ABSTRACT

The world journalistic press is replete with reports indicating that the economy of China is growing very rapidly and that China will, in the 21st Century, assume a prominent place among the economic super powers of the world. At the same time, there has been substantial investment of effort and money on the part of China in implementing Internet connectivity throughout the Middle Kingdom. Chinese leadership is wise in understanding that telecommunications in the 21st Century will be a dominant force in determining economic strength of any country. This paper discusses China's economic development, the modification of its political posture, and the development of the Internet in China. It identifies and discusses factors which will hinder the growth and development of the information industry in China and which will detract from China's full participation in the globalization of information.

Nevertheless, the pace of economic growth in China moves rapidly and surfaces in a variety of reports throughout the world. Browsing the World Wide Web brings one's attention to organizations such as InfoChina, a business and market information resource which lists on its Homepage databases of statistical data about Macro Economic Indicators, Household Survey, Import Changes, Money and Banking, Selected Industry Outputs, Top Ten Hot Spots of Investment in 1995, Top Ten Energy Consuming Regions, and Canada-China Business Statistics. ⁽¹⁾ Other indicators of China's phenomenal economic growth, and its interaction with other world economic powers, appear with great frequency in China News Digest. ⁽²⁾ Such comment in CND is always succinct and appears always to be couched in the language and the attitudes of the individual contributors. That China's economic rise and growth has been dramatic is unquestioned. Particularly, the growth of the last few years has been enormous, but it has created some imbalances, both domestically and in terms of Chinese foreign relations. Relations between the United States and China are strained as a result of the trade imbalance and have become more difficult as China appears to show indicators of becoming as intractable and as contentious with regard to trade imbalance as is Japan.

The deciding factor, however, in determining China's continued economic growth, particularly long term economic growth, would appear to be Chinese internal politics. Already, the signs are there indicating slow but, nevertheless, consistent change in political leadership. Whether China can maintain the degree of political stability that it has over the past several years while continuing to promote economic growth remains to be seen.

In all candor, history suggests that the combination of political authoritarianism and prosperous economic growth is not a happy one. Throughout the western hemisphere, no country has been able to maintain a rigid political structure and, at the same time, enjoy economic prosperity. Invariably, the creation and establishment of an educated and trained entrepreneurial class inevitably leads to demands for political participation. ⁽³⁾ What China's future political posture will be, remains, of course, to be seen.

The one factor that has not been prevalent in the experiences of other countries with economic growth and political evolution is telecommunications. Indicators are that all countries and economies, regardless of hemisphere, will be shaped in profound ways by telecommunications. Already, we have seen certain indicators that telecommunications makes the world smaller and smaller, and emphasizing the roles to be played by smaller and smaller political constituencies. Such is the theme of John Naisbitt's Global Paradox. ⁽⁴⁾

The primary paradox or focus of Naisbitt's work is that "the bigger the world economy, the more powerful its smallest players." ⁽⁵⁾ Naisbitt goes on to predict that "the study of the smallest economic player, the entrepreneur, will merge with the study of how the big bang global economy works." ⁽⁶⁾ The fundamental factor seen by Naisbitt as powering what he calls the "global paradox" is telecommunications. Specifically, he sees telecommunications as "... the driving force that is simultaneously creating the huge global economy and making its parts smaller and more powerful." ⁽⁷⁾ Naisbitt devotes extensive discussion to what he calls "The Dragon Century: The Chinese Commonwealth...." ⁽⁸⁾ His closing comment in this extensive chapter is that "Next century, looking back, it should be clear that the emergence of China was the most important economic force shaping the world in the latter part of the 20th Century." ⁽⁹⁾

During the immediate past few years, and paralleling the impressive economic development of China, has been equally impressive progress in the development of Internet connectivity. Some brief anecdotal evidence will clearly illustrate this progress. For five weeks during the months of October and November in 1993, this writer visited and lectured at several universities in Beijing, in Chongqing, and in Guiyang. All of these lectures were about various features of the Internet and focused on Gopher, Telnet, and FTP capabilities. At that time, there was no Internet connectivity in any of the facilities where the lectures were delivered and, having known this before hand, a series of transparencies of Gopher, Telnet, and FTP screens had been prepared for purposes of demonstrating to various audiences exactly what the capabilities were. Since that time, and since the establishment of the first Internet link in 1993 at the Institute of High Energy Physics in Beijing, 'net connectivity seems to have taken off at a whirlwind pace.

