Embassy of the People’s Republic of China

Let us first take a look at China’s online population growth. Just 30 months ago, at the end of June 1998, there were only 1.1 million internet users in China. That number doubled in the next 6 months and reached 2.1 million by the end of that year. 6 months later, it reached 4 million, and in yet another 6 months it soared to 8.9 million. That is the end of 1999. You see what, it doubles every 6 months, or quadruples every year. To my knowledge, the world has never seen another large country experience such spectacular growth of users since the birth of Internet. This trend continued in the year 2000. The first half of last year saw another doubling to 16.9 million users, and the latest survey shows that the figure is well over 22.5 million.

But you ain’t seen nothing yet. According to the latest survey, more and more people exploit Internet accesses other than dial-up telephone lines. For every 2 dial-up users, there is another one who uses or partly uses ISDN or DSL. No doubt these users, especially the DSL subscribers, will account for an increasingly larger portion. That means, principally, we may see more than 300 million Chinese Internet users in the next several years, which will be almost equal to today's total English and European language Internet population.

But you ain’t seen nothing yet. The Chinese are famous for their fondness of wireless communication. At present there are over 85 million cellphone users, and they represent the second largest wireless population in the world. That means out of every 5 Chinese telephone users, 3 are using wireless devices. Wireless application protocol(WAP) technology could rapidly boost the online population by bringing the internet to China’s 85 million cellphone users; connections through cable to the over 100 million cable TV customers are also currently in trials. So, you will not say that I am crazy if I predict a Chinese online population of more than 500 million, which will be 25% more than the world’s total today.

The Ministry of Information Industry, China’s network regulator, has insisted that the major telecom provider, state-owned China Telecom lower it access charges, which have dropped to less that a third of the 1997 prices. China Telecom is also adding 2 million lines each month to meet the surging demand for network access.

Over the last 3 years, an enormous amount of "content" in Chinese language has been put onto the Internet. This development is absolutely crucial because most Chinese Internet users do not read or speak English. In a survey taken in 1997, the biggest complaint of Chinese Internet users is the "lack of information in Chinese language", but when the same survey was taken in 1999 it was no longer the case. In the last survey taken in the year 2000, only 6.4% of the people considered the "lack of information in Chinese" their biggest concern. The amount of registered domain names ended with ". CN (read as "dot CN")" has exceeded 120 thousand, not to mention the large number of Chinese websites which are not registered in the ".CN" category.

This prospect is exciting. Also exciting is that the e-business is getting started in China. By the end of the year 2000, 80% of the Chinese domain names were ended with "dot com dot C N", whereas 2 years ago there were only 70% wearing such ".com.cn" names.

The most successful B to C Chinese Internet company is 8848, named after the height in meter of the Mount Everest, the world’s highest mountain. Another popular Internet company is 3721, a website which offers "domain names in Chinese language" to its clients. Online stock trade is also popular in China. It gives birth to emeritus websites such as "www.yestock.com", "www.stockstar.com" and "www.homeway.com.cn".

No doubt that the Internet is changing the ways of business, life and communication in China. Among the youths have evolved a large number of "web-worms" who hang on the Internet for hours everyday even at the cost of a big part of their income and time. One of their favorites is to stay in virtual forums and chatting-rooms, or play games online. Even the official newspaper the People's Daily has created its own virtual forum, namely, "For a Stronger China" Forum, where people can find a lot of very open political opinions. For example, recently when the Chinese National Peoples Congress was in cession, we saw some sharp criticisms of the government work report delivered by premier Zhu Rongji. Please bear in mind that this was on the official website of the "People's Daily".

The fast growth of Internet in China has also raised some concerns. Firstly, it may lead to a chaotic market and worsen the regular business circle when uncontrollable oversupply happens. Secondly, there comes the perplexing question of "big or small". For instance, as the monopoly over the telecommunications business by one single state-owned conglomerate had proven to be inefficient and harmful to consumer rights in the past, the Chinese government ordered the breakdown of China Telecom into 3 companies last year. But if the domestic telecommunications and Internet market was sliced into rugged pieces by hundreds of "small players", like the situation of Chinese automobile market, none of them will be able to reach the efficient scale of low cost and better services.

Another concern is about the possible negative impact on society of this new and fast growing technology. Generally speaking, the Chinese government has always held a steady stance of supporting the Internet and encouraged people to benefit from the full potential of the Internet. But the fast move towards a networked society has also raised some reasonable concerns in the general public and government departments. There is a widely accepted consensus in China that we need to manage the internet’s risks while harnessing its potential.

Among the regulations the most basic one is the "Regulation on Telecommunication Operation " issued by the State Council in September, 2000. It categorizes telecommunications operation into two terms: the "basic telecom services", including the services of providing public infrastructure, transferring public data and of basic voice communication; and the "value-added telecom services", including all other operations based on the basic telecom services. All the Internet services, except for the construction and operation of Internet backbones, are regarded as "value-added telecom services", such as ISP, ICP, email, EDT, and e-business.

According to this regulation, the market of "value-added telecom services" is much more open than that of the basic services. For example, no minimum domestic ownership of a company is required for value-added services, while a minimum 51% domestic ownership of a basic service company is a prerequisite. Another big difference is in the time required for getting licensed. For basic services, you must wait up to 180 days to be certified a license, while for value-added services it takes no more than 60 days.

Another well-known document, which was also issued by the State Council at about the same time, is the "Management Methods on Internet Content Services". But this regulation is very loose. For example, nobody needs a license to provide content services. They are just required to submit some files to relevant authorities for the record. As a matter of fact, it can be said that the issuing of this Management Method has cleared the doubt that China might have introduce rigid regulations on Internet Content Services. Son now one can rest assured that the content service market is an very open one and will remain so.

Later the Ministry of Information Industry issued more detailed implementing rules focusing on Bulletin Board Service(BBS)"and singled out the BBS from other Internet content services where some specific rules would apply. You do need an approval from the national or local telecommunication administrations to start your BBS, and it may take you up to 60 days to get licensed.

In all the three documents of regulation or management rules, it is explicitly prohibited to disseminate certain information or "content" on the Internet, Including such content that stirs up racial and ethnic hatred, advocates evil cult or feudal superstitions, spreads rumors which can lead to social disorder, or contains or promotes obscenity, pornography, gambling, or activities of violence and terrorism.

The decision to ban such content is based on the judgement of rationality and protecting of human rights, and it is also shaped by the traditional Chinese values. I understand that governments around the world are trying to find reasonable ways to guide the wild ride of the Internet, including the flush of overwhelming amount of information on it, some of which might be regarded as "extreme" and "unacceptable" according to their respective values. The important question is how to regulate the internet industry in a way that creates an environment conducive to rapid internet growth compliant with their relevant rules. So let me close my remarks by asking that we work together, through intensive communication and mutual understanding, to explore the unknown area of governments' role , so that the internet can deliver its full commercial benefits in this new world of knowledge economy.