywords and other, hidden features.

In 2006 Yahoo! China failed to topple Baidu. Yahoo! was soon after bought by the Alibaba Group, owners of the business-to-business (B2B) directory of product-suppliers Alibaba.com. The Alibaba Group leads online retailers in the number of transactions made in China. The core product offering of the group is Alibaba.com, the world’s largest online portal connecting potential buyers directly with suppliers from around the world. Users only have to type the name of the product they would like to have manufactured into a search box on Alibaba.com. They also identify the country—usually, China—and perhaps even the province in which they would like the search to take effect. The application displays a list of products that match the keywords. It’s up to the user to scroll through the list of photos and descriptions to find potential suppliers. The onus is on the potential buyer to screen suppliers for quality and dependability. Alibaba was the third most visited e-commerce website in the world in 2011 after number one Amazon.com and then eBay, according to Comscore. The company makes its money through membership offerings to suppliers. Alibaba revenues in 2010 were US$845 million.

The overwhelming majority of online shoppers in China use a system called Alipay to settle accounts through the Internet, although buyers still settle nearly a third of transactions on the Internet through cash, paying the delivery service at the door. Alibaba established Alipay in 2004 to support purchases made through its other company, Taobao, which was a direct competitor of eBay. Alipay electronically places payments in an escrow account the buyer releases when she accepts the goods ordered. More than 8.5 million transactions each day made their way through Alipay by the end of 2010, for an annual transaction volume of US$140 billion. PayPal, within the same period, had a transaction volume of US$92 billion.

In 2011, Jack Ma, the Chairman of Alibaba Group, transferred Alipay assets to a company in China he personally owned, despite Yahoo! being a major shareholder in Alibaba. Ma claimed that Chinese government regulations forbidding foreign ownership of online payments had forced him to perform the share transfer.12 The transaction was a huge embarrassment for Yahoo!, which was already losing global market share and had little independent presence in China. The incident clearly illustrated the extent to which business in general in China—and the high-stakes Internet marketplace in particular—were still frontiers where the rules were made up along the way.

In 2010 the Alibaba Group oversaw nearly 400 billion yuan (US$62.5 billion) in online transactions. Jack Ma predicted the company would manage 1 trillion yuan (US$156 billion) through its websites in 2012.13 It was the Alibaba Group’s late entrant Taobao that beat eBay in a highly publicized competition for market share. Taobao is a website with a cacophony of product offerings for sale.

In 2003 eBay bought the Chinese e-commerce site EachNet for US$180 million with much bravado. eBay exported its revenue generation model to China, which involved charging fees for transactions, listings, and other services. eBay and its Chinese partner, EachNet, controlled 90 percent of China’s online shopping in 2004. Taobao, however, understanding the price sensitivities of Chinese shoppers, offered its services for free, making its money through online advertisements. Taobao trounced eBay. In 2006 eBay beat a retreat from its online base in Mainland China and retrenched in Hong Kong. It folded its EachNet investment into a joint venture with Tom Group Ltd., to maintain a presence in Greater China.14

In 2010 Taobao controlled more than 80 percent of e-commerce in China. Taobao’s stature also extended into the labor market. In 2009 Taobao reported that its site had helped create half a million new jobs, mostly through young people opening new online stores. Taobao’s ungainly growth spurt, however, forced the company to morph into something more manageable and nimble in the face of rising rivals.

In 2011 the company split into three entities: eTao, Taobao Mall, and Taobao Marketplace. eTao is a search engine focused on finding merchandize. The search service would help direct customers to Taobao Mall and Taobao Marketplace. Analysts saw eTao as a direct threat to Baidu, both of which look to advertising revenues to make a profit. The Mall was more a showcase of brands for about 70,000 companies, Chinese and foreign. Taobao Marketplace was more for small vendors. Taobao Marketplace was free for sellers, though it used the same advertising revenue model of its parent.15 However, the Taobao business model had some weaknesses that upstarts began to exploit as early as 2009.

