The Chinese flag flies outside the NYSE during the IPO for Alibaba Group on September 19, 2024 in New York City. Getty Images
China’s government has spent much of this year emphasizing its dedication to expanding internet infrastructure. In May, Beijing officials said that the state will spend more than $182 billion to boost web speeds by the end of 2017, thanks to investments of more than $69.3 billion this year on network construction, and at least another $112.8 billion over the following two years. Tech in Asia reported that at a meeting this Tuesday, China’s National Development and Reform Commission (NDRC) focused on development of the internet sector, during which NDRC deputy director Lin Nianxiu announced that over the next three years the government will pour $188 billion in investment into China’s “internet information fundamental infrastructure.” These commitments come on the heels of private and foreign investment; domestic technology companies are heavily investing in elevating China’s web services, and overseas companies have made it clear they intend to get a piece of the pie.
And yet, President Xi Jinping recently announced his administration’s intentions to cut restrictions on foreign investment. His trip to the U.S. last week purportedly focused on ameliorating U.S.-China business ties, and the Chinese leader spoke publicly about assuring U.S. business leaders that he is making it easier to invest in China, according to Reuters. The media outlet cited a private source who said that at the eighth annual meeting of the U.S.-China Internet Industry Forum, Lu Wei, a chief internet regulator, indicated that China and the U.S. were set to reach some kind of agreement on cyber warfare.
The likelihood of that agreement coming to fruition is debatable, especially given China’s historic, near-manic controls over domestic internet use and its unequivocal rejection of U.S.-based web companies like Facebook. But government officials have been vocal about domestic investments aimed at elevating the country’s overall web presence and speeds. (China ranks somewhere around 82 on the world’s internet speed scales.) Private equity and venture capital investments in China’s telecom, media and general industries reached a record US$15.56 billion in the first half of this year, according to the South China Morning Post, led by more than 500 internet-related deals.
The government certainly has the support of some of the country’s most major technology corporations. In mid-September, Bloomberg quoted the head of Baidu, China’s largest search engine company, as defending its losses and weak outlook against American investor criticism. CEO Robin Li emphasized that Baidu is making huge inroads in different areas of web-based services, including online-to-offline ones. Along with its global expansion, the company is eyeing domestic growth. And Li says that its investors abroad don’t have an adequate understanding of how internal growth in China is advancing.
But to be effective, Beijing’s internet expansion, alongside private investment, will need to coincide with a rethink of China’s web censorship policies. Reports noted that while Xi was in the U.S. he defended his right to impose his government’s internet regulations at a meeting with U.S. technology leaders at Microsoft’s headquarters near Seattle. Xi told chief executives, including Apple’s Tim Cook and Facebook’s Mark Zuckerberg, that countries should align internet policy “with their national realities.”
While China’s investments in its own internet capabilities are clear, its understanding of the correlation between a successful web market and freedom of speech on the internet remains murky. Xi wants to make China a web superpower, but while restraining users and foreign services. It remains to be seen how warring influences of money and politics will play out.
