The Negative Economic Impacts of China’s Data Protectionism

Editor’s note: This is a guest post by Erica Newland from the Center for Democracy & Technology (CDT), a non-profit public interest organization based in Washington, DC.

Google’s recent whitepaper on censorship as a trade barrier has brought renewed attention to the global economic impact of policies that curtail the free flow of information, especially policies that have emanated from China. But reports on China’s censorship regime have failed to mention an important gear in its machine of information control, one that has huge implications for governments and business and that strikes at the heart of our notion of free flows of information: For many university students in China, information from abroad is, quite literally, not free.

In 2003, the China Education and Research Network (CERNET), through which all Chinese universities connect to the Internet, instituted a data fee for access to internationally hosted websites. CERNET didn’t pull any punches when describing its motivation: In order to encourage domestic communications, the regulation itself reads in Chinese, fee for international data downloads will be instituted while domestic data downloads will be free.

While this policy has been implemented inconsistently across institutions, many Chinese universities pass the international data download fee onto users of the network, the majority of whom are students of limited means. For example, the prestigious Peking University, Tsinghua University, and Fudan University charge students for access to international websites, as do many lesser-known institutions.

The international data fee does not apply to every foreign website: A small number can be accessed free of charge. Each month, CERNET announces a few newly white-listed IP addresses, usually corresponding to the websites of research services like JSTOR and Lexis Nexis. But visiting other information portals like The New York Times, Wikipedia, or even The Journal of Infectious Disease‚ incurs a long-distance fee.

Call it data protectionism

For American businesses, data protectionism translates into lost customers. That is, unless these businesses decide to set up websites within China’s walls and play by China’s rules: Companies that refuse to engage in self-censorship risk losing their website and business license. In other words, circumventing data protectionism (and other impediments to foreign websites imposed by China) requires acquiescing to censorship demands.

For a government that has long feared politically aware students, pay-per-view access to foreign ideas also serves as a convenient way to prevent the infiltration of harmful information from oversea, while allowing the government to avoid accusations of widespread censorship. As China’s future business, government, and thought leaders develop research and communication habits, many are acclimating to a pseudo intra-net, one devoid of much of the world’s knowledge.

Tiered pricing may be a necessary, though unfortunate, policy choice in nations with severe bandwidth limitations. But China is rare in instituting a pricing structure whose prima facie purpose is the promotion of domestic business and voices over foreign competitors. Like more traditional forms of censorship, data protectionism restricts the unique potential of the Internet to facilitate the free flow of information and the spread of ideas across boundaries. It presents a barrier to international trade and creates a problematic precedent as other regimes, like Vietnam and Iran, look to China for tips on information control. So as the Department of Commerce continues to investigate barriers to the information economy, it should consider the impact of data protectionism and the importance of ensuring global flows of information remain free.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to
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  • Bojan

    Not all countries are democratic and equal… It’s a shame that there is no data freedom for people in China, but their government does what it wants, not more different than USA, just in a different way… ;)

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