One such indicator of this pace is the list of Chinese University Homepages maintained by Christina DeMello at the Massachusetts Institute of Technology (http://www.mit.edu:8001/ people/cdemello/cn.html). In the late spring of this year, this listing included more than 50 Chinese universities. Not only did none of these universities have a Homepage when this writer was in China in 1993, but also the overwhelming majority had no Internet connectivity at all. This is rather dramatic change in a relatively short period of time.

The real impetus for Internet connectivity deployment came with the establishment of CERNET (China Education and Research Network). As a three-layered structure with CERNET as a nationwide backbone, and with eight regional networks and then campus networks, Internet connectivity will be extended to more than 1,000 universities enrolling more than two million students. The first phase of CERNET implementation was completed in December, 1995. At the time of this writing, there are a few more than one hundred universities connected to CERNET from all provinces of China with the single exception of Tibet.

Most of the Internet development in China appears to be occurring in the coastal areas, and this is exactly where the majority of economic growth in China is taking place. ⁽¹⁰⁾ Ultimately, a program unofficially titled "The China Internet Project, or ChinaNet," operated by the Ministry of Posts and Telecommunications has a goal of providing access to 360,000 state enterprises, and 8.6 million private enterprises in 600 Chinese cities. ⁽¹¹⁾

In early 1996, however, there were fewer than 100,000 Internet estimated users in China. A significant number of those Chinese who are Internet users feel it is difficult to acquire information from the Internet, and they also experience difficulty with the dominant mode of communication over the Internet, the English language. A survey shows that some three-fourths of online users in China use only e-mail services, and most of these seem to be of the opinion that information from the Internet is useful only for research purposes. ⁽¹²⁾ One area in which China appears to be making a pioneering effort is that of regulation of Internet communication.

China's strategy seems to be one of attempting to control access and not allowing foreign firms to offer information. In February, 1996, regulations were passed banning transmission of state secrets, information harmful to state security, and pornography over international computer links. These new laws also require Internet users, including institutions, to register with the police and direct that all public Internet access go through the computers managed by the Ministry of Posts and Telecommunications. ⁽¹³⁾

A great deal depends on China's ability to create a communications infrastructure. Economic growth is in large measure related to the growing consumerism of the Chinese people, and also to attracting foreign trade and investment partners. The Chinese government clearly understands that it can do neither of these well without a greatly expanded and upgraded telecommunications system.

The evidence of such understanding is unequivocal. A recent issue of the CINET-L Newsletter, a non-public discussion list sponsored by China News Digest and published by volunteers, reports on a variety of telecommunications issues which all illustrate very well the accelerated pace at which China is implementing Internet connectivity and Internet access. ⁽¹⁴⁾ This particular issue reports on the signing of an agreement by US Microsoft and the Shanghai Municipal Group on Computer Application and Industrial Development for the joint development of technology and software on the Internet and Intranet. It should be noted here that this agreement is with Microsoft and a group in Shanghai, perhaps the city in China where most economic development and activity is taking place. At the same time, this same issue of CINET-L reports on an Internet Business Center established in Beijing for the Dongfang Holiday Computer Center. This Center is designed to provide a variety of office services for Chinese and foreign business men. These services include office automation, meeting rooms, secretarial and receptions services. At the time of its establishment, it included more than twenty 486 computers all connected to the Internet. Use of the business center is governed by a membership system. Browsing through the particular issue of CINET-L in question, one finds entries discussing the establishment or formulation of regulations for information networking by the Ministry of Posts and Telecommunications. One of these speaks of the city of Jinan in east China's Shandong Province investing more than 200 million yuan to launch a city-wide Internet service. A report in the People's Post and Telecommunications Daily states that this Jian node is now open to the public, and has 1,500 subscriber terminals.

Reports such as these are commonplace in both CINET-L and in China News Digest, and one becomes accustomed to seeing them. Upon reading report after report of China's development and accomplishment in the arena of telecommunications, it would seem that Internet connectivity and activity are commonplace. This, however, is not so. The issue of CINET-L referred to here also includes a brief note to the effect that the number of Internet users in Beijing is approaching 10,000. Ten thousand users in Beijing constitute less than .01 percent of the population of the city, and this minuscule percentage puts the matter of the Internet connectivity in Beijing into perspective. There is still enormous work to be done, and this will require the continuing and consistent application of talent, time, and money. Even so, China's leadership seems to be undaunted by the enormity of the task. An ancient Chinese proverb well known to the entirety of the world is that, "Even the longest journey begins with a single step." Almost posturing itself so as to deny this ancient truth, China is racing forward in several directions in an effort to enter the 21st Century telecommunications age.

Paralleling efforts to wire the Middle Kingdom is the phenomenon of wireless technology. Some of the wireless technologies that are considered portable conveniences in North America and Europe are being used in China for wireless systems designed to serve fixed locations and limited areas in lieu of wired lines. Such wireless systems can be set up more quickly than a wired system, cover the same territory, and with continually decreasing technological costs, at less expense.

It is abundantly clear that the economy of China is developing at a very rapid rate and that the Chinese people are very eagerly anticipating increased participation in this economy as consumers of the goods it produces. At the same time, it is also clear that China's official policy is very supportive of the implementation of telecommunication's technologies, understanding very well that those countries with inadequate telecommunication infrastructures will have great difficulty participating in the global economy of the next century. Some see major obstacles facing the development of the Internet and its accessibility in China. One of these observers is Jeff Smith, President of Bridge to Asia. In a document entitled "The Internet and Scholarly Communication in China," Smith identifies several such barriers. Among these are financial barriers which he identifies in terms of costs of computers, modems, and e-mail accounts; technical barriers which he identifies as incompatible hardware and software systems; "noise" on telephone lines that garbles transmissions; institutional barriers in the form of competition between units which might prevent users at one institution from using resources at another; and user-interface barriers which Smith sees as some persons lacking the technical assets or the technical know how to use information technologies. Smith goes on to identify government control as a barrier and language as another. English is the common language in use on a global basis on the Internet, but just as western scholars need fluency in Chinese to use Chinese data, so do users in China need fluency in English to access western information sources in the English language. Because written communication does not carry the nuances and connotations of spoken languge, and does not convey non-verbal cues, users must be fluent in English to avoid misunderstanding English language transmissions. ⁽¹⁵⁾

What other factors might come into play in this preparation of China to emerge as a major geopolitical and economic force just a few decades into the future? From the perspective of a western eye, there are three possible factors suitable for discussion here. One of them is the governance of China. Another is the absence of a sophisticated, developed, and refined legal and regulatory infrastructure. And the third, perhaps a subset of the second, is the absence of any tradition or history of intangible property rights in China.

There are very few true Marxist-Leninist governments left in the world. North Korea might be the extreme example with Cuba, Vietnam and, of course, China practicing forms of government which are highly centralized and non-democratic in nature, but which also are encouraging, to various degrees, economic development, i.e., capitalism. A characteristic of each of the governments mentioned is a centralization of authority and, as a by product of such centralization, the relative absence of a legal and regulatory infrastructure comparable to those that are in place throughout western Europe and most of the North American continent.

With the absence of such legal and regulatory infrastructure, one observes an inordinate difficulty in controlling commerce in a market economy, socialist or otherwise. Stories abound in western newspapers, magazines, and on television about pirate CD-ROM factories in Shanghai and elsewhere, about the prolific replication and redistribution of pirated audio tapes, and about pirated editions of English language novels, textbooks, and journals for which various individuals and/or organizations and companies in the west hold copyright. Any Chinese university library will show ample evidence of such publications. To be sure, the Chinese government makes some effort to control such illegal activity, and is marginally successful in some of these efforts.

With the absence of any developed and mature legal and regulatory infrastructure, however, it is exceedingly difficult in spite of whatever best intentions might be in place to control illegal production of material for which other persons or organizations hold legal, intangible property rights. Difficulties associated with recorded music or with the written word are not the only infringements of intangible property rights which occur. There are also pirated versions of jewelry and clothing which create financial loss for western manufacturers.

China's efforts to protect intangible property rights are, for the most part, summarized in a small booklet published by the Information Office of the State Council of the People's Republic of China. ⁽¹⁶⁾ This document consists of a "Forward," three separately titled sections, and some concluding remarks. In the first page of the "Forward" is an open acknowledgment of the historical absence of a tradition of protection of intellectual property rights. We find in the "Forward" a statement which says, "As a whole, China, however, for a variety of historical reasons, began work on its intellectual property rights protection system at a comparatively late date."⁽¹⁷⁾ This late date is identified as the time at which China began reforms and began opening itself to the outside world. It goes on to speak about "... a tremendous amount of effective work in this field, ..." since the end of the 1970s.

Section one of this document is entitled, "China's Basic Positions Regarding the Protection of Intellectual Property Rights." In this section, we find yet another acknowledgment of the absence of tradition of intellectual property protection when we encounter the statement that, "Still, the intellectual property rights protection system has only comparatively been introduced in China, and some portion of the population has a rather incomplete understanding of intellectual property rights."⁽¹⁸⁾ The last section of the document refers to a variety of suits brought by various companies about copyright and trademark violations, and the action of Chinese courts in resolving these issues.

Heretofore, discussion has been offered about the economic development of China and about the impressive progress made by the Chinese to create a modern telecommunications system throughout the country. Some commentary has been offered about China's form of government, about the relative absence of a legal and regulatory infrastructure, and about intellectual or intangible property rights. The interplay of all of these various factors allow for some interesting discussion of, and prediction about, China's potential for participation as a full partner in the 21st Century globalization of information. The basic hypothesis upon which this paper is based is that China will continue to experience difficulties in participating in such globalization until such time that sufficient and convincing evidence can be produced that China is able to, and is willing to, exert the kinds of pressures and influences necessary to control criminal behavior and violation of intangible and intellectual property rights. As late as 1994, this writer saw in a university library in one of the southern provinces of China rows upon rows of journals published by European or North American publishing houses, and reprinted wholesale in China. Such evidence does not square with claims that China's practice of protecting intellectual and intangible property rights is adequate. There are even people who seriously question the sincerity of such efforts. Then, even if such sincerity is valid and is in place abundantly, it is necessary to have, again, that legal and regulatory infrastructure in place so as to enforce such sincerity.

China's economic future appears to be very positive, but its relations with, and negotiations with, western countries in the 21st Century age of telecommunications will be fraught with frustrations and difficulties until such time that the factors identified in this paper reach a higher level of maturity.

1. Statistics from China Monthly Statistics (CMS) and InfoChina/CMS. Recent Market Statistics, InfoChina Dynamic Decisions. http://www.info-china.com/samples.htm [Accessed 7/18/96].

2. China News Digest. ftp://cnd.org [132.249.229.100]; gopher://cnd.org; http://www.cnd.org.

3. Baker Institute Report. (June 1996, No. 4) Notes from the James A. Baker III Institute for Public Policy at Rice University. Secretary Baker Addresses China Conference on U.S. Policy Toward Asia, pp. 2-4.

4. Naisbitt, John (1994). Global Paradox. Avon Books, William Morrow & Company, Inc.

5. Ibid., p. 5.

6. Ibid., p. 6.

7. Ibid., p. 61.

8. Ibid., pp. 233-295.

9. Ibid., p. 295.

10. Xing, Li. The China Education and Research Network Project Progress Report. Cinfolink Annual Review of Information Services and the Internet in China, 1995-1996. Services Documentaries Multimedia Inc., Montreal, Quebec, Canada, pp. 77-80.

11. Carrol, Mark. (1995). Asia Loosens Internet Access. Electronic Engineering Times. 7 August. p. 68.

12. Yu, Chih-Ho, and Ning Huang. (1996a). China: Access to the Internet Growing. Newsbytes. <XN960108_810U@clari.net>. 8 January.

13. Newsbytes. (1996, March 19). Asia Ponders Internet Regulations. N960318_6U.

14. CINET-L Newsletter. (August 2, 1996, Issue No. 72).

15. Smith, Jeff. (1994). Bridge to Asia. The Internet and Scholarly Communication in China. HTTP://WWW.BRIDGE.ORG/CSCCPAPER.HTML (Accessed

4/9/96).

16. Intellectual Property Protection in China. (1994.) Information Office State Council of the People's Repubic of China, Beijing.

17. Ibid. p. 1.

18. Ibid. p. 6.