Even China Can't Cage The Internet

Can China tame the Internet? That's the question that Beijing's mandarins are asking themselves as they try to cope with the revolutionary medium that is hitting the Middle Kingdom. The number of ordinary Chinese online is soaring. That is leading a host of entrepreneurial companies to create Chinese-language Web sites. Powerful multinationals such as America Online, Yahoo!, and Softbank are arriving. And stock market investors are alive to the possibilities, too. That helps explain the tremendous response in mid-July to the NASDAQ initial public offering of China.com.

The Chinese government seems to be welcoming this invasion. While entrepreneurs who dare to start a newspaper in China could end up in jail, privately owned Net businesses are publishing information online and gingerly pushing the limits of acceptable public discourse.

There are limits. Beijing has decreed four taboos for Web companies: No Taiwan, No Tibet, No Dissidents, and No Sex. Beijing has sent security forces after people who violate those rules. Most businesses have fallen into line. Indeed, foreign Net entrepreneurs boast of their willingness to censor themselves. During the May protests that followed the NATO bombing of China's embassy, most major Chinese portals limited coverage to official accounts that blamed the U.S. for a deliberate attack. They didn't let their customers see news stories reporting the American apology and explanation.

That sort of behavior is just what Beijing wants from its domesticated Internet companies. By opening up the Net to private business, China is betting that it has figured out a way to have the economic benefits of the Net without troublesome political side effects. But already, cracks are appearing in this new Chinese wall. For instance, dedicated Chinese Net surfers can find their way around the restrictions to visit off-limits sites and join in feisty, taboo-touching online chat groups. As the technology gallops ahead, China's communist rulers may find it increasingly difficult to keep a booming Internet population in its cage.

Before it's here, it's on the Bloomberg Terminal.