2b.  Bandwidth

Over the years these networks’ bandwidth has increased with the increasing volume of processed information. The following is a chart of these increases.[i]

These increases in bandwidth illustrate several points. First, the demand for bandwidth is increasing rapidly; as a result, more international gateways are being developed. Secondly, China Telecom has a clear monopoly over the Internet industry. Thirdly, all ISPs have been developing new infrastructure. (Although this graph does not show an increase for CNCNET, there has been an increase in infrastructure. A decrease in bandwidth is the result of China Railcom — see above.)

More than 85 percent of Internet access is through dial-up at a connection rate of 56 Kbps.[ii] The most recent China Internet Network Information Center (CNNIC) survey concluded that out of 12 million host computers, most connected to the Internet using a dial-up method. Dial-up is a temporary, as opposed to dedicated, connection between machines established over a telephone line using modems. Dial-up functions like a long-distance phone call; the call goes through once the receiving end picks up. If the long-distance line is overloaded with calls, the call cannot be completed. Although the nation’s overall bandwidth has rapidly increased, China ’s narrow bandwidth in international gateways limits the capacity for data transmission. During heavy traffic, slow connectivity results, causing much consumer frustration. This has been a major complaint from Internet users, particularly since prices for services remain relatively high.  

II. Policy Background

Over the years the government has taken a minimalist approach to foreign investment in its telecom sector. The State invested heavily in telecom operators and national infrastructure while essentially closing the door to direct foreign investment, unless the investment was used for technological development. Few foreign companies have been directly involved in providing telecom services. Keeping the door closed to foreigners enabled the government to reinvest state telecom revenues. The monopoly power has allowed the government to protect its domestic industries, national security, and maintain the stability and reliability of the national public network.

Although national networks were in place as the Internet exploded in the 1990s, new policy issues arose. Basic telecom policies applied to the Internet. The Internet’s growth, however, heightened national security aspects of communication and media, and promoted a new realm of economic development and way of life.

The government’s quest to understand the Internet’s social and political ramifications accelerated in response to the April 25, 1999 rally of 10,000 Falun Gong members in front of the central government’s compound in Beijing . The government was caught by surprise, and an investigation revealed that the Internet was the means by which the demonstration had been organized. As a result, the Internet was received with even more caution. Seen as a serious threat to national security, the government decided to direct the Internet industry under the auspice of telecommunications, rather than the information technology (IT) sector. This strategic move to telecommunications restricted foreign investment. Control was given to the Ministry of Information Industry, and other government bodies participated in the industry’s legal development.

A key to China ’s Internet policy is the role of the Communist Party. China ’s political structure contains both government and party responsibilities. State politics are kept in-line with party policies since almost every government official is a Party member. This is vital to the Internet industry because the Communist Party is concerned with maintaining its authority over the nation. Although China has reformed its economy towards market-socialism, the government’s strategy is to control the direction, speed and application of each reforming endeavor. The government is fully aware of problems from changing the political and economic landscapes too quickly, as seen through the example of the Soviet Union . Nor does the government want to lose domestic industries to foreign competitors, as has been exemplified through scheduling commitments in the WTO.

On a broad scale, recent policy initiatives have focused on national economic development. Providing a strong economy legitimizes the regime in power; thus, since 1978 the Chinese have focused on transitioning to a more open market system.

During the opening ceremony of the Fifth Session of the Ninth National People’s Congress, Premier Zhu Rongji addressed delegates on the government’s priorities in the coming year. He expressed that the government’s main goals were economic development, social progress, adjusting to WTO entry and implementing market reform.[iii] Government policy objectives include:

1.       Increasing domestic demand

2.       Economic restructuring and reform

3.       Adapting to WTO entry and increasing openness to the outside world

4.       Transforming government functions
 

Measures to achieve these goals include:  

1.       Increasing the income and purchasing power of urban and rural residents; increasing the development of service trades, labor-intensive industries, and small and medium sized businesses; and encouraging people to spend more on housing, tourism, telecommunications, cultural activities, sports and other services  

2.       Accelerating the development of information, biology, new materials and other high and new technology industries; using high and new technologies for information network projects, new electronic components, integrated circuits, and software; information development in the national economy and society; and developing the modern services trades

3.       Quickly improve the uniformity of law, nondiscrimination, and transparency to align foreign-related economic laws and statutes with WTO rules, guaranteeing fair and efficient law enforcement; continue to optimize foreign investment

4.       Transform government functions of economic regulation, market supervision, social management, and public service; reduce the scope of administrative examination and approval, simplify and standardize necessary procedures, stress openness and transparency, and clearly define responsibilities; accelerate and utilize information technology in government administration, and promote electronic administration for working and supervising efficiency

  
The government clearly promotes economic development via the services sector, information technology, and administrative reform. However, the politics of the Internet are complicated and expansive. The development of the Internet is shaped by a number of  individual actors.
  

