11 June 2015

From China’s “Great Wall” to “Great Firewall”


At the inaugural Consumer Electronics Show Asia, held in Shanghai earlier this week, the vice president of Asia Pacific, Latin America and Emerging Markets for Twitter delivered a keynote speech on the significance of the leading social media platform to Asia’s fast growing business community. The aim of the speech? To introduce the benefits of the social media to businesses. The audience? Key leaders from across the continent. Mention of China’s ban on Twitter? Not even the slightest hint.

The internet has long been under attack in mainland China: bans on websites like Google and Facebook, close monitoring of online content, frequent deletion of social media posts, while threats to bloggers and dissenters have been rampant. Moreover, similar government attitudes have been echoed in neighbouring countries in South and South East Asia, including Vietnam, Myanmar, Thailand and Cambodia. Yet, looking beyond the fundamental issue of freedom of speech and human rights, there is a growing need to assess the impact of restricting internet on the economy of a nation like China, which is on a quest to achieve economic superpower status.

Note that just as Google has a Chinese sibling in Baidu, YouTube has a Youku. China also has a thriving alternative to Twitter, Weibo, which has over 600 million registered users. So the question really is, what can Twitter achieve in this region given there already exists a mighty competitor? Twitter’s vice president  cited in his speech the examples of Alibaba, Air China and Xiaomi, three Chinese companies which are leveraging Twitter to build their brand overseas. This is precisely the defect in China’s internet policy. These online alternatives do connect China to China. But how does China connect to the rest of the world? The internet age has ushered in a change in commentary on international issues: previously the focus was on the “Great Wall of China”, but now the “Great Firewall of China” is the hotly debated topic.

First, let’s get the facts right. All nations with free internet are able to access the “Chinese internet” and are therefore capable of following and taking advantage of Chinese trends. On the other hand, synonymous businesses in China, large or small, will primarily have access to local trends and topics. Users in China can still bypass the restrictions by using virtual private network (VPN) and access global content.

However, note that since the start of the year, a number of VPN companies have experienced disruption to their services – which has made the use of collaborative online tools, like Google Docs, difficult. Moreover, VPNs are slow and therefore the loading time for a website is much longer, leading to greater inefficiency costs. E-commerce is an immediate casualty of the lack of confidence that comes with restrictions, censorship and privacy laws, and this phenomenon has been widely proven in academic studies. In comparison, in Japan, where the internet has been relatively open for decades (though it garnered some criticism recently), Euromonitor has estimated that Japanese online retail alone has experienced continuous double digit growth rate over the past ten years. The internet is an enabler of entrepreneurship, innovation and creativity, and such restrictions are paradoxical as China has pledged to develop a high-tech, R&D focused nation and has begun investing substantially in these efforts. Note that, though official figures are not available, CCTV has suggested that building the firewall cost the Chinese government $770 million as of 2002.

Like all good debates, this too has a strong counter argument. The “Chinese internet” is no less quick or efficient than its international counterpart. Many have debated that due to language and cultural differences, a large majority of the population does not feel the downside of this restriction. Moreover, local entrepreneurs have argued that censorship can keep competition from large multinational companies at bay and therefore allows an opportunity for local companies to grow. Kai-Fu Lee, Google’s Head of Operations in China prior to its relocation to Hong Kong, has said that even if an entrepreneur was to suffer some losses from these restrictions, the gains would be far greater.

While economists, politicians and policy-makers are still debating the long term economic implications of China’s internet policy, the fact of the matter is that the Chinese government is not going to budge any time soon. While the jury is still out on this, here is some food for thought: of its 600 million internet users, China has more than 250 million micro-bloggers, which in comparison is ten times that of the United Kingdom. Whatever the outcome, this issue is certain to make a global impact.

Ranjavati Banerji is a former management consultant, currently working with Centre for Policy Studies.