On June 17, 2012, China’s Ministry of Industry and Information Technology, along with the National Internet Information Office, released a notice for public comments (Exposure Draft) on a revised draft of the Internet Information Services Procedures (Administrative Procedures). The Administrative Procedures were enacted on September 20, 2000, by the the State Council Information Office and have now been implemented for over 12 years. In the past decade, global advancements in the internet’s technical capacity, operation style and service content have rendered the Administrative Procedures incompatible with today’s model, necessitating revision to policy.
This Exposure Draft is a clear embodiment of the Chinese Government’s desire to tighten control over internet information services. We believe this trend merits attention, especially in regards to the following areas:
1) The Exposure Draft created the National Department of Internet Information Content, which will be responsible for managing internet information content. Businesses engaging in providing internet information services must not only obtain permission to operate from the Telecommunications Department as before, but now must also seek an additional approval from the Department of Internet Information Content. Currently, in response to the rapid diffusion of information, wide range, and powerful influence of internet information sites such as online BBS forums, Weibo (microblogging) and blogs, the Exposure Draft’s creation of the National Department of Internet Information Content reflects the Chinese government’s incorporation of internet content into a conventional management framework.
2) Stronger management policies will be enactaed against the spread of falsified and slanderous internet information. For example, users will be required to use their real names when registering with websites and service providers will be required to keep the information posted by users on file for a period of 6-12 months (extended from 60 days).
3) In response to leaking or even nonconsensual sale of user information, the Exposure Draft also makes internet information providers and service providers responsible for keeping user information confidential and not selling, tampering with, leaking or any other illegal use of said information. Such infractions will be met with fines and even revocation of the company’s telecommunications operating license or record.
However, although the Exposure Draft revisions reflect the Chinese Government’s future plans to tighten controls on internet information services, the Exposure Draft mainly focuses on the industry’s regulatory mechanisms, and the new revisions do not touch upon foreign investment in China’s telecommunications industry.
Presently, foreign investment in China’s telecommunications industry has limitations regarding investment ratio, and, in practice, it is difficult to obtain the proper internet operating licensing for such companies invested partially with foreign capital. Therefore, most foreign capital goes through the “Sina.com structure” in order to participate in China’s internet information service industry. Although the structure is controversial, China’s relevant authorities have not explicitly denied its existence, with the Exposure Draft not making mention of the “Sina.com structure.” Under China’s existing laws, the “Sina.com structure” will remain the main model for of future foreign capital participation and investment in China’s internet valueadded telecommunications services.
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