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Mr. Xi Jinping, Tear Down This (Fire)Wall

While protecting domestic Internet service providers, China’s Great Firewall may dash hopes for further innovation. Source:

In Beijing, signs throughout the city read: “Patriotism, Innovation, Inclusiveness, Virtue.” Like most political slogans, this particular one relies heavily on wishful thinking and an element of deception. China ranks 22 out of 50 OECD economies in innovation, a surprisingly low number given the prowess of the Chinese economy.

Innovation itself is synonymous with taking risks and breaking rules to create revolutionary, practical new markets. As Berkeley professor Ross Levine and London School of Economics professor Yona Rubinstein put it, entrepreneurs possess the perfect combination of being “smart and illicit.” It is often necessary to experiment and push acceptable boundaries to ensure that societal progress does not remain idle.

The most direct reason for the lack of Chinese innovation is the CCP’s ongoing decision to strengthen its digital barrier with the outside world, a move that inhibits creativity.

Beijing has demonstrated a solid commitment to economic growth; however, in 2014 growth hit a 24 year low. A healthy amount of innovation would allow the Chinese economy to benefit in the long run by breaking into competitive, high-tech industries. China would do well to follow the example of South Korea, Japan, and Germany, countries that are pouring resources into R&D and forming private corporations with government support.

However, the number one hindrance to innovation in China is censorship, a field in which Beijing undoubtedly excels. Censorship dramatically cuts off the flow of ideas both within China and the international community. When Deng Xiaoping began his systematic implementation of the “birdcage economy” in 1979, China’s closed-door policy was still in effect. This system was a Faustian deal of sorts: the party loosened economic restrictions, but did not tolerate individualist democracy. The sole exception to this was permitting Chinese students to study abroad, which exposed them to Western, liberal ideals. Economic reforms allowed the birth of a new commercial class, but not a new political order nor a multi-party state. The CCP holds power through two key strategies: first by arguing that the Chinese people’s standard of living and GDP per capita have increased substantially since it came into power, and second, by relying on coercion and the widespread criminalization of dissent.

Although censorship started within China long before the rise of the Internet, the CCP’s desire to control even cyberspace-based discourse began in 2000 with the creation of the “Great Firewall” of China, formally known as the Golden Shield censorship project. By 2001, investment in the project had already reached $770 million. To maintain one-party rule and protect domestic security, the CCP recently implemented procedures to make scaling the firewall even harder.

Starting in 2014, all Google services were blocked in the country. Beginning this February, microblogs such as Sina Weibo have come under close scrutiny. Social media users must take oaths in writing that they will not defy Chinese political and security interests. Moreover, users must register with their full names, not with pseudonyms like “Obama’’ and “Putin.’’ Soon, measures targeting foreigners will kick in as well, as all foreign nationals must allow their products and intellectual property to undergo rigorous security checks.

Now, with 45.8% of the population on the Internet and the growing use of microblogs, it is becoming more difficult for the party to convince the Chinese people to silently internalize their political dissent. Moreover, it is much harder for the government to crack down on key figures that could hide behind a screen and an alias.

In an interview with Berkeley professor Noam Yuchtman, Yuchtman said that Chinese citizens told him the mobile app WeChat became popular largely because microblog censorship drove them to find alternatives. Now that images from Hong Kong protests are censored on WeChat, more and more Chinese realize that the websites they are granted access to, such as Baidu and Youku – China’s Google and YouTube equivalents – are not giving them a complete image of the world. They instead realize that they are increasingly becoming frogs at the bottom of a well, as the Chinese saying goes, and are experiencing greater global isolation as a result of the Chinese government’s growing paranoia.

Censorship amongst different social classes also varies. Yuchtman points out that those in academia have constant access to VPN workarounds, and that “If you’re elite enough, then you can get around a lot of these blocks. Urban elites and academia de facto have fewer restrictions for Internet access than the common Chinese citizen.”

As a result of varying censorship, entrepreneurs who are not in elite circles are shut out from access to information beyond the firewall that may help them innovate. Moreover, unbalanced censorship policies benefit those who may not even be China’s future innovators. Those in elite circles that have access beyond the firewall often seek political or economic power within the CCP instead of fresh new ideas to build upon.

However, it’s necessary to acknowledge that the government has economic motives for developing the firewall as well. There is a desire to develop the domestic economy by nurturing web service providers and startups. The “China Wide Web,” epitomized by giants such as Tencent, Baidu and NetEase, provides seemingly ample information and a steady Internet connection for many small enterprises in China.

Nevertheless, even fast Internet speeds still have drawbacks that stunt innovation. Chinese entrepreneurs using Chinese web services may not be fully informed of the world’s most recent trends if the government deems such issues to be a threat to national interests. A Shanghai-based software engineer said that even searching terms such as “river” can have repercussions – the entire IP address is blocked out, causing delays for minutes on end – as “river” is the same character as the surname of former Chinese president Jiang Zemin. If such entrepreneurs then turn to Google apps for a better solution but run up against exceedingly slow Internet speeds, their innovative ideas may never come to fruition, or they may grow too exasperated to continue searching. The same applies to foreigners interacting with those in China. They may find the fact that the social platforms upon which heavily rely – such as Skype and Gmail – are nearly impossible to use, causing them to seek collaboration elsewhere.

The Chinese government should gradually come to terms with its concerns. As Yuchtman states, silencing critics “generates political tension just as much as reading the New York Times and finding out that Wen Jiabao’s family is incredibly rich resulting from his political power.” There exists the risk of hypocrisy under Xi Jinping’s mission to crack down on corruption and follow the rule by law while bribery and back-scratching runs rampant through Chinese society.

To curb this, access to alternative, open sources of information is crucial. Yuchtman argues that “Chinese elite would be in a much more stable situation if everything they said about political rights, rule of law and a desire to fight corruption was matched by the institutions in media and access to information.” Web-based criticism of the Party does not dominate Chinese internet usage. According to Yuchtman, allowing open criticism is a transparent yet uncomfortable process that addresses Xi Jinping’s desire to create a government that effectively deals with corruption.

A more severe effect of the stringent new rules accompanying the firewall is that both foreign investors and mainlanders may grow disillusioned with harsh censorship policies and slower connections to the outside world. Investment is not always an impersonal exercise. It involves people on the ground, and in cyberspace, exchanging ideas. If the R&D segment of the populace seeks solace elsewhere, a brain drain may be inevitable. According to Yuchtman, those in Beijing who feel stifled by being constantly monitored may seek either to move to Shanghai, which has looser Internet restrictions and its own educational curriculum, or to Hong Kong. Moreover, only a third of the 3 million Chinese nationals who have gone abroad – many of whom represent the nation’s best and brightest – have returned. This further depletes China’s ability to innovate.

It would be beneficial for China to take a page from the concept of “smart and illicit.” To become a great global innovator, it is crucial to allow some pushing of the boundaries. When breaking rules becomes impossible and rule-breakers begin to relocate elsewhere, China may lose all of its entrepreneurs. For now, Internet censorship is only buying time in the short run for the CCP. With growth slowing down, the time is ripe for the CCP to loosen restrictions and open the floodgates to innovation.

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