Best Article So Far On Netease’s Problems Getting World of Warcraft Approved In China

Century Weekly, Hu Shuli’s new magazine, has a great article on the travails in China of Netease and World of Warcraft. It was the cover story of the last issue, and the magazine has just posted the official English translation on the web site. It is a must read if you are interested in gaming and Internet regulation in China.  I will have more to say later, but for now I will just add that if Netease had so much trouble figuring out the shifting regulatory landscape in China, how can Google expect to succeed?

Warcraft Row: An Industry Changer

A Chinese government regulation process for World of Warcraft is altering an online sector bogged down by dueling bureaucracies.

NetEase is a veteran of Chinese online gaming, with seven years of industry experience. So it was stunned when a seemingly straight development path suddenly descended into a dark maze after the company sought government permission to operate China’s version of World of Warcraft: The Burning Crusade, an online role-playing game enjoyed by millions of Chinese.

NetEase eventually succeeded. But along the way, the company lost a lot of money and had to play games with a pair of competing bureaucracies that each sought an upper hand in regulating the online gaming business.

Now more than ever, NetEase understands how necessary it is to play the government’s license game and the regulatory contest between the Ministry of Culture and the General Administration of Press and Publication (GAPP). The company also learned that good government relation is the key to winning in the online gaming sector.

And NetEase is not out of the woods. World of Warcraft is back online after a long blackout, but the dispute between the culture ministry and GAPP over gaming regulation has yet to be settled.

Moreover, NetEase is facing the possibility of another regulatory run-in, while at the same time trying to restore revenue levels as well as peace over World of Warcraft…

Go read the entire article.

I apologize for the sporadic updates. I am still trying to figure out how to write interesting stuff that actually adds value among all the noise already out there. In the meantime you can follow much more frequent updates on Twitter @niubi

Related Post: “网瘾战争 War of Internet Addiction” — Are World of Warcraft’s Travails In China Much More Interesting Than Google’s?

Lawyers, Poachers and Gatekeepers in the China Online Video Market

Some of that $ 500m+ raised by Chinese video sites is going to the lawyers. Yesterday Ku6 announced it is suing Tudou for copyright infringement; Tudou says it will countersue. Today, Youku announced it is suing Ku6 (English release here) for 10m+  RMB, also for copyright infringement.

Employees are also benefiting from the investors’ open pocketbooks. Chinese press is reporting that Tudou’s Chief Architect and former CTO Zhao Liang 赵亮 has quit. A Tudou PR executive told me that there was no news of his departure and that Zhao switched from the CTO role to the Chief Architect post about 6 months ago, with “a senior tech member stepping up internally to take Tech team leadership..[but] no immediate appointment for CTO title yet.”

If those Chinese press reports are to be believed, both Baidu and Ku6 are trying to poach Zhao Liang, and it sounds like Ku6 may get him. One industry insider told me today that Ku6 is offering far above-market pay packages in its efforts to poach talent from more successful competitors. Chen Tianqiao can outspend everyone in this industry except the state-owned firms, although Ku6 may not be hiring the best in the field. According to this Chinese press report, Ku6 recently hired former Youku sales vice president Chen Jun 陈军.

The excellent Asia tech blog Mobinode writes that Baidu’s Qiyi CEO said 30-50% of traffic to Chinese video sites is sent by Baidu. If true that could be problematic for sites like Tudou, Youku and Ku6. Baidu is known for promoting its own products and either filtering out competing services or burying results for them several pages deep. Tudou CEO Gary Wang acknowledged this threat in a March 1 interview with China Daily:

Instead, he [Gary Wang] regards Tudou’s biggest rival as Baidu, China’s biggest search engine, because “a significant part” of Tudou’s traffic comes from Baidu’s video search service, and now it is launching its own content.

So far the big winners in China’s online video wars would appear to netizens, lawyers, employees and, increasingly, the content producers.

See previous posts on China’s online video industry here.

