Can China’s economy thrive with a censored Internet?

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(Photo: Tim Robberts / Getty Images)

There are two Internets in the world today. The first is the one you are probably using right now to read this post, through which you can connect with people around the world, surf for whatever information you want and blog at will. This Internet is a key tool for businesses to enhance productivity, for people to educate themselves about the world and for new ideas to bounce briskly from place to place. Then there is the second version of the Internet. The one here in China. The authoritarian government is fearful of the free Internet and has put in place all sorts of methods of controlling what people can read, say and access on the web. Major international sites, including Twitter, Facebook and YouTube, are completely blocked here. Certain searches are impossible, emails are monitored, many web pages simply won’t open, and others open so slowly (like this blog) that only the most patient or determined will endure the wait. How bad it is? Take a read of what my colleague Hannah Beech, TIME’s China bureau chief, had to say in a recent magazine essay. Hannah makes the important points that (1) the Chinese government’s interference with the Internet actually saps people’s interest in using it, and (2) there’s not much anyone can do about it:

The net effect of this interference is a blunting of curiosity. I really don’t need to Google that term, right? A dangerous lassitude takes over…China is the world’s second largest economy. Can it really get away with online restrictions more suited to Cuba or North Korea? It seems so.

For me, this isn’t just a human-rights issue. It is an economic development issue. The question is: Can China’s economy continue to thrive if it is using a different Internet than everybody else?

First, let’s look at this as a straight-up productivity problem. The Internet has become a tool through which we can work more quickly, efficiently and reliably, accessing information instantly that would otherwise have taken minutes, hours, even days to locate. And here in China? Despite all of the top-grade IT infrastructure China has built, the Internet runs much more slowly than it does in most other places I visit, either elsewhere in Asia or the U.S. That’s because of all of the government filtering and monitoring. When the government feels that a sensitive event is taking place, like the National People’s Congress, the Internet can grind to a near halt. So while businessmen in all of China’s major economic competitors require a mere micro-second to open a web page, here in China everyone is stuck waiting around for several seconds – or depending on the page, perhaps as much as a minute. Add that lost time up over a week, a month, a year, and you’re looking at a ton of wasted time in China. In India, or the U.S., or Brazil, workers are using that time to write up reports, hold meetings or devise new ideas; in China, workers are sitting at their desks twiddling their thumbs. The Internet has helped boost productivity dramatically around the world. But not as much here in China.

But that’s a minor issue compared to how China’s control of the Internet could impede its economic progress. The government has made it a primary goal to upgrade the Chinese economy into new high-tech industries and foster greater R&D and innovation. The state has put a lot of money behind such efforts. That’s because as wages continue to rise in China, the economy is losing its low-cost advantage. Moving “up the value chain” into more expensive products made by more advanced industries is crucial if China is to continue its rapid growth. Otherwise, it could get stuck in the “middle-income trap,” unable to make the leap into a truly advanced economy. But with the Internet controlled, China is attempting this very difficult task without an important tool – free flow of information. If China is to develop homegrown, innovative industries that can compete on a global scale, its businessmen, scientists and students need to be hooked into what the rest of the globe is doing, to latch onto new trends, read about fresh ideas and connect to how everyone else in the world is living. That’s not possible here in China. How much of a disadvantage does the censorship of China’s Internet present? The government would, of course, argue there is none. But the fact is that Indians and Americans don’t face this hurdle. By being able to freely access whatever they wish, and join freely in online debates and forums, those Indians and Americans are able to use the Internet as a window on the world and as a creative device in ways Chinese are not. Don’t tell me that doesn’t matter for China’s ability to compete in the future.

Yes, the Internet in China is evolving. Twitter may be blocked, but there is a Chinese alternative, Sina Weibo, a microblogging site that has had great influence on Chinese society by offering an outlet for information within the country unavailable in the government-controlled media. But though such local sites might enhance the exchange within China, they don’t help Chinese connect to the world. And they are much more easily controlled than an international site like Twitter. That’s why Twitter is blocked and Weibo is not. Furthermore, people in China know that the spooks are monitoring these sites. Write the wrong thing and you could get a visit from state security agents. Whatever outlets Chinese might have on the Chinese Internet, they won’t use them as freely out of fear of repression.

And the fact is that China’s control of the Internet also hampers its own Internet companies. When I read China’s Alibaba might make a bid to acquire Yahoo!, my first thought was that I’d have to close my Yahoo email account, which I’ve had for more than a decade. Why? I’d worry about my personal security. I’m sure Alibaba would promise to ensure the privacy of its users. But if state agents demand access to my account, will Alibaba say no and risk angering the powerful and intrusive Chinese government? I’m not willing to find out. All Chinese Internet firms will encounter the same distrust on the international stage. That makes it almost impossible for them to compete with American, European or even Indian or Brazilian outfits.

Beijing is reacting to these challenges in just the wrong way – by intensifying, rather than liberalizing, control over the Internet. Here’s more from Hannah:

This summer, Beijing began requiring public wi-fi in coffee shops and other locations to be routed through monitoring software that public-security officials can access…Now Sina Weibo and Chinese social-media sites are the target of a new government crackdown. In recent weeks, officials have dropped by Sina Weibo’s offices to remind employees of their patriotic duties. The State Internet Information Office, a body set up this year, warned citizens last month not to spread “malignant tumors” online. The Politburo is also mulling over “cultural reforms” that would restrict the Internet further — and presumably lead to a growth in the number of online snoops.

That’s not just bad for the freedom of the Chinese people. It’s bad for the future size of their wallets. By forcing its citizens to use the China Wide Web instead of the World Wide Web, Beijing is damaging its competitiveness versus its more open and democratic neighbors. Perhaps the spies monitoring me as I post this the blog will read it and think for a moment about what is best for their country. But I doubt it.

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