TRAVEL through China’s vast, poor hinterland, and even there you will find it: ordinary Chinese being urged, insistently, to take part in the telecoms and computer revolutions. In some of the most backward cities, consumers are assailed by billboards that weave dreams around mobile phones or the latest Chinese dot.com company. In the countryside, Communist-style slogans painted on village walls promise a better life if households would only get a telephone. And in the down-at-heel town of Wanxian, on the steep banks of the Yangzi river 1,900 km from the coast, a red banner across the main street announces “Breast enlargement by computer”.

Everything is possible, it seems, in the information age. It is a notion that is encouraged at the highest levels of the state. Since the early 1990s, China’s Communist rulers have continually emphasised the need to create modern telecoms and information industries, where possible with home-bred technologies. By this means, China will vault into the ranks of the prosperous, technology-rich countries.

Ultimately, the leaders hope, success will also be a vote of confidence in the party’s own policies, and in particular in its insistence on what it calls a “socialist market economy”, in which a strong measure of state guidance prevails. The rise of the Internet in China over the past couple of years, and the possibilities of e-commerce, have only reaffirmed these aspirations, even though the speed of the Internet’s development in China has clearly caught the state off-guard.

China’s leaders intend to avoid the anarchy that has marked the development of the Internet in the West. Rather, they want the Internet to become a vital engine of national progress, harnessed wherever necessary to the controlling forces of the state. Deng Xiaoping, China’s late paramount leader, once said of economic reform that when you open the window, the flies come in. Deng’s successors, led by President Jiang Zemin, aim to let in as few flies as possible in the Internet age. The degree to which they succeed will shape not only China’s economic development, but also its political future.

To date, the state’s plans for information technology have chiefly taken the form of massive investment, nearly $50 billion so far, in telecoms and data-processing hardware. A giant bundle of “Golden Projects” are being built for the purpose, among others, of tying local government more closely to the centre, as well as processing enormous amounts of data about revenues. This, it is hoped, will recentralise power that has been lost to the localities during two decades of economic loosening.

But the Golden Projects also have other potential uses. It is no surprise that the security forces, both military and police, were among the earliest users first of computers and then of the Internet in China, or that the security apparatus was responsible for developing most of China’s anti-virus software. With these new investments, any future Chinese government, if it were so minded, could monitor and control China’s citizens much more forcefully. The government could, for example, introduce “smart” national identity cards on which personal information would be stored, a high-tech version of the manila-bound dossier that is kept by the Communist authorities on every city-dweller in China.

In addition, since 1993, a fibre-optic grid has been laid across the country. Eight high-capacity lines run north-south, and eight east-west, connecting China’s principal cities. That backbone has allowed the state telecoms monopoly, China Telecom, under the all-powerful Ministry of Information Industry (MII), to install new telephone lines at a stunning rate. According to Ross O’Brien of Pyramid Research, a telecoms consultancy that is part of the Economist Group, in 1990 there were fewer than 10m telephone lines in China. Today there are 125m lines, with more than 2m being laid every month. Mobile phones are multiplying even faster, from 5m mobile-phone users in 1995 to over 57m today. More mobile handsets will be sold in China this year than in either the United States or Japan. “Teledensity” in China, at just 11 fixed lines for every 100 people, is still low compared with developed countries (see chart). But there will probably be several more years of fast growth, making China the most attractive telecoms market in the world.

The speed with which cities are becoming connected through high-capacity lines has allowed the Internet to surge through Chinese society, even if its use is still clunky and slow by western standards. Growth in that use has outpaced even the spread of fixed and mobile phones, albeit from a lower base. In 1995, there were fewer than 50,000 Internet-users in China. If statistics from the state China Internet Network Information Centre are to be believed, there were 2.1m users at the beginning of 1999 and 8.9m at its end. By the end of this year, the number is expected to be 20m. There are now 48,000 registered domain names in China, three-quarters of them commercial.

This kind of growth makes foreigners slaver. A few companies such as Hughes, Ericsson and Motorola have already prospered in China, despite its coolness to doing business with foreigners, by supplying the telecoms hardware that the country craves. Now foreigners want to profit from the Internet boom by providing software and other services. Already, some $150m of foreign investment has gone into Chinese dot.com companies, mainly Internet content-providers and e-commerce start-ups. Foreign investors like to claim that they are doing their bit to open up closed minds and a closed political system. In April, Bill Clinton went further: he claimed that the Internet, with foreign involvement, would eventually bring democracy to the Middle Kingdom.

