One Billion Customers - James McGregor [71]
Dow Jones and Reuters provided proprietary information to paying subscribers and thus had little to worry about from CIC, even if it were able to control the Internet in China. What we didn’t know at the time was that James Chu had prepared a “white paper” to justify CIC’s efforts to control the Internet. In “A Vision for the People’s Republic of China’s Internet Development” he likened information to “viruses.” An uncontrolled Internet spreading dangerous viruses would threaten China’s national sovereignty. “When new ideas are brought into another culture, it [sic] will sometimes destroy the old existing one and create social unrest,” Chu wrote. The paper concluded that “there are ideas that…should be stopped at all cost.”
Xinhua rewrote Chu’s white paper and then passed it to the party propaganda department, which sets strict content guidelines for all media and cultural entities in China. The nation was still reeling from the horrible global publicity that resulted from the Tiananmen Massacre in 1989. Ding Guangen, China’s propaganda czar and one of Deng’s poker pals, loved the idea of protecting China from outside information and ideas. But before the authorities could figure out how to implement the controls, young Chinese entrepreneurs had already set up Internet service providers and Yahoo-like Chinese websites, and the nation’s universities had established a network of international links to the Internet. It was too late to control the Internet. But Chu’s arguments about protecting China from outside influences had given Xinhua the weapon it needed to achieve another goal. The agency convinced the State Council—roughly the equivalent of the American president’s cabinet—that foreign news and data providers in China needed to be better controlled. The result was the January 1996 directive that, if enforced, would drive Dow Jones and Reuters out of business in China and, not coincidentally, put China’s entire economy in danger.
The Chinese government at this time was in many ways very primitive. The various agencies and departments were rigidly controlled from the top down, with little or no coordination among them. Xinhua had obtained the State Council’s approval of its new regulatory powers by working almost exclusively within the Communist Party Propaganda Department. Xinhua’s leaders hadn’t consulted with the ministries of foreign trade, foreign affairs and finance, the stock market regulators, or the central bank. Had they done so, someone would have made it clear that an order effectively muzzling the free flow of financial information in China and jeopardizing the nation’s financial institutions wouldn’t be well received in the rest of the world.
Suddenly, China was in the midst of a firestorm of accusations and questions from abroad. Headlines across the globe condemned the order as a step backward for China. The Clinton administration, the European Union, and the World Bank all questioned how China could successfully take over the international financial center of Hong Kong if the country’s leaders didn’t understand the financial markets’ vital need for the free flow of news and data. More troubling for China, Xinhua’s decree raised questions about how ready China was for possible membership in the World Trade Organization. China desperately wanted to join the WTO. Pride was part of it—membership would be an important recognition of