On Friday, there was the first ever auction of shareholdings in
Chinese internet companies. Much hype preceded the event,
suggesting that major foreign companies would be among the bidders.
However, no foreign bidders appeared and by the end of the auction,
only one company received a bid, from a domestic firm with which it
had already held merger talks.
The new regulations, published yesterday, though signed two
weeks ago, state that all internet content providers must first be
approved by the ministry of information industry before they
receive foreign investment or seek stock listings. This will cause
concern among existing Chinese internet companies that are largely
foreign owned and which have never received ministry approval, in
case the authorities decides to remove their licenses to trade.
Internet companies will also be held responsible for keeping
content from their sites which is seen as subverting state power,
harming China’s reputation or supporting cults. Illegal content
must be censored by ISPs and they must report on it to state
authorities; ISPs must also keep records of all users and the
content they post on-line.
