04 October 2000

New regulations unveiled on Monday for China’s fledgling internet industry have so far caused little concern among the country’s web experts.

The Chinese government’s new laws are potentially draconian, forcing all online companies to apply for licenses, preventing direct foreign capital entering the industry and holding firms responsible for their websites’ content. Fines of around $120,000 could be incurred by companies breaking the regulations.

There is concern that the new rules could slow the industry considerably, making Chinese firms less competitive than their relatively freer foreign counterparts. US telecoms consultant Duncan Clark claimed, “That's not a situation that any major foreign investor would want to be associated with”.

It is also feared that the laws will hit start-ups hardest, since these will have less cash to play with and poorer legal advice than the major players.

However, these rules have not come out of the blue. Many internet companies in China have been expecting them, and already regulate themselves to avoid provoking the wrath of the government. “I don't see any immediate impact on the industry”, commented Tony Zhang, chief executive of

The rules were first drafted at a time of rapid growth for the industry, but this growth has since slowed, prompting suggestions that the government might not strictly enforce them. “The market isn't overheated now, so I don't see a necessity for the government to crack down now”, added Zhang.

News source: New York Times