III. Political Background
 

1.  Central Government

The central government organizations involved in the Internet industry’s policy making can be illustrated as follows:

1a.  Central Committee

At the apex of the political and party structure is the Central Committee. President Jiang Zemin is the supreme representative of China and the leader of the Central Committee. He has the power to disseminate statutes adopted by the NPC, appoint and remove members of the State Council, declare war, and ratify treaties. He is, however, still subordinate to the National People’s Congress (NPC).

As a collective body, the Central Committee (CC) has supreme power over government party affairs. The body enacts party policies, accepts and reviews political reports from party leaders, and approves major changes in party membership. The CC holds annual plenary sessions through which party and state policies and programs are discussed and ratified. However, the large size of the CC (approximately 350 people) makes reaching consensus on pressing issues difficult. The Politburo and its Standing Committee have the authority to carry out the party’s day-to-day supervisory work and are responsible for selecting top personnel to direct the party, government and military. Consisting of a small group of leaders elected by the CC, these men occupy positions at the top of the power structure. Currently the Politburo has fourteen members:

The Politburo’s Standing Committee is the major decision-making power within the party. Currently there are seven members of the Standing Committee:

Together, these two bodies possess ultimate control over party policies. Regarding the State’s Internet policies, the Central Committee is responsible for ensuring that Party principles are upheld. Controlling the dissemination of State secrets via the Internet, a national security concern, has become a priority for this elite group. The State Secrets Bureau is directly responsible for protecting state secrets and implementing and monitoring organization for the Committee for the Protection of State Secrets under the Central Committee. The Bureau has helped develop laws and regulations for the protection of state secrets on the Internet.  

Other powers held by the Central Committee include the power to elect individuals within the State Council to carry out Party principles. Generally, the majority within the Central Committee can vote against reelecting any individual deemed either too liberal or conservative at the end of the five-year term. Since the Committee’s drive for economic development is a primary concern for the nation as a whole, conservatives and liberals are generally judged by the speed with which they want to open the economy to foreign participation and domestic restructuring. As a result, the State Council and its ministries direct the liberal or conservative reforms. The Central Committee, including the President, looks to these bodies to carry out Party and government policies.  

Each member of these two bodies possesses a great deal of influence within China ’s political system. These officials have reached high level positions by contributing to the State and the Party for the majority of their lives; their average age is 65.

1b.  National People’s Congress

The National People’s Congress, as the chief organ of collective state power, formulates laws, selects and removes leaders of the highest state organs, formulates policies and supervises other government departments. The number of regional delegates is determined by population ratios in rural and urban areas, with each delegate serving five-year terms. Every year the NPC holds a working session after the year’s first quarter to bring delegates from around the country together to discuss national matters. Delegates are divided into groups according to regions where they meet with the central government’s ministers. The meetings provide the delegates with an exchange of information about the government’s performance. It is within these sessions that delegates present their region’s policy objectives or problems to the body for discussion. 
  

1c.  National People’s Congress Standing Committee

When the NPC is not in session, its Standing Committee functions as the executive body. The one hundred fifty-three members of the Standing Committee are elected by the NPC. The NPC Standing Committee has the right to enact, interpret and amend laws, with the exception of laws relating to fields reserved for the NPC as a whole. Eight permanent special committees that represent the NPC operate under the direction of the NPC Standing Committee. These committees are: Ethnic Groups Committee, the Legal Committee, the Finance and Economics Committee, the Education, Science, Culture and Public Health Committee, the Committee for Internal and Judicial Affairs, and the Committee on the Environmental and Resources Protection. Both within and outside the NPC yearly sessions, these committees study, examine and draw up related motions.
   

1d.   State Council

Next in line on the hierarchical scale is the State Council. The executive organ of the State administration, the State Council manages legislation and submits proposals to the NPC and the Central Committee. The State Council also handles economic management, diplomatic and social administration, and other powers granted by the NPC and its Standing Committee. The Constitution gives the State Council the right to develop administrative laws and regulations. It administers the government through forty-eight ministries and commissions, eight offices and ten institutions. Ministries and commissions under the State Council deliver orders, instructions and regulations. Within the State Council, the most powerful decision-making roles are granted to the premier and his four vice-premiers. The President appoints these positions. The organization also consists of five State Councilors and a Secretary General.  