“Publish and be Deleted”-The Global Times on Censorship in China

One of China’s more aggressive state-owned newspapers, The Global Times, has an amazing article today describing Internet censorship in China. The most pervasive and impactful web censorship in China is not carried out by state-owned filtering systems or censors operating the “Great Firewall” and blocking foreign sites. As Rebecca MacKinnon has pointed out, it is undertaken by individual Internet companies at the root level; i.e. before or just after posting the “offending” content.

All Internet companies in China have to abide by these rules, whether you are a startup, a state-owned firm or an overseas listed company like Tencent, Sina, Baidu, Sohu, Shanda, Netease etc.

Given how sensitive this topic usually is, I would not be surprised if the article eventually is “harmonized” (the Chinese netizens’ term for deleting sensitive content). Then again, this kind of “openness” to a foreign audience may have its uses.

Here are some of the highlights, though I urge you to go to the Global Times site and read the entire article:

Self-censorship is the rule of survival that prevents popular websites from being shut down, Zoe Wang, a veteran website developer told the Global Times.

“I can understand an author being outraged when his post gets deleted, but it’s even harder to operate a website as I have to suffer the humiliation of supervisory organs and handle all the criticisms coming from users,” she said.

“How can you hope to pay your staff or maintain your users’ statistics if the website is shut down all because of one sensitive post?”

“You can never relax,” said the small website operator.

“You’re always keeping your phone switched on and waiting for that emergency call from the authorities requiring deletion of a post.”

What’s worse, she said, was the complete absence of clear-cut rules for deciding whether or not to delete an online post.

“The criterion of sensitivity depends on many aspects such as the political environment, the website’s background, size and location, as well as the different understandings of Web masters.”…

A site that published collaborative user-submitted translations of English and Chinese articles, Yeeyan was shut down in November last year for violating the regulation on “running a news information service”.

According to this national regulation, any organization applying for the establishment of an Internet news information service on the Chinese mainland must have registered capital of no less than 10 million yuan and at least five Chinese mainland editors who have engaged in journalism for longer than three years.

Yeeyan relaunched 39 days later under tight self-censorship, with all “political” news removed…

“It’s impossible to rescue your website if you violated the related law,” a Web master from China Unicom, Beijing branch, told the Global Times.

“As long as Douban is growing, it won’t care about what users say because the real threat comes from the authorities,” Fang said.

It’s pointless fighting the system, he said.

“We can only fight the slavish social environment and gradually gain a sense of citizenship,” he said…

There are 14 general laws and regulations governing illegal online behavior, all vague and lacking in detailed, practical provisions, according to Li Yonggang, a professor of Internet politics from Nan-jing University, in his newly published book Our Great Firewall: Expression and Governance in the Era of the Internet.

“As a result, it’s difficult to draw a line when operators and Web users censor, apart from the well-known restricted field of political issues,” he wrote.

There are more than 10 government organs entitled to supervise the Internet, Li said. This inevitably gives rise to conflicts, he believed.

Bans are also increasingly unpredictable, he said. Recipients receive no explanation and no comeback. Chinese mainland Web users tend to react with a pessimistic, alienated and impotent attitude.

“Chinese may criticize the evils of society, but at the same time they feel like participants,” Li said.

“In fact the Great Firewall is rooted in our hearts as so little ‘harmful information’ will ever come to light thanks to individuals’ self-discipline and website operators’ self-censorship.”…

Google to Resume Talks With China – WSJ.com

6+ weeks on and the “negotiations” are just getting started. Per this Wall Street Journal article-Google to Resume Talks With China-Google’s lead negotiator is Ross LaJeunesse, former deputy chief of staff to California Governor Arnold Schwarzengger.

It could be a stroke of genius for Google. The Terminator is very popular in China. A better headline might have read “Google to China: We are Sending in the Terminator…or at least his Deputy Chief of Staff.” Joking aside, I am sure Mr. LaJeunesse is a very smart and talented executive, who will likely have a lot of fun working on this issue.

