China Calls for Internet Crackdown After ‘Prostitute Diary’ Shut

China’s government told its 500 million Internet users to stop spreading “malignant tumors” online or face punishment, the official Xinhua News Agency reported, citing a Cabinet spokesman it didn’t name.

Users in China must “abide by the law, show self- discipline and refrain from spreading rumors,” the spokesman for the State Council’s State Internet Information Office said, according to Xinhua.

He criticized a so-called prostitute diary on Sina Corp.’s Weibo microblog that was allegedly written by a 31-year-old man, who made up stories about working as a 22-year-old prostitute in Hangzhou, a city in eastern China’s Zhejiang province, Xinhua said. It attracted more than 250,000 users, Xinhua said.

China’s leaders are grappling with how to manage Twitter- like online microblogs that spread information difficult for government censors to control. Several members of the ruling Communist Party’s Politburo have visited Internet companies in recent weeks in the wake of a deadly train crash in July. Online commentators criticized the government’s handling of the case and spread commentary and photos of the accident at odds with the official government line.

Xinhua, citing the spokesman, said local authorities and websites should hold people who “spread rumors” accountable and “penalize them according to the law.”

China had 195 million microbloggers at the end of June, a 209 percent increase from the end of 2010, Xinhua reported, citing the China Internet Network Information Center.

The total number of Internet users in the country is greater than the populations of all but two countries: India and China itself.

Chinese Internet stocks tumbled in New York trading yesterday after a top U.S. securities regulator said the Department of Justice is reviewing allegations of accounting fraud at firms operating out of the Asian nation.

Sina’s shares slid to an eight-month low of $71.61 yesterday in New York.

To contact the reporter on this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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