1e.  Ministries

The ministries and commissions are responsible to the State Council. They maintain a great deal of autonomy, however, in developing policies and regulations. Each ministry acts within its jurisdiction as a regulatory and enforcement body of government policies. This level of the central government is the most involved in creating national laws and regulations. Currently twelve ministries are active participants in Internet regulations and/or development. These stakeholders are:

1e-1  Ministry of Information Industry

The Ministry of Information Industry (MII) is the telecommunications industry regulator. It oversees national electronics and information products manufacturing, telecommunications and software industries, information promotion of the national economy, and social services.[iv] The MII broadly:

·          Plans the State public telecommunications networks, and special division networks for the government, military and educational departments

·          Formulates the State’s information industry development strategies

·          Supervises all aspects of the telecom markets according to law, examines and approves licenses, supervises quality, ensures fair competition, regulates on interconnection and supervises its implementation

·          Propels the research and development of electronics and information products manufacturing, organizes research of major scientific and technological development projects

·          Participates with international organizations, signs inter-governmental agreements, and organizes economic and technical cooperation with foreign countries

See Appendix 2 for specific details about MII’s thirteen departments.

Over the years, pressure has built on Minister Wu Jichuan and the MII to increase competition, reduce services fees, and produce detailed rules for the Internet. The MII has  begun to address these goals. The MII’s efforts concerning the Internet are currently concentrated in regulating industry growth in information technology, building additional networking capabilities, and approving licenses for service providers, which now include foreign participants.

1e-2  Ministry of Foreign Trade and Economic Cooperation

Though not specifically involved in telecommunications, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) is responsible for regulating foreign trade and investment. All foreign investment in China ’s communications industry must receive MOFTEC approval[1], including joint ventures and technological transfers. These responsibilities are allocated to the Department of Foreign Investment, which also drafts guidelines and enforces implementation mechanisms for mid- and long-term projections.[v]  Deputy Director, Wang Shichun, believes that the Ministry has the facility to receive a flow of information from all over the world, and use it for China ’s benefit. He also believes MOFTEC has taken a leading role in the industry’s development by reviewing technology that is imported to China , in order to “properly apply it to suit local conditions”.[vi]
  
 

1e-3  State Administration of Radio, Film, and Television

The State Administration of Radio, Film, and Television (SARFT) approves the content of radio, films and TV programs in accordance with requirements established by the Communist Party’s Propaganda Department. It also oversees the operation of national TV networks and controls access to cable and satellite networks. Only recently have cable and Internet networks integrated to produce high-speed two-way broadband. Cable companies that provide or hope to provide Internet access and data services must apply for licenses at the Ministry of Information Industry. Internet video programming falls under the jurisdiction of SARFT. Currently there are over 80 million cable subscribers in China .[vii]

  
 
1e-4  Ministry of Public Security

The Ministry of Public Security is responsible for securing national computer systems. As a result, all Internet users must register with the MPS. In addition, the Ministry’s China Internet Products Testing, Evaluation and Authentication Center works with the People’s Liberation Army (PLA)-affiliated Secrecy Bureau and other organizations involved with State security to certify hardware, software and data security products. The eleven items it is accredited to certify are[viii]:

·          Access Control Products: firewalls, routers, proxy servers/gateways

·          Authentication Products

·          Security Auditing Products

·          Security Management Products

·          Data Integrity Products

·          Digital Signature Products

·          Non-repudiation Products

·          Commercial Encryption Products

·          Tempest Products

·          Information System Security

·          Information Security Services

The Ministry has prohibited Internet service providers from allowing the online distribution of information that harms public security. Cyberpolice monitor the online activity of those suspected of violating content regulations. The Ministry is responsible for closing many Internet cafes engaged in “illegal activities”. The Ministry of Public Security has the authority to approve information technology and to develop Internet regulations regarding to State security without consulting with the MII or any technology importing companies.

1e-5  Ministry of State Security

The Ministry of State Security has the authority through its State Security Law of the People’s Republic of China (1993) to take legal action against an individual whose conduct harms the PRC state security. This law has been repeated in specific Internet laws.

Article 4 states[ix]: Acts of harming the PRC’s state security referred to in this law are those carried out by organizations, groups and individuals outside the territory, or instigated and financed by them but carried out by others; as well as those carried out by organizations and individuals inside the territory in collusion with organizations, groups and individuals outside the territory:

1.       Of plotting to subvert the government, dismember the state and overthrow the socialist system

2.       Of stealing, secretly gathering, buying and illegally providing state secrets for an enemy

3.       Of engaging in other sabotage activities against state security

The Ministry, like other ministries, has the right to develop Internet regulations within their jurisdiction.
  