Taobao early on in its development began garnering a reputation for supporting the sale of counterfeit goods. That worked fine for a segment of the population that could not afford the real thing but wanted the look and feel—the cachet—of the genuine article, whether it was a purse, a mobile phone, or a dress. Nevertheless, the United States Trade Representatives (USTR) office lodged a complaint that Taobao supported the sales of thousands of fake products with designer labels, costing American companies billions of dollars in lost sales. In 2011 a Taobao Marketplace spokesperson said that in 2010 Taobao had deleted nearly six million listings from its site that infringed on trademarks. It had taken the cooperation of six thousand brand owners from around the world to identify the offending offerings. In the first half of 2011 Taobao Marketplace took down an additional 47 million listings that violated trademarks.16 Taobao, though, had another, more sensitive vulnerability that irked thousands of buyers in China every day.

On average, it took two to five days for items ordered on Taobao to make it directly from the seller to buyers, which, as any consumer who’s “got to have it now” knows, is a long time to wait for fulfillment. Sometimes, the boxes in which the items were shipped were crushed. One item my wife ordered took the agreed-upon but unsatisfactory four days to arrive. She told me the item was coming from Shanghai to our home in Suzhou, 150 kilometers west of Shanghai. A swarthy middle-aged man who had clearly only known manual labor in his life delivered the box. He smelled of cigarette tar and sweat. He was friendly and solicitous, and opened the box in the hallway in front of the entrance to the apartment. The trick to know in China, when ordering goods by mail, is to check the merchandise before accepting delivery. The review can be as superficial as opening the box to make sure what you ordered is what they put in the box. My wife and I, though, chose to be a bit more thorough by actually plugging in the appliance to make sure it worked as advertised. In Taobao’s system, once the buyer accepts the package, the deal is considered done.

Another major challenge with e-commerce in China is the method of payment. Most Chinese do not have credit cards. Most, however, have bank cards. As late as 2009 sellers on Taobao took cash on delivery of goods to the buyer. As Taobao gained in prominence, it put in place its Alipay system. Most Taobao users open a bank account just for Taobao transactions. They do not want to expose their day-to-day bank account information to the outside world. When customers tell a bank teller the account is for Taobao, she will know what they mean. Though the account is generic, she will supply customers with a digital token that they plug into the USB port of their computer. When online shoppers make a Taobao transaction and wish to pay, they plug the tokens into their computers to complete what should be a secure transaction.

No longer, then, did users have to pay cash to swarthy men smelling of tobacco and looking suspect themselves. The ease with which users could then purchase and pay led to the creation of Internet users Chinese call Taobao Heads. Taobao Heads spend hours at a time each day perusing items to purchase. One husband told me of his Chinese wife, “We’ve got so much stuff now we’re not using what she bought on Taobao. It’s so cheap to buy! A lot of the things are unused, so we’re giving things away to make room for the new purchases.” The fervent commercial activity on the Chinese Internet made it plain to the central government that it could only push so hard when it came to filtering, cracking down, or outright blocking Internet channels of communication and commerce. Tech-savvy quarters of the CCP realized in 2011 they would have to join the game or have their power marginalized completely.

If You Can’t Beat ’Em

Since 2008 the CCP has successfully blacked out all civilian digital communications in Tibet and Xinjiang. The extreme security measures have hardly impacted the country’s overall economic growth rate. The territories, however, are poor, remote agrarian regions with little commercial activity to begin with and a population that has little access to the Internet anyway. The impact on the Chinese economy and international trade would be much more dramatic, however, if authorities placed a digital blackout on Shanghai. Hundreds of multinationals and thousands of Chinese companies in Shanghai alone rely on the Internet for secure transfer of information and financial transactions. In addition, hundreds of thousands—if not millions—of workers would be thrown out of jobs. Business owners would see their income streams dry up overnight. China’s leadership would see several generations of work rolled back at least 20 years. The degree to which China would affect its standing and credibility in the world for maintaining a safe and stable environment in which to conduct business would be dramatic, on the order of the Tiananmen Square incident in 1989. After that incident, it took international businesses nearly three years to consider re-entering the China market after the world was shaken by the brutality with which authorities broke up the protest. China’s leadership has known since then it can ill-afford a repeat of the response to mass discontent on the same scale as Tiananmen Square.