When China joins the WTO, possibly later this year, foreign influence in its Internet market will become legal, though with tight constraints. Investment in Chinese content- and service-providers will be limited to 49%, a level judged sufficient by the government to spur local competitors but not swamp them. And even after WTO membership, the possibilities for commercial involvement in China’s Internet will be dogged by the country’s backwardness. There is much hype about the potential for e-commerce in China. Yet there is no national payments system for buying goods online, there are few reliable distribution channels for delivering them, and online buyers are not confident about security.

Moreover, the state and the many government agencies competing over Internet development have consistently failed to agree about commercial regulation. So the Internet will continue to operate in a legal twilight. It is no wonder that e-commerce deals are at present running at a mere $20m-40m a year.

Sheer primitiveness aside, the Chinese state has other ways of keeping out the foreign “flies”—from liberalism to democracy to pornography—that will come in with the Internet. Here are the four most important:

•State control. Although China encourages a degree of competition among ISPs and content-providers inside China, the number of organisations that can interconnect with the global Internet is limited to just four state-controlled entities, led by the MII. This makes it much easier for the state to control what comes into the country. From time to time The Economist’s website is blocked. The sites of the BBC, the Washington Post and CNN are blocked almost continuously, as are overseas sites of human-rights organisations and of the Falun Gong, a spiritual movement that has been condemned, and suppressed, as an evil cult.

•Encryption. Late last year, regulations were issued by the new State Encryption Management Commission that banned Chinese companies or individuals from using foreign encryption software. Foreign businesses were required to register the encryption products they themselves used in China. In theory, that gave the state the means to decode traffic passing through the Internet or between branches of the same business. In practice, the regulations were ill-considered and are ultimately unworkable. The state has since backed down from some of its more absurd demands; but ordinary Chinese are still forbidden to use any foreign-made stand-alone encryption products. They may use only state-approved, Chinese-designed encryption ware, which they must register with the commission. This gives the state a powerful tool for monitoring computer traffic.

•Internet policing. Earlier this year, the government became alarmed at the amount of “unauthorised” news appearing on Chinese websites. For instance, the websites of some state-owned publications ran stories taken from the uncensored Hong Kong press about a corruption scandal in Fujian province. As a result, the State Secrecy Bureau (another hitherto unheard-of agency) promulgated “regulations for computer systems on the Internet”. These extended the ban on the publication of vaguely-defined “state secrets” to the Internet, including e-mail, bulletin boards, chat rooms and news groups.

Even before the new regulations, the state had been an eager policer of the Internet. The first victim, in 1998, was a computer programmer in Shanghai called Lin Hai. He made the mistake of supplying (possibly quite innocently) a dissident Internet magazine in America, VIP Reference News, with 30,000 Chinese e-mail addresses. He was sentenced to two years’ imprisonment, although he did not serve his full term. Other people arrested for Internet activity include Qi Yanchen, a journalist in Hebei province who had posted excerpts from his book, “The Collapse of China”, and four journalists who published e-samizdat last year.

Most recently, on June 3rd, Huang Qi was arrested in Chengdu, the capital of Sichuan province. Mr Huang’s website, whose address (www.6-4tianwang.com) makes reference to the date of the still-taboo Tiananmen massacre on June 4th 1989, started as a bulletin board for missing people in China. Over the months, it became a forum for discussion of human-rights abuses that the authorities eventually found too provocative. Mr Huang is likely to be charged soon under the new state-secrecy laws.

•News monitoring. In addition, the propaganda department of the Communist Party has drafted new laws touching the publication of news on the Internet. Commercial websites are now barred from hiring their own reporters or from publishing “original” content. Only news that has already been published by a state outlet (such as the People’s Daily, the official Communist mouthpiece, or Xinhua, the state news agency) is now allowed.

At the same time, the state media will receive extra government money for web development, reinforcing their dominance of what the Chinese are allowed to read. The regulations have killed the hopes of those web portals that wished to shine by providing original news. Sina.com, for instance, built a name for itself with its coverage of popular reactions to the bombing of the Chinese embassy in Belgrade, in May 1999, opening chat rooms in which people could vent their feelings outside government channels.