 

1e-6  Ministry of Education

The Ministry of Education has engaged in interactive distance education systems through cable TV and the Internet. The Ministry is responsible for approving education-related content. The Ministry of Information Industry and the State Administration of Radio, Film and Television are responsible for administering the transmission of the state education programs via satellite and Internet networks. 
  
 

1e-7  Ministry of Health

This Ministry requires that all health-related content on Websites be inspected and approved by public health authorities before application for ICP business licenses. The sites must only provide information on disease prevention, fitness and health education—strictly banned are online diagnoses and treatment prescriptions.

  
1e-8  State Press and Publication Administration[x]

In November 1999 the SPPA developed the Interim Regulations on Managing the Distribution of Publications, which states that all companies need SPPA permission to sell publications online and that non-publication distributors may not open online bookstores or sell publications on the Internet. The SPPA claimed that this ruling was necessary to standardize the market for publication distribution and strengthen the management of online bookstores. Some Web sites were selling superstitious, reactionary or pornographic books.

The Ministry has also regulated to ensure that the reprinting of unverified information, especially from uncensored Internet sources, be stopped. In doing so, they issued the Circular on Further Strengthening the Management of Reprints by Newspapers and Periodicals in March 2000. The Circular requires that publications guarantee the political correctness of the reprinted content. Particular care is required for material involving state policies, foreign affairs and confidential documents. Publications may not reprint obscene, violent or superstitious content, materials from internal or illegal publications, or unverified news from the Internet.

In addition, the Ministry is responsible for approving news content not already published by official news organizations. Original news content must be approved by the SPPA before being posted on-line.

1e-9  State Drug Administration

The State Drug Administration is responsible for approving Internet content on medicine. The administration has developed the Provisional Measures for the Administration of Internet Pharmaceutical Product Information Services to control pharmaceutical sales over the Internet. The Ministry also conducts clinical drug research, updates and enforces national standards, and promotes the sale of drugs by state-owned enterprises.

1e-10  Ministry of Culture

The Ministry of Culture created a Notice prohibiting wholly foreign-owned, Sino-foreign equity joint ventures and Sino-foreign cooperative joint ventures from any on-line business activities relating to audio-visual products. In addition, domestic audio-visual on-line dealers are required to obtain a permit from the audio-visual market administration department of the province in which the dealer’s business resides. The MOC bans all business activities involving audio-visual products with content that is harmful to the reunification of the nation and integrity of the country’s sovereignty and territory; undermines national unity; discloses state secrets; advertises obscene, superstition or exaggerated violence; and is defaming or insults people.[xi]
 

1e-11  State Council Information Office

This ministerial level office has many functions. The SCIO is responsible for[xii]:

• Regulating foreign media operations in China by proposing related policies; coordinating international publicity activities 

• Convening press conferences for cabinet departments 

•  Publishing white papers on China ’s official views regarding important domestic and international issues

• Helping the Ministry of Foreign Affairs and the National Association of Journalists to supervise resident foreign news offices in China  

• Organizing news-gathering trips by overseas media organizations and regulating Internet media

The Office is directly linked to the Chinese Communist Party’s Propaganda Department, which oversees news coverage and editorial content for all media operating in China . The State Council Information Office developed regulations prohibiting content providers from directly posting foreign news on their Websites and prohibiting direct links to overseas news Websites.

2.  Regional Governments  

Local governments have acquired more autonomy from decentralization over the last twenty years. Among other responsibilities, local governments must craft regional laws, propose development strategies, and provide social services. Governments act as entrepreneurs, establishing policies and regulations for their economies. Currently local leaders are preoccupied with increasing investments to help smooth the economic development process, and increasing service sectors to diversify the economy. This would generate more employment.  

The central government’s relationship to the local governments remains very important. The central government continues to redistribute resources and guide Communist Party ideology throughout the country. The Party implements national policies, which have a direct effect on the regions. As a result, local representation at the National People’s Congresses is essential. Each year provincial representatives (delegates) spend two-weeks in Beijing to respond to the central government’s policies from the previous year and discuss new concerns. At this time regional initiatives are brought to the central government’s attention as a unified body, especially concerning national policies.  

During the Fifth Session of the Ninth National People’s Congress in March 2002, provinces discussed the following concerns[xiii]: 

• Beijing : Raising living standards of the disadvantaged, preparing for the Olympics

• Shanghai : Opening up service and trade sectors 

• Guangdong : Improving the investment climate 

• Shandong : Development of high-tech industries

• Gansu : Developing the West 

• Yunnan : Difficulties of reaching economic goals in a fast-changing international setting without the proper infrastructure

• Sichuan : Stimulating economic and social development according to the needs of the local people, reforming state enterprises

• Shaanxi : Reforming state enterprises and reducing local protectionism

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