So the CCP decided in 2011 to extend its presence on the Internet beyond censorship into the commercial realm. The CCP sanctioned China Central Television (CCTV), the Party’s TV persona, to start up its own online search engine. However, the Party would need to bring Baidu down a few notches to increase CCTV’s online profile.

Reporters for CCTV televised an expose about Baidu that accused the state-sanctioned and protected Google-knock off of being monopolist in one instance,17 libeling a respected professor in another report,18 and ignoring dissatisfied Baidu users.19 Think tanks even got in on the discussion, with Jing Linbo and Wang Xuefeng of the Chinese Academy of Social Sciences writing in the Study Times, a publication of the Communist Party School, “The combination of capital and the Internet is a mighty controlling power. The Internet is a special industry—once it is controlled by foreign capital, the impact could be severe.”20 They were referring to Baidu’s listing on the NASDAQ. “If we judge by the indicator that a foreign control of over 20% stake is relatively controlled, and over 50% is majority-owned,” they continued, “then most Chinese Internet companies that are listed offshore are controlled by international capital,” the authors wrote. “International capital thus controls our Internet industry.”21 They rounded out the editorial by claiming the combination of capital and the Internet would have an impact on politics and the government. They added that China should strengthen supervision not only over an Internet company’s capital structure but also its business operations, including its dealings with related parties.22 Though the CCP was not willing to kill free enterprise and innovation on the Internet, it was willing to throttle it to maintain control of the country.

China Scrums

However popular it might be in the West to believe that the Chinese government will increasingly clamp down on Internet usage as completely as any Soviet-style police state, the reality of the balance between power and commerce in China is more convoluted. Nearly every day that I walk the streets of this fast-paced country I marvel (and sometimes, squirm; and at other times, become annoyed) at how nearly every interaction in China is a negotiation: whether it’s crossing a busy street, vying for space while riding a bicycle in a bike lane, or buying vegetables from a street vendor. The more fractious an issue, the more each negotiation becomes a scrum. A scrum in the few-holds-barred game of rugby involves members of opposing teams going shoulder-to-shoulder against each other to kick a ball back to a player on their side. From the outside, scrums look like utter, violent chaos. And yet, deep within the mound of heaving bodies and grinding collar bones is a negotiation of sorts, to get the ball to the players who will push for a score for their team.

On the Chinese Internet, though, there is more than one team at play at any given time. And because of the vastness of the arena of the Internet and the restrictions to free expression in the physical world, there are many scrums going on simultaneously between blocks of users: e-commerce users, privateers, censors, and vigilantes.

Online scrums in China as a means to negotiate platforms, domains, rights, limitations, and penalties in cyberspace is creating a web space separate from the World Wide Web as the West has come to know and cultivate it. The Fractured Web, as Andrew Hupert calls the dislocation of a portion of the World Wide Web, is the new reality. Hupert was a professor of international negotiation at New York University’s campus in Shanghai when we spoke. He told me over a cup of coffee in a trendy Shanghai cafe one muggy afternoon, just after the riots in Xinjiang in the summer of 2009, “No one cares that the central government has blocked Twitter or Facebook or YouTube. Chinese don’t seem upset in the least about it. After all,” he continued, “they already have their Chinese equivalents of the social networking sites, and the Chinese companies are overjoyed that the international competition is off their necks.” In other words, Chinese politics and business are sometimes on the same side of the scrum; their interests aligned. That autumn Hupert had written on his blog China Solved—in reference to blocked Internet services like YouTube, Twitter, Facebook, and Google—“Usually industrial and national security policies are at odds with one another. This time they dovetail beautifully. This must have been a no-brainer for Beijing. Suppress potentially disruptive voices and protect key industries at the same time—in one fell swoop. Everyone from the Party leadership to the business community loves the idea.” However, Internet businesses’ alliance with the central government had shortcomings.