In a forthcoming essay in China Perspectives, published in Hong Kong, Eric Sautedé traces hacker attacks on American sites of the Falun Gong back to Beijing’s Public Security Bureau. But the state lacks the power to prevent similar gatherings-by-e-mail in future. In fact, the security forces are having trouble hiring bright young net-wizards these days, since they would rather apply their knowledge commercially.

In the case of Huang Qi in Chengdu, online viewers were able to follow his arrest live. He wrote: “The Public Security Bureau has summoned me for interrogation. The road is still long. Thanks to everybody devoted to democracy in China. The policemen are here now. So long.” A yellow ribbon has been put up on the site, and many people have posted messages of sympathy, along with attacks on the government. Curiously, the state has not—or not yet—got round to closing down the site.

Other provocative sites remain unblocked, too. The government rails against a London-based organisation that advocates Tibetan independence. Yet its website is still freely accessible from China: evidence of how Chinese organs of state control are often fragmented, inefficient and ill co-ordinated. And the existence of proxy servers overseas always allows the most determined Chinese surfers to skirt round state control.

There are signs that the Internet is already creating a degree of “living space” that challenges state constraints on young and literate Chinese. Earlier this summer, a young student at Beijing University was raped and then killed on her way back to her dormitory late at night. The university authorities tried to sweep the incident under the carpet, and a domestic news ban was placed on the story. But friends in America of students at Beijing University read about the incident in the overseas media and e-mailed the news back to China. Immediately, the students organised two days of demonstrations. The unrest died down quickly; but many people in Beijing, not least in the Communist Party, worried that it might evolve into political protest, as happened in 1989.

Admittedly, the authorities understand now how university bulletin boards work, and what a danger they are. They tried to contain the incident of the dead girl by cutting the links to other universities’ bulletin boards. But students have gone on airing their grievances. Recently, the internal board at another university in Beijing has been seething with anger over an announcement, by the English faculty, that final exams would be postponed and that students would have to take a three-week course to act as escorts for visiting foreign officials. A few weeks later, the training was cancelled and the exams put back on schedule. With better ways of communicating among themselves, students feel they are able to resist that sort of high-handed behaviour.

Women also have their champions, led by a web company called Gaogenxie, or “high-heeled shoes”, a symbol of freedom in China against the traditional bound feet. Again, the site steers well clear of politics. All the same, says Yin Hui, Gaogenxie’s editor, it deals with issues that mainland publications avoid: for example, Chinese men’s reluctance to use condoms, or people’s attitudes to sex. In a society where women are expected to marry young, Gaogenxie also devotes space to the challenges facing single women, including single mothers.

All this, though, does not add up to confirmation of a civil society. The web’s new entrepreneurial stars, though they are young, hip and cosmopolitan, cannot be counted on to lead demands for democracy and a more accountable government. After all, the best-known entrepreneurs, such as Edward Zeng of Sparkice, a chain of Internet cafés and now a budding dot.com, and Jack Ma of Alibaba.com, a business-to-business exchange that matches international demand for Chinese products with their suppliers, still have close links to the state, even if they rarely wear ties and would look at home in Silicon Valley. Who would risk their business prospects by allowing provocative content on their sites? A powerful streak of self-censorship pervades Chinese websites. All of them employ what Patrick Horgan of Apco, a consultancy, describes as a “chat-room mama” to strike out sensitive topics, such as Taiwanese independence or democracy, whenever they pop up.

Besides, as part of a new consumer culture in China, the Internet can act as opium for the masses, dulling political desires. The government understands well the effects of the consumerism drug. In the years after Tiananmen, shop windows full of desirable goods did much to divert attention from political dissent.

The present generation of 17-30-year-olds appears much less politicised than the previous one. Is it any coincidence that it is also the generation that is most wired? The state claims that the typical Internet surfer spends 17 hours a week at the terminal. An unscientific wander through the Internet cafés and campuses of Beijing suggests that much of that time is spent logging on, playing games and writing frivolous e-mails to friends sitting across the hallway. The government is probably right in assuming that this is not—at least not yet—a revolutionary generation with a sharp new weapon.

LINKS

The Economist Intelligence Unit assesses e-commerce in China. The China Internet Network Information Centre compiles data on the use of the Internet in China. Click the names to go to companies mentioned in the article: sohu.com, Sina.com, www.6.4tianwang.com,Gaogenxie (Chinese only), and Sparkice.

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