China Crimps Internet News

P> The U.S. State Department has nothing to say for the record. They're working on it. The president and vice president's press offices aren't returning calls about it. The Chinese Embassy in Washington didn't return repeated messages. They've got jobs to keep. The Taiwan embassy, though it would love to, wasn't talking. Even those who would be most loquacious about any subject -- client-seeking attorneys -- the ones WT called, as of yet, don't have anything to say about it.

The move, of course, prompts censorship issues. That's easy. What's hard to sort out are copyright infringement, free trade and other international issues. These issues haven't been thought through, and so the news beyond the initial story is about trickier questions than mere Chinese censorship.

Last week, the Wall Street Journal printed news stories on it Wednesday, Thursday and Friday. Also, an angry WSJ editorial denounced the decision. None of these reports, which relied almost exclusively on anonymous sources, entertained the subject that has the U.S. State Department wonks and the intellectual property lawyers grasping for intellectual ground upon which to prop up a position.

The move caught most everyone by surprise, including Dow Jones, Reuters and Bloomberg L.P., three news services hurt by the change. Reuters issued this statement from its office in Hong Kong: "On the face of it, this has extremely serious implications for Reuters, as well as for many other organizations active in China." Reuters and Dow Jones have signed thousands of customers in China, a market said to be currently worth more than a million dollars.

Stories in the WSJ missed the most interesting issue of this transcultural imbroglio: Have the Chinese violated free trade provisions by commandeering information that has been produced by Western news services and then reselling it within its own borders? Further, if information is the product, is censorship of the Internet -- through which the economic news in question is delivered -- tantamount to a violation of free trade?

"It's a very sad omen," said Selig Herrison, a senior associate in the South and East Asia department at the Carnegie Endowment for International Peace. "It will further poison the well of relations between the U.S. and China."

In the last year China had been thought to be gung-ho about the Internet. It had been the thing to get; now it's the thing to suppress.

This latest action by the country's Communist government underscores its determination to control what Chinese citizens know.

The effect of the recent decision reaches beyond mere consumers of economic news. China's main Internet provider, Chinanet, recently imposed what it described as a temporary moratorium on new subscribers.

This suggests that the Communist leaders consider the Internet a threat to China, a closed society that nevertheless hopes to foster economic growth through state-controlled capitalism.

There's also an apparent economic incentive to channel economic news through the New China News Agency. The agency will profit from the distribution of foreign electronic economic news. Reuters, Dow Jones and Bloomberg will not be the only companies hurt. Chinese securities firms and banks, as well as currency and other traders, stand to lose if the New China News Agency puts the brakes on the free flow of economic information.

These entities within China would be forced to compete on a world stage where other nations are always a step ahead with on-time and unfettered economic news and data.

No matter what comes from the eventual response of the U.S. State Department to this issue, the recent decision of the Chinese government to funnel or censor economic news bodes badly both for Western firms and a freer China.