The Great Fire Wall of China

Here's a global teaser: Name the country that currently languishes at the bottom of the Internet food chain, but will have an estimated 141 million people online by 2005 and will be the largest electronic-commerce market in the world. Hint: It's the most populous nation on earth.

Right now, China counts only 1.4 million Internet users, but that hasn't stopped companies like Microsoft, America Online, Yahoo and Dow Jones from plunging into the alluring, but officially off-limits, waters of the Chinese Internet industry. Even Christian broadcaster Pat Robertson is getting in on the act as a major investor in Zhaodaola, a Beijing-based Web portal.

But amid the heady rush to dot-com this vast country lies a nagging question: What will be the electronic boundaries of the Net in China? The answer is of prime concern for Western investors, who spend long days strategizing about how to wire the sleeping giant. The person who may hold the answer, at least for the moment, is Wu Jichuan, China's Minister of Information.

That's why Western politicians and executives were dumbstruck as Wu announced that his government would begin to enforce a 1993 ban on foreign investment in its online industry. Wu's salvo may signal little more than a return to hardball negotiations over China's entry into the World Trade Organization, which the Clinton administration would like to see happen before the end of the year. "This is classic Chinese bargaining," says Peter Lovelock, head of Maverick, a telecom consulting company in Hong Kong.

But other industry watchers aren't as convinced. "The head of MII (Ministry of Information Industry) is seeming to kick the door shut on foreign investment in China's information industries," says Ken Grant, executive editor of Virtual China's China Matrix Web site. "It remains to be seen whether he can keep it closed."

Controlling Industry and Information

Somewhere beyond all this Beijingology lie two fundamental concerns for China: How does it maintain control of what could be its most influential industry of the next century, and, just as important, how does it control the information passed along the Web?

After all, the Internet may be a fine tool for promoting electronic commerce in a giant structured market economy, but it's likely to play havoc with the official party line. This hasn't been lost on the ruling technocrats, who realize the Internet is their real-life forbidden fruit: They can't wait to taste it, but they dare not.

Not surprisingly, all the major players in the domestic Internet boom are closely monitored by the Chinese government, and any offending information, for instance about Taiwan, Tibet or whatever the current bete noire, is quickly blocked by a vigilant team of government Web censors. Both the leading domestic portals Netease and Sina.com rarely run afoul of the authorities, because they don't place material that breaks from the party line on their mainland Chinese sites.