For­eign firms in China’s Web box

Link only to HQs abroad, note says

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - THE AS­SO­CI­ATED PRESS JOE McDON­ALD

BEI­JING — China is tight­en­ing con­trol over for­eign com­pa­nies’ In­ter­net use in a move some worry might dis­rupt their op­er­a­tions or jeop­ar­dize trade se­crets as part of a crack­down on tech­nol­ogy that al­lows Web surfers to evade Bei­jing’s on­line cen­sor­ship.

In a let­ter to cor­po­rate cus­tomers seen by The As­so­ci­ated Press, the big­gest Chi­nese In­ter­net ser­vice provider says vir­tual pri­vate net­works, which create en­crypted links be­tween com­put­ers and can be used to see sites blocked by China’s govern­ment Web fil­ters, will be per­mit­ted to con­nect only to a com­pany’s head­quar­ters abroad.

The let­ter from sta­te­owned China Tele­com Ltd. said vir­tual pri­vate-net­work users are barred from link­ing to other sites out­side China, a change that might block ac­cess to news, so­cial me­dia or busi­ness ser­vices that are ob­scured by its “Great Fire­wall.”

The let­ter re­peats an an­nounce­ment from Jan­uary that only vir­tual pri­vate net­works ap­proved by Chi-

nese author­i­ties are al­lowed. That has prompted fears of pos­si­ble loss of trade se­crets or in­for­ma­tion about cus­tomers or em­ploy­ees among com­pa­nies that ques­tion the re­li­a­bil­ity of Chi­nese en­cryp­tion ser­vices and whether author­i­ties might read mes­sages.

Reg­u­la­tors an­nounced a crack­down in Jan­uary to stamp out use of vir­tual pri­vate net­works to cir­cum­vent Web cen­sor­ship.

Author­i­ties have tried to re­as­sure com­pa­nies they won’t be af­fected, but if the rules in the China Tele­com let­ter are en­forced, they could ham­per ac­tiv­ity rang­ing from gather­ing in­for­ma­tion for busi­ness deals to em­ploy­ees work­ing on busi­ness trips.

The crack­down re­flects Pres­i­dent Xi Jin­ping’s vi­sion of “In­ter­net sovereignty,” or China’s ab­so­lute right to con­trol what people can do and see on­line.

Con­trol over in­for­ma­tion is es­pe­cially sen­si­tive ahead of a Com­mu­nist Party congress late this year at which Xi is ex­pected to be ap­pointed to a sec­ond five-year term as leader.

The rul­ing party en­cour­ages Web use for busi­ness and ed­u­ca­tion but re­jects the no­tion of a bor­der­less In­ter­net and the free flow of in­for­ma­tion.

It con­trols In­ter­net traf­fic across China’s bor­ders and tries to keep its pub­lic from see­ing thou­sands of web­sites abroad in­clud­ing Google and so­cial me­dia such as Face­book, Twit­ter and YouTube, as well as news out­lets and hu­man­rights groups.

This week, the Bei­jing mu­nic­i­pal In­ter­net reg­u­la­tor an­nounced it or­dered web­site op­er­a­tors in­clud­ing Baidu Inc. and Ten­cent Hold­ings Ltd. to re­move ma­te­rial that was “dis­tort­ing the his­tory of China and the Party” and “pro­mot­ing ab­nor­mal val­ues” or had other prob­lems.

Also this week, a let­ter is­sued by the Wal­dorf As­to­ria Ho­tel in Bei­jing to guests that cir­cu­lated on so­cial me­dia said the ho­tel can no longer pro­vide vir­tual pri­vate-net­work ser­vice “due to le­gal is­sues” as of last Fri­day.

In June, the Hong Kong­based op­er­a­tor of a pop­u­lar ser­vice, Green VPN, an­nounced Chi­nese reg­u­la­tors had or­dered it to close.

China has re­peat­edly pres­sured for­eign com­pa­nies to hand over tech­nol­ogy, en­cryp­tion know-how and other trade se­crets in ex­change for ac­cess to its huge and grow­ing mar­ket.

Com­pa­nies cite In­ter­net con­trols as among the big­gest ob­sta­cles to do­ing busi­ness in China.

In a sur­vey by the Amer­i­can Cham­ber of Com­merce in China last year, 79 per­cent of com­pa­nies that re­sponded said Web fil­ters hurt them by block­ing ac­cess to in­for­ma­tion and busi­ness tools.

U.S. Pres­i­dent Don­ald Trump said in April he would tem­po­rar­ily set aside dis­putes with China over mar­ket bar­ri­ers and cur­rency while the two sides co­op­er­ated over North Korea’s nu­clear pro­gram.

But Trump has ex­pressed frus­tra­tion with lack of progress on that and has re­sumed crit­i­ciz­ing China’s trade sur­plus with the United States.

It was un­clear how many com­pa­nies re­ceived China Tele­com’s let­ter.

The Amer­i­can and Euro­pean cham­bers of com­merce in Bei­jing said their mem­bers had not re­ported re­ceiv­ing it.

The let­ter, which bears no date, says vir­tual pri­vate net­works are for “in­ter­nal of­fice use only” and can con­nect only to a com­pany’s head­quar­ters abroad, not to any other web­sites. That would block users from see­ing busi­ness news or other in­for­ma­tion sources that are shielded by the fil­ters.

Com­pa­nies are re­quired to pro­vide the iden­ti­ties of ev­ery em­ployee who uses a vir­tual pri­vate net­work, ac­cord­ing to the let­ter.

Lester Ross, a lawyer in Bei­jing for the firm WilmerHale, said he had not heard of the China Tele­com let­ter. But he said the con­di­tions in it de­scribed to him by a re­porter would be dis­rup­tive if en­forced.

With­out vir­tual pri­vate net­works to by­pass Web fil­ters, “then it is just im­pos­si­ble to do busi­ness un­der the con­straints that ap­ply of­fi­cially,” said Ross. “You’re either mak­ing it un­en­force­able or they are dam­ag­ing busi­ness to an ex­tra­or­di­nary ex­tent.”

A West­ern diplo­mat who asked not to be iden­ti­fied fur­ther be­cause of the sen­si­tiv­ity of the is­sue said com­pa­nies have told his govern­ment they worry the con­trols might lead to weaker data se­cu­rity and trade se­crets be­ing leaked to Chi­nese com­peti­tors. The diplo­mat said some are hes­i­tant to in­vest more in China be­cause of to that.

China Tele­com and the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy, which an­nounced the Jan­uary crack­down, did not re­spond to re­quests for in­for­ma­tion about the let­ter.

Author­i­ties have never dis­closed whether they read com­mu­ni­ca­tions sent over Chi­nese vir­tual pri­vate net­work providers.

“De­spite the fact that people get used to the sys­tem, pro­tec­tion of con­fi­den­tial­ity is al­ways a con­cern,” said Ross. “They’ve never guar­an­teed pri­vacy of com­mu­ni­ca­tions.”


A woman at the Global Mo­bile In­ter­net Con­fer­ence in Bei­jing in April checks her phone near icons of apps that are mostly banned in China.

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