In the medium-to-long-term, Mainland users and China’s up-and-coming hi-tech service economy will suffer. Chinese managers and businesses will find it difficult to understand how to enter and negotiate in the international marketplace; and Chinese technologists will find themselves in an application-ghetto the rest of the world considers insular and not applicable to international issues and norms. Hupert calls the insular market space the Chinese Friendship Net, a name taken from the government operated Friendship Stores of 20 years before. Only foreigners and high-level apparatchiks could shop in Friendship Stores; the rest of the populace had to stand in long queues and accept their rations from government shops. “For the moment, the Chinese Friendship Net is delivering all the same services and products as the international Internet—in some cases even more. But as the two Internets develop and diverge, we will return to a situation where commerce in China becomes separate but unequal. Those caught on the wrong side of the digital border will not have access to new media or technology—while a digital Chinese elite will have VIP access to the global net.”

But the technochiks’ efforts to fence off the Internet from the rest of the world will not go unchallenged. Hundreds of millions of Chinese netizens will push back on actions that curtail and control all of their activities on the Internet, as in the case of the Green Dam software initiative. The most dramatic scrums in the China Wide Web are and will continue to involve those that reach the threshold where politics and commerce meet, where the technochiks have drawn the boundaries of their domain for power. Anyone who crosses the border into the wider world risks being filtered out of cyberspace existence. The tension between unfettered access and censorship is rising quickly in China’s Internet universe. The sheer number of new users logging on for the first time and becoming enamored with the plethora of service offerings and opportunities for expression will continue to rise into the 2020s. With less than a third of the Chinese population in 2011 regularly living with the Internet, China still has a long way to go before it reaches the same density of users as America. America’s penetration was about 75 percent in 2009.

In addition, the 700 million citizens who still lived in the countryside at the close of the first decade of the new century had little recourse against corrupt government officials, unscrupulous real estate developers, and polluting factories. Greater access to Internet channels of communication will make local goings-on more transparent to the world, at nearly the speed of light. Indeed, one of the ways the Party has been able to manage discontent in China’s interior is through restricting the information that flows into the hinterlands.

Twenty years after the Tiananmen Square incident, citizens are more interested in balancing out the opportunities of self-expression and economic opportunity in their day-to-day lives than in democracy, per se. For Chinese, democracy—embodied by the Western notion of “voting the bums out of office” if they do a poor job, as well as a separation of powers—is worthwhile as long as it proves an effective means of allowing them to carry on economically the way they’d like to, with the least amount of “unfairness” reasonable in life.

As Rebecca McKinnon wrote:

“ . . . One must also keep in mind that the people blogging online are the most inclined to view their glass as half full as opposed to half empty when it comes to personal freedoms: they are the educated urban elites who have benefited more than any other segment of the Chinese population from the past 20 years of economic reforms. There would need to be a much more profound and acute offline crisis for this group of people to find it worth risking the online and offline freedoms they have gained in exchange for the very uncertain gamble that they might be about to gain even more. This is especially the case when no viable national thought leader is able to emerge online under the current system of controls— and no viable alternative to the Chinese communist party has emerged offline either.”23

The vast scale of the Internet, current commercial rewards, and the staggering riches that lay in store, though, has complicated the government’s equation for control and restriction of information about the society and about the rest of the world. Especially important to Chinese officials is the way the rest of the world perceives China, as the less well-traveled of the Old Guard still harbors a tremendous insecurity about navigating in truly international streams. The Internet becomes like a wild thicket to Chinese propagandists, in which Chinese Internet subversives are able to hide and “nest” like sparrows.

Compounding the sheer number of current and potential Chinese Internet users with which government censors have to contend is the prospect of disruptive technologies that may seem to lighten the burden of socializing users, but may also complicate government agendas for control and “spin” of information. In the West millions of teenagers rely on Facebook and Twitter to chat about whether that cute girl in class really likes a guy or not; or what the hottest pop act is; or whether or not an old girlfriend is still hot or not. Meanwhile, in China, Facebook and Twitter are, as of this writing, blocked—considered tools of the subversive in light of the violent protests of Uighurs in Xinjiang or the ongoing investigations of corruption in the CCP. Instead, the CCP has sanctioned homegrown versions of the same applications with the hope that censorship controls will reign in any political impulses Internet consumers may have. The CCP also sees the Internet as a profitable new frontier through which its agencies may be able to further enrich themselves.

The clashes between the Chinese polity and its would-be masters will only increase in cyberspace. The sheer numbers of users rushing to access the Internet, combined with the disruptive technologies that continually destabilize the Internet ecosystem, are proving difficult for central planners to control. When Chinese authorities consider a country-wide event threatening their hegemony, they may compromise their image and their control of the Internet and shut down ALL access to it. Just as residents of Xinjiang found in 2008, consumers throughout China may not be able to get online through computers; nor may they be able to make phone calls on land lines or send or receive text messages between each other through their mobile phones. China then will enter a glacial age of digital and commercial innovation that will erode any strides the country was making to become an innovation nation. It will also cripple its efforts to become the world’s premiere services outsourcing provider, a sector the central government has identified as strategically important to the country’s economic interests and irrevocably dependent on digital communications technologies.

Notes

1. “Trouble on the China Express,” Wall Street Journal, August 1, 2011. Available online at http://online.wsj.com/article/SB10001424053111904800304576474373989319028.html.

2. “China’s E-commerce Scale Increased by 20% in 2008,” China Tech News.com, Jan 7, 2009. Available online at www.chinatechnews.com/2009/01/07/8432-chinas-ecommerce-scale-increased-20-in-2008.

3. Yang Wanli and Chen Limin, “A Taxing Issue for Online Shops,” China Daily, July 12, 2011. Available online at www.chinadaily.com.cn/bizchina/2011–07/12/content_12882261.htm.

4. Ibid.

5. Nick Mackie, “Online Shopping Is Growing Rapidly in China,” BBC, August 29, 2011. Available online at http://online.wsj.com/article/SB10001424053111904491704576570612044417314.html.

6. Jeremy Page, “Why China Is Trying to Censor Talk about Jiang Zemin,” Wall Street Journal, July 7, 2011. Available online at http://blogs.wsj.com/chinarealtime/2011/07/07/why-china-is-trying-to-censor-talk-about-jiang-zemin/.

7. Michael Wines and Sharon LaFraniere, “In Baring Train Crash Facts, Blogs Erode China Censorship,” New York Times, July 29, 2011. Available online at www.nytimes.com/2011/07/29/world/asia/29china.html?_r=1&hp=&pagewanted=all.

8. “Baidu and Microsoft Tie-up for English Search in China,” BBC, July 5, 2011.

9. “Microsoft, Baidu to Expand Web-Search Partnership in China,” Bloomberg, July 4, 2011.

10. Ibid.

11. “How Chinese Users Search Online,” iMedia Connection report, July 28, 2009. Available online at www.imediaconnection.com/content/23899.asp.

12. Eliot Gao, “Alibaba-Yahoo Fight Highlights Threat to China Internet Control,” Wall Street Journal, July 4, 2011. Available online at http://blogs.wsj.com/chinarealtime/2011/07/04/researchers-alibaba-yahoo-fight-highlights-threat-to-china-internet-control/.

13. Loretta Chao and Laurie Burkitt, “Chinese Online Retailer Hopes to Raise Up to $5 Billion in U.S.” Wall Street Journal, September 16, 2011. Available online at http://online.wsj.com/article/SB10001424053111904491704576570612044417314.html.

14. Lee Chyen Yee and Argin Chang, “eBay Eyes up to 40 Percent Jump in China Sales,” Reuters, August 30, 2011. Available online at www.reuters.com/article/2011/08/30/us-ebay-idUSTRE77T68120110830.

15. Nick Mackie, “Online Shopping is Growing Rapidly in China,” BBC, August 29, 2011. Available online at http://online.wsj.com/article/SB10001424053111904491704576570612044417314.html.

16. Ibid.

17. Kathrin Hille, “China’s State Broadcaster Attacks Baidu,” The Financial Times, August 17, 2011.

18. Ibid.

19. Ibid.

20. Eliot Gao, “Alibaba-Yahoo Fight Highlights Threat to China Internet Control,” Wall Street Journal, July 4, 2011. Available online at http://blogs.wsj.com/chinarealtime/2011/07/04/researchers-alibaba-yahoo-fight-highlights-threat-to-china-internet-control/.

21. Ibid.

22. Ibid.

23. “Flatter World and Thicker Walls? Blogs, Censorship and Civic Discourse in China,” Public Choice, August 9, 2007.