Then again, his government background, even at the state level, may just further confirm in Chinese official minds that Google is inextricably linked to the US government.

Will Investment Ever Stop Flowing Into Chinese Video Sites?

As I mentioned in my last post, over the last several months money has continued to pour into Chinese online video sites. Baidu (UPDATED with official announcement) raised $ 50m from Providence Equity partners for Qiyi.com, a Hulu clone. Shanda-controlled Hurray bought Ku6 for $ 40m+, a distressed price in relation to the $ 30m+ that investors had put into Ku6. Youku raised $ 40m, all from existing investors Maverick Capital, Chengwei and others, bringing their total raise to date to $ 110m. The “National Team”, led by CCTV and its new subsidiary CNTV.cn is pouring an undisclosed but not insignificant amount of capital into its online video efforts.

Now I am hearing that Tudou, which last raised $ 57m in April 2008, bringing their total raise to date to $ 80m+, is raising another round, this time reportedly $ 40m at a $ 200m pre-money valuation. If the rumors are to be believed, Tudou lost money on about 100m RMB net revenue (after rebates) in 2009. A $ 200m+ valuation is “aggressive”. Tudou’s PR person refused to comment, but if you are interested I think the CEO and other management may be available for meetings in the US in early March. Tudou has a great brand and I believe is a reasonably strong second place player to Youku. But the amount of capital raised is mind numbing, and could fund so many other good, innovative Chinese startups.

When you add in sites like 56.com, PPstream, PPlive, 6rooms etc., you are looking at something close to $ 500m in investment in China online video sites, and that is not counting what the portals Sina, Sohu, Netease and Tencent have invested. So far, the only exit on that $ 500m I know of is Ku6’s distressed sale to Hurray, a transaction that was probably quite painful to most of Ku6’s investors and option holders.

No question the audience is there; tens of millions of Chinese watch video online. The advertising dollars are still primarily spent on TV, but they are beginning to shift to the Internet. However, you have many aggressive salespeople with good stories competing for relatively small change, all while their sites burn cash. The big ones like Youku and Tudou are burning less, but they are still not profitable. And the online video model does not appear to have much leverage in it, especially given the rapid Chinese content cost increases in addition to the still huge bandwidth fees.

China’s online video industry is in desperate need of consolidation, with maybe 2-3 private companies left standing to compete with the “National Team” players like CCTV and Shanghai Media Group. Youku is in the lead and has a strong management team and supportive investors. They seem like they could be a consolidator with the obvious target someone like Tudou. But with the combined capital the two firms have raised–close to $ 200m and counting–and the difficulty of determining relative valuations and roles, I am not sure what is logical will actually happen.

Even if it did, the exit path for these private companies is very unclear. The online video industry is big enough now that foreign firms are not allowed to buy into it, which kills the early pitch some of these firms had that Google or Microsoft would buy one of them to get into China. Chinese Internet firms do not have strong track record of M&A, and when they have bought they have done so at distressed prices.

A huge public firm like Tencent could easily afford Youku or Tudou (Note to Pony Ma, the market has gifted you an amazing currency in the form of your stock at a $ 35+ Billion valuation. You should use it.), but they don’t seem to have it in their DNA. Perhaps that will change as management grows into its valuation, but I would not want to bet on it. The technology is not difficult, and the Chinese portals touch most of the video users anyway, so these guys all seem to think they can build it themselves, much cheaper, while waiting for the advertising market to grow into the online video sector.

The only really profitable exit for these guys would be an IPO, and that is what firms like Youku are now betting on, but to get to that scale they are going to have to start taking significant advertising dollars out of the mouths of state-owned behemoths like CCTV. That is going to be very difficult, as CCTV is an immensely profitable and powerful entity that will not give up material revenue without a nasty fight. And given to whom CCTV reports–the Ministry of Publicity, and given the money and “interests” involved, any real threat to CCTV will likely be met with regulatory blockades as well as commercial competition. A private firm, especially a foreign VC-backed firm, will not win against CCTV.

I am not surprised that the reports of Tudou’s fundraising have them going to the US. Chinese investors seem allergic to new investments online video now. I know investors and management at several of the companies mentioned above, and the local Chinese investors have a much gloomier outlook for their online video portfolio companies than do the foreign investors.

My China Market Entry Advice To Facebook And Twitter

Don’t bother trying to come into China directly. Your services are far too subversive to be approved in the current environment. Even if you were allowed into the country, you would be chewed apart by large, scrappy local competitors like Oak Pacific, Kaixin001, Sina and Tencent. And the ethical and public relations minefields would be too great a distraction for your young companies.

Instead, provide free VPN and other filter-bypassing services. A meaningful number of Chinese users will flock to your products if they can access you easily. You will then have a decent base of Chinese users which, given your sophisticated ad-targeting capabilities, you will eventually be able to monetize, with a much higher margin than if you were operating in China.

I understand the Expo 2010 US organizing committee has burned bridges in Silicon Valley, but please also consider sponsoring the US pavilion at Shanghai Expo 2010. You represent some of the best that American offers, and you should be showing off to China and the world.

A Coming China Golden Age Of Online Video Profits For Content Owners?

China’s online video usage is massive. According to CNNIC 240m Chinese Internet users watched online videos at the end of 2009. The online video ad market is small (figures are hard to come by but I estimate no more than USD 120m) but growing fast.

Today Youku and Tudou, the two leading independent online video sites, announced an alliance in which they will share parts of their video libraries and jointly bid on the rights for new content. According to the story about the alliance “Chinese online video prices have jumped several times over the last year as market competition intensifies. That has made content expenditures the greatest cost for many online-video sites.”

Youku, which is probably 50% bigger than Tudou in traffic and 30% bigger in revenue, also recently announced a “copyright identification management system” to prevent the upload of infringing videos.

Why is there a sudden rush to respect copyrights? There are several reasons, and as usual money is the primary one.

Chinese production firms are spending billions of RMB creating content. Film box office growth in China is soaring, but rights owners have been losing significant amounts to online piracy. Foreign rights holders, as the MPAA has argued for years, have been losing a lot as well, but the Chinese government, especially the State Administration of Radio, Film and Television (SARFT) and China Film Group, do not really care about foreign losses. However, now that serious money is coming out of Chinese pockets the attitude towards enforcement has clearly changed.

The courts are also part of this change, as there are now regular victories for rights holders in piracy cases. Even if the damages awarded tend to be small–10-50,000 RMB–the numbers will add up over time.

The shifting landscape of online video is also speeding the move towards legitimacy. Youku, which has raised $110m in venture capital, and Tudou, which has raised somewhere near $100m, are the only large independent firms left. Youku recorded a loss on 120-130m RMB (USD 20m or so) in net revenues in 2009. Tudou also lost money on a somewhat smaller revenue base. Both are growing fast, benefiting from the huge audiences online and the growing shift of video ad spending to online outlets, but are minnows compared to the rich, powerful, more integrated competitors now entering the online market. I believe the Youku-Tudou deal announced today is just a precursor to an eventual merger, assuming the investors can figure out relative valuations, which will not be easy given the USD 200m or so invested.

Hurray ($HRAY), controlled by Shanda ($SNDA) and Chen Tianqiao), recently purchased Ku6, which had raised around USD 30m, for the distress sale price of USD 44m. Shanda, which built its core business on the infringement of a Korean game and then went legitimate as it accumulated a USD 1B balance sheet, realizes the fastest way for Ku6 to compete with the bigger firms like Youku and Tudou is to have better content and to force them to pay up for the rights.

State-owned firms, AKA the “National Team”, like CCTV and Shanghai Media Group have launched or are launching online video services and they should be good about respecting copyrights. Baidu has established a separate online video company (rumors in the Chinese press say the site will launch in March at qiyi.com) in partnership with Providence Equity Partners, a major investor in Hulu. Chinese portals Netease ($NTES), Tencent, and Sohu ($SOHU) are more aggressively building online video services, all focused on capturing TV ad dollars that will start moving online.

Strange as it may seem given the history of rampant piracy in China, we may now be entering a golden age of profits for Chinese content owners.  Skeptical readers who think they have seen this movie before will likely ask: is it real, or is it Memorex?  To me it looks more real than it ever has before.

Western content owners?  Don’t expect to get rich online here anytime soon, especially when pirated DVDs are still ubiquitous. Your content still needs to be approved by SARFT, and the vast majority of Chinese online video viewers prefer productions from China, Hong Kong, Taiwan and Korea rather than ones from the US or Europe.  But even a small check should be better than open theft.

Google, China and “Digital Combat”

Today’s New York Times has a long and interesting piece by Markoff and others on US preparedness for cyberwar–In Digital Combat, U.S. Finds No Easy Deterrent. As usual anything by Markoff is a good read. I want to focus on several points in the article relating to Google ($GOOG) and China. I believe the points are detrimental to any attempts by Google to forge a compromise and remain in China, something I already believe is quite unlikely, as I wrote last week.

First is this quote:

“You have to be quite careful about attributions and accusations,” said a senior administration official deeply involved in dealing with the Chinese incident with Google.

No surprise that Google is dealing with the US government, but this admission will likely reinforce the Chinese government’s belief that Google works very closely with the US government in general and is a foreign force for malice within China’s Internet.

The second is this bit:

Inside the National Security Agency, which secretly scours overseas computer networks, officials have debated whether evidence of an imminent cyberattack on the United States would justify a pre-emptive American cyberattack — something the president would have to authorize。

Of course the NSA does this kind of stuff, but what exactly does “secretly scours overseas computer networks” mean? And if you are a Chinese security official, what do you think it means, especially now with all the cyber attack rhetoric flying between China and the US? And as a sovereign nation and major power nation wouldn’t you think you too should be scouring overseas computer networks?

The third point is from the last two paragraphs of the article:

That is what makes the Google-China standoff so fascinating. Google broke the silence that usually surrounds cyberattacks; most American banks or companies do not want to admit their computer systems were pierced. Google has said it will stop censoring searches conducted by Chinese, even if that means being thrown out of China. The threat alone is an attempt at deterrence: Google’s executives are essentially betting that Beijing will back down, lift censorship of searches and crack down on the torrent of cyberattacks that pour out of China every day. If not, millions of young Chinese will be deprived of the Google search engine, and be left to the ones controlled by the Chinese government.

An Obama administration official who has been dealing with the Chinese mused recently, “You could argue that Google came up with a potential deterrent for the Chinese before we did.”

The arrogance and naivete in these two paragraphs is striking. Arrogance in the belief that the withdrawal of Google.cn means “deprivation” for millions of Chinese youth (killing World of Warcraft would be “deprivation”, per this film), and naivete in the belief that the Chinese government and the Communist Party (CCP) would be deterred in any way by a Google departure. It would be laughable but for the fact that these are serious journalists and an influential administration official, and they buy into this misreading of Beijing and regurgitate it without question.

Wake up, China does not need Google. While some elements within the Chinese government do not want to see Google leave, and Google’s departure will have costs for China, I believe other elements, especially within the powerful security services, will be more than happy to see them go. In fact, they would probably very much prefer that those millions of young Chinese only use search engines, like Baidu ($BIDU), that are effectively “controlled by the Chinese government”.

Let’s look again at what Meng Jianzhu, the Minister of Public Security, said in “Seeking Truth” in December:

The Internet has become a primary method for the anti-China forces to infiltrate us and amplify destructive energy. This provides new challenges in maintaining state security and social stability for the Public Security agencies.

I know that sounds paranoid and frankly strange to most Americans, but this is not just rhetoric; Mr. Meng believes what he says, and acts on his beliefs.

There is more discussion of the CCP worldview in another article also in today’s New York Times, by Michael Wines:

From blocking or closing down thousands of blogs and social-networking sites to accusing the United States of seeking information hegemony, the government has made it clear that the control of information has become even more of a central priority than in years past, according to David Bandurski, an analyst and author at the Hong Kong-based China Media Project, who spoke in a telephone interview on Monday.

“The CCP media worldview is that you have China versus a hostile West in this global war for public opinion,” he said, referring to the China Communist Party.

Good luck Google, but you may have badly misplayed your hand, assuming your intention really is to stay in China.

What do you think? Please let me know in the comments.

“网瘾战争 War of Internet Addiction” — Are World of Warcraft’s Travails In China Much More Interesting Than Google’s?

Google’s recent moves in China have captured global attention about censorship and Internet controls in China, eliciting protests from inside and outside China.

But there is a much more entertaining protest about China’s web controls circulating on the Internet–”网瘾战争 War of Internet Addiction”.  It is an hour long video, “shot” almost entirely with in-game video from World of Warcraft, satirizing the government’s attempt to “harmonize” China’s Internet with forced installations of “Green Dam Youth Escort”  and the travails of Chinese World of Warcraft players over the last several months. It is quite brilliant.

You can watch the original Chinese on Tudou here or an English subtitled version on Youtube: Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 (part 6 starting around minute 7 has the most obvious speech against Internet controls) Part 7

The background material, including the script, is available here (in Chinese). UPDATE: the background material on Google Docs now includes English annotations for all the references at the end of the document. The team has been busy adding to this living project.

The film tracks the fight between The9 ($NCTY) and Netease ($NTES) over the renewal rights to Activision Blizzard’s ($ATVI) World of Warcraft, the requirement that skulls be removed from World of Warcraft (hence the Skull Party), the bureaucratic battles between GAPP and the Ministry of Culture over the re-approval of WoW in China, the money-obsessed Uncle Yang and his Internet addiction camps and electro-shock therapy (see this forthcoming Feb 2010 Wired article on China’s Internet addiction camps), and the attempts to impose “Green Dam Youth Escort” software on Chinese web users. The movie concludes with an impassioned speech calling for Chinese World of Warcraft players to end their silence and raise their hands in protest to fight attempts to harmonize China’s Internet and keep them away from World of Warcraft, followed by an agreement between the warring bureaucracies-GAPP and MOC–to put aside their dispute and go after Netease for more money.

I think this more effectively challenges and potentially undermines the powers behind Internet controls than anything Google has done; many more Chinese likely care about censorship that affects WoW and other online games than care whether or not Google.cn stays online in China.

I doubt this video is good for Netease and its ongoing issues with GAPP over World of Warcraft. The company that may end up laughing the hardest is The9, in spite of the cutting portrayals of its Chairman Zhu Jun and CEO Chen Xiaowei.

“War of Internet Addiction” is a great look into the push and pull between Internet regulators and netizens in China, and the very legitimate cynicism so many Chinese embrace.

UPDATE: Rose Lu of Phoenix TV has an interview (Chinese only) with the filmmaker, known as 性感玉米 SexyCorn ( @CorndogCN on twitter). A couple of highlights:

He made the film with 100 volunteers and they spent no money other than WoW fees.

He no longer plays on the China WoW servers, in spite of the discrimination against Chinese players overseas and the lack of rights he has playing on WoW servers outside his own region.

He makes the point that even though the film takes place in WoW it is about much more than just a game:

这个影片,让不懂游戏的人流泪,是因为大家的互联网处境都一样-The film makes people who dont understand games shed tears because all of us on China’s Internet are in the same boat.

“War of Internet Addiction” is a much more eloquent, and likely impactful, protest against Internet censorship in China than Google’s moves.

What do you think? Please let me know in the comments.

Will Secretary Clinton’s Speech On Internet Freedom Kill Google’s Hope For A Compromise in China?

Secrectary of State Hillary Clinton is delivering a speech in which, according to the Wall Street Journal, she will announce that “the U.S. plans to make unrestricted access to the Internet a top foreign-policy priority.” I think it is wonderful that the U.S. will push Internet freedom globally. But the timing could probably not be worse for Google ($GOOG).

Google has signaled its compromise position in China, as reported by the New York Times-Google Hopes to Retain Business Unit in China:

“Google has said it is prepared to shut down its local Chinese-language search engine, Google.cn, unless it is allowed to run it uncensored. The company has also indicated that it would like to retain much of its operations there, including its growing ranks of Chinese engineers, its sales force and its toehold in the country’s mobile phone business.”

The New York Times is also reporting that both the Chinese government and Google want to treat the issue as a commercial, not a political or foreign policy dispute. Smart positioning for Google, even if i think it is a mistaken interpretation. Evgeney Morozov makes very good points in a post today-Google+US Government=Love. Morozov argues that:

“Google has managed to turn their business quandary over what to do about China into a political affair, with the US government having no choice but to play second fiddle to Google’s first. Now it’s not just Mountain View vs Beijing, it’s Washington/Mountain View vs Beijing. Brilliant. No wonder Google has been hiring all those smart policy types with government experience: you can see they are acting very smart.

It’s a very high-risk gamble they are playing but keep in mind that Google needed to sort out their China problem anyway – it’s better to do it now, with full support of the US government/policy-makers, than later (imagine the kind of publicity fallout were it to be known than the email accounts of the Chinese human rights activists were compromised and Google didn’t warn anyone else about it).”

Back to Clinton’s speech. There is no way this speech won’t politicize the Google-China dispute. Which brings me to another official policy pronouncement, one made in the pages of “Seeking Truth” in December 2009 by Meng Jianzhu, the Minister of Public Security. Surprisingly this speech has not come into the Western media discussion around the Google China brouhaha. I quote from the always useful China Digital Times:

“The title of the article is “Intensify the Construction of Five Capacities, Comprehensively Raise the Level of Stability Maintenance”. The following paragraph is from the article (via news.163.com), translated by CDT:

Currently, the social and economic development of China shows a series of new transitional characteristics. In the domain of social stability, there are heightened conflicts among the people, a higher crime rate, and a complex situation in the struggle against enemies. The Internet has become a primary method for the anti-China forces to infiltrate us and amplify destructive energy. This provides new challenges in maintaining state security and social stability for the Public Security agencies. The interconnectivity, complexity and sensitivity of different kinds of social conflicts has apparently increased, bringing new challenges for public security agencies in controlling the complex situation. All kids of criminal activities and social order issues are growing in scale. This also presents new problems for Public Security agencies managing social order. People’s consciousness of the law and consciousness of rights have obviously increased, and the level of public opinion and social supervision has increased to an unprecedented scale. This requires new standards for Public Security agencies’ law enforcement activities.”

The key phrase in the context of today’s speech by Secretary of State Clinton is “the Internet has become a primary method for the anti-China forces to infiltrate us and amplify destructive energy.”

There are many constituencies inside the Chinese government, many of whom no doubt see the benefits of working out a compromise with Google. But I fear most of those people may be relatively powerless, especially in the face of the current massive campaign by the Party and the security services to regain “control” of the Internet. Chinese leaders usually mean what they say, especially when what they say appears in “Seeking Truth”.

And from the perspective of the official in charge of public security who is very worried about and committed to dealing with threats to the Party’s rule, especially from the time-honored “anti-China forces”, there is no more obvious threat than the owner of the largest and most accessible information network on the planet-Google. Given how large Chinese companies generally tend to work with the Chinese government, which makes many Chinese officials assume US ones work with the US government, and given what Clinton is likely to say today, I have no doubt Minister Meng and his associates will believe that Google is part of a larger set of anti-China forces bent on “amplifying destructive energy”.

If I had to bet on the outcome of a bureaucratic battle in China, I would put my money with the security services, especially when the other side is a foreign firm like Google.

What do you think? Please let me know in the comments.