Is China’s VPN crackdown all about the money?

China is in the process of trying to block access to VPNs to all individuals and business. Most assume that this is because the Communist Party of China (CCP) remains determined to control access to information in this authoritarian one-party state. But is there a more capitalist motivation behind their actions too? Money.

One columnist in the Financial Times has suggested that this is at least as important, if not more so, and constructed a pretty compelling case to back up her argument.

Power or money?

Lucy Hornby highlighted in her column the fact that China is not actually blocking access to the uncensored internet for businesses. Instead, they are forcing them to use Chinese-controlled software instead.

International businesses in China have the option to use Chinese VPN services, which have been licensed by the Communist Party. State efforts to regulate the VPN sector in China has seen a number of independent VPN providers shut down and individuals operating or selling VPN services, being arrested and jailed.

The other option open to international businesses is to pay for a leased line; a secure private connection to the internet. But these are only available from state-run telecoms companies and cost an exorbitant price, even for a big multinational company.

Being run by state-run companies which are dependent on the Communist Party, they are also highly unlikely to be secure either, with most business assuming that such leased lines are going to be tapped.

Classic protectionism

Lucy Hornby describes this move as a classic case of rent-seeking by a regulator eager for the licence fees that come from forcing everyone to use favoured companies.”

She also stressed that this was not the first time the CCP had made such a move. An example given was that of the state-run Xinhua news agency’s efforts to secure a share of foreign newswires’ sales after making the argument that it was “safeguarding state sovereignty”.

Xinhua lost this claim at the World Trade Organization (WTO). But astonishingly, the WTO ready accepts the rights of the Chinese state to censor information access to its own people.

However, they do oppose the sort of protectionist policies that allow China to block corporate access to a service being provided by an international service in favour of one being offered by a domestic service. And there can be little doubt that this is what the VPN ban in China amounts to.

But to question the VPN ban would in effect be to question the who of the CCPs so-called ‘Internet Sovereignty’ vision. As we have discussed before, ‘Internet Sovereignty’ is the concept that every state has the right to regulate, censor, and surveil the internet in their own country.

Such a policy not only leads inevitably to widespread online censorship and surveillance, but also to inevitably protectionism, as states favour those business and services closest to them, either ideologically or geographically.

Whether the WTO would stand up to China and the CCP on this issue remains to be seen. But it is a possibility, especially given the big problems being felt by some international businesses and embassies already.

But that would require a country, most likely the USA, to challenge China on this issue in the WTO. And, as Lucy Hornby points out, that seems unlikely under the current administration. Not least because of their own intrusive online surveillance programmes.

And even if they did, the likelihood is that the CCP would strongly resist. The new setup is likely to be hugely profitable to the state-run Telecoms companies in the short to medium term at least. Money that they are badly in need of.

And with China’s Belt and Road policy trying to export the ‘internet sovereignty’ concept to other authoritarian regimes, the opportunities for profit could be even larger.

Profit an undeniable factor, but not the only one

So, Lucy Hornby is absolutely right to claim that money is a factor in the ban on VPNs being introduced in China. But so too is information control and it would be wrong to underestimate the lengths that the CCP will go to retain its grip on power.

All of which means that for international companies and individuals, proper internet access is going to become harder and harder to find in the months ahead.

But, there are still some VPNs working in China, which you can read about in our Best VPN for China 2018 article. These are all still working in China at the time of writing.

And they can rest assured that these providers and others, will be doing everything within their power to ensure that international VPNs can still be accessed in China, by everyone.

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