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The Problems Faced by China in Devising an Online Landscape with Chinese THE PROBLEMS FACED BY CHINA IN DEVISING AN ONLINE LANDSCAPE WITH CHINESE CHARACTERISTICS A thesis presented to the faculty of the Center for International Studies of Ohio University In partial fulfillment of the requirements for the degree Master of Science Shuho Otani August 2005 This thesis entitled THE PROBLEMS FACED BY CHINA IN DEVISING AN ONLINE LANDSCAPE WITH CHINESE CHARACTERISTICS By Shuho Otani has been approved for the School of Science in International Affairs and the Center for International Studies by Don Flournoy Director, Institute for Telecommunications Studies Josep Rota Director, Center for International Studies Otani, Shuho. M.A. June 2005. International Development Studies The Problems faced by China in Devising an Online Landscape with Chinese Characteristics (60 pp.) Director of Thesis: Don Flournoy Abstract: China has become the second largest internet user in the world. This fact is primarily due to the country’s rapid economic growth, especially in the telecommunication industry, but what does this fact mean? Although the growth of the internet in China can be read as a positive sign, my thesis addresses questions having to do with the development of an online landscape within China. It addresses such issues as whether or not information technologies are a liberating force for democracy in China, or whether or not they have lead to an increase in governmental control; moreover, what is the relationship between information technologies and the current status of the digital divide in China? These questions will be addressed within the thesis. Finally, my thesis explores the unique ways the internet has impacted the development of society and the political economy of China. The Chinese government has long faced big political, economic, and social challenges as a result of the sudden growth of the Internet and telecommunication industry. What does the future hold for a country that lacks a free information market; are the effects of a loosened communication system likely to change China’s political economy, and if so in what ways? My thesis argues that the net results, either positive or negative, of the rapid growth of the Internet industry in China will depend on how fast it can make the transition to a political regime based on the rule of law and limited government. Approved: Don Flournoy Director, Institute for Telecommunications Studies ACKNOWLEDGEMENTS I would like to thank Dr. Don Flournoy for his mentoring and patient guidance throughout the thesis process and especially for providing invaluable insights and the necessary motivation to see it through its completion. I would also like to thank Dr. Elizabeth Collins and Dr. Ismail Ghazalah for their assistance as well. iv TABLE OF CONTENTS INTRODUCTION ...............................................................................................................1 CHAPTER ONE ..................................................................................................................3 HISTORICAL REVIEW OF TELECOMMUNICATIONS AND INTERNET DEVELOPMENT IN CHINA 1.1 Telecommunication Development.................................................................................3 1.2 Internet Development..................................................................................................12 CHAPTER TWO ...............................................................................................................17 THE CONTINUING PROBLEMS FACED BY CHINA 2.1 Telecommunications and Social Control: China’s Social Change Dilemma ............17 Perspectives on Information Technology and Development.....................................17 Measures of Control taken by the Chinese Government ...........................................17 Fragmented and Inefficient Government Control......................................................20 2.2 Digital Divide..............................................................................................................26 Understanding the Digital Divide ...............................................................................26 Digital Divide in China...............................................................................................30 CONCLUSION..................................................................................................................37 APPENDIX........................................................................................................................40 BIBLIOGRAPHY..............................................................................................................52 vii LIST OF FIGURES FIGURE 1: Ownership chain of major telecommunication operators in China..................6 FIGURE 2: The growing GDP in China during 1970 to 2002 ...........................................9 FIGURE 3: The GDP growth rate in China........................................................................9 FIGURE 4: Personal computer growth in China / per 1000people during 1970 to 2002 .................................................................................................10 FIGURE 5: IT expenditure per capita and percentage of GDP in China (1991 to 2001) ..............................................................................................10 FIGURE 6: Telephone mainlines / per 1000 people in China during 1980 to 2002 .......11 FIGURE 7: Mobile phone subscribers/per 1000 people in China during 1989 to 2002 ..11 FIGURE 8: The growth of Internet users in China...........................................................16 FIGURE 9: Telephone mainlines in China and in its large cities.....................................32 FIGURE 10: Internet Users in Western China ................................................................32 FIGURE 11: Internet Penetration by Regional Population ...............................................33 FIGURE 12: The Internet users by gender and marital status ........................................33 FIGURE 13: The Internet users by age groups ...............................................................34 FIGURE 14: The Internet Users by Income ....................................................................34 FIGURE 15: The Internet Users by Education Level ......................................................35 FIGURE 16: The Reasons for not using the Internet .......................................................36 viii LIST OF TABLES TABLE 1: Market players in the Chinese telecommunications market .............................6 TABLE 2: The break-up of old China Telecom .................................................................7 1 INTRODUCTION Since China sent its first email in 1987, it has become the second largest internet user in the world. This has been primarily due to the country’s rapid economic growth and the growth of its telecommunication industry. During this recent period of economic growth, the country has experienced two emerging parallel reform processes: economic liberalization and political deregulation. These have resulted in changes in China’s telecommunication industry and its Internet landscape. In addition, the Chinese government has clearly identified the Internet as an agent driving force for economic development. Although China’s achievement of Internet growth in double digits every year is a positive sign, this thesis investigates some of the problems that China faces in devising an online landscape. The thesis addresses the following questions: 1) how has China achieved a high level of growth in the telecommunication and Internet industry, and 2) do information technologies become a liberating force for democracy in the country, or do they lead to increased governmental control over society? The thesis will also address the issue of digital divide in China. The thesis will show that the Chinese government has faced big political, economic, and social challenges as a result of the sudden growth of the Internet and telecommunication industry. One of the challenges is the conflict between a development leap forward in information technology and the Internet’s putative threat 2 to the power of China’s government. The other challenge is the digital divide in China, which is mainly characterized in terms of regional differences, e.g., east versus the west, as well as along economic and social lines, that is, the differences between those who can afford it and those who cannot. 3 CHAPTER ONE HISTORIAL REVIEW OF TELECOMMUNICATIONS AND INTERNET DEVELOPMENT IN CHINA 1.1 Telecommunications Development China has made remarkable progress in the telecommunication sector since the end of the Mao Zedong era in 1976. Chinese telecommunication development has achieved double-digit growth in the last two decades. Today, the market is continuing to rapidly grow. According to OECD report (2003), China had become the largest telecommunication service market in the world by the September 2002. The market consisted of 207 million fixed line telephony users and 190 million mobile phone users in that year. In addition, the number of fixed line users increased 43.7 percent, and the number of mobile phone users increased 123.5 percent. Beginning in the1980s, the Chinese government pushed the institutional reforms and economic development by introducing a market economy into state socