You are Not Welcome: An Analysis of Thousands Foreign Technology Companies Blocked by China Since 1996
The media makes blow-by-blow coverage of US restrictions on sensitive technology trade with China, however it rarely covers China’s blockade of entire categories of foreign goods and services for decades. These blockades are generally imposed by fiat, without due process or opportunities for redress. If policymakers in democratic countries adopt restrictions, they must adhere to the rule of law, follow a defined administrative process, and offer affected parties the opportunity to defend themselves and challenge the rulings. Indeed, Chinese companies can access America’s top lawyers for defense, and Chinese parties receive more deference in US courts that foreign parties could ever imagine in China.
Strand Consult’s free report You Are Not Welcome: An Analysis of the Thousands of Foreign Technology Companies Blocked by China Since 1996 examines these practices. The report is one in Strand Consult’s series of reports about China, supply chain, and security.
Media coverage tends to focus on discrete activities by US and European nations to restrict individual firms like Huawei and TikTok for documented violations and abuses of privacy, security, weapons non-proliferation, and other laws. Less attention is paid to the systematic restriction of tens of thousands of websites and related internet technologies by the People’s Republic of China (PRC). The PRC restricts these technologies for ideological and economic reasons. Most people take for granted that the websites and media they access everyday are not available in the PRC. These foreign technologies and their operators have been denied access to the world’s single largest online market, hundreds of millions of internet users, and a multi-trillion-dollar opportunity. Moreover, the Chinese people are denied to freedom to engage on an open internet.
Building upon censorship frameworks in traditional media which had been in place for decades in the PRC, the State Council adopted rules and regulatiosn to control internet traffic beginning in 1996. Broad categories of information were prohibited including harms to national security, state secrets, or social stability, or anything deemed sexually suggestive. Thereafter a set of requirements were imposed on internet service providers: licenses to deliver internet content, traffic distribution through official exchange points, intermediate liability, and certification that all content on their networks is legal. Subsequently, the PRC developed a set of techno-nationalist policies to promote that the hardware and software of the internet is made in the PRC, as well as blueprints for a new architecture of the internet. This encompasses the whole internet value chain from SMIC for the semiconductors, Huawei for the network equipment; Lenovo for the laptops; Inspur for the servers; and Alibaba, Tencent and Baidu for the applications—among other PRC firms.
Strand Consult addresses the PRC restrictions in its new report You Are Not Welcome: An Analysis of Thousands Foreign Technology Companies Blocked by China Since 1996. It describes how and why the PRC has systematically restricted thousands of foreign internet technologies like online news and media outlets, social media platforms, virtual private networks, content delivery networks, mobile applications, telecommunications equipment, cloud services, and other technologies. The report covers the following information:
- Identification and classification of the many foreign technology companies restricted by the PRC, noting the year, method, and the PRC’s justification of the restriction
- Examination of the reasons the PRC conducts its restriction
- Description of the types of restrictions applied
- Description of the law, policies, and regulation used by the PRC to enforce the restrictions
- Discussion of academic, theoretical, and policy explanations for the ongoing restrictions
- Hundreds of references and footnotes to document the research
The purpose of the report is to create transparency about the conditions that foreign companies face in the PRC.
Strand Consult’s report You Are Not Welcome: An Analysis of Thousands Foreign Technology Companies Blocked by China Since 1996 provides valuable information on PRC market conditions. For example:
- Restricting foreign technology has a long history in PRC. The first foreign Internet-based services were blocked in the PRC in 1996.
- The restrictions practiced by the PRC continue to evolve and are increasingly sophisticated. They encompass basic blocking and filtering tactics and are also systemic within the PRC’s physical internet architecture and access level, comprising exchange points, hardware, and software. Moreover, restrictions are delivered at many levels of government and enterprise, whether top level regulators like the Cyberspace Administration and the State Information Council or the censorship practices of PRC companies themselves. The system is also guided by hundreds of thousands of “internet commentators” who are hired to model preferred discussion and behaviors online, virtual internet police avatars, and stiff punishments for transgressions. Notably Chinese users practice high levels of self-censorship.
- Additional restrictions are observed in the set of industrial and economic policies designed to promote state-owned enterprise and PRC national champions for the internet and information technology domains.
- The PRC itself notes that the internet is a battlefield of competing ideologies and that restrictions are justified to protect the interests of the state. Notably US and European perspective conceptualize the internet as a positive medium to facilitate collective action. The PRC sees precisely the opposite: to prevent collective action against the state.
- The report also introduces the different legal regimes for restriction. While restricting any PRC company in the US or EU requires extensive due process and can be challenged in courts, foreign companies in the PRC can be arbitrarily blocked without any explanation or judicial review.
Readers can improve their understanding with this critical analysis of the PRC and its restrictions on foreign technology. While coverage of a country’s TikTok ban makes for sensational news, it obscures the larger picture of systematic restriction by the PRC perpetuated against thousands of technologies and companies for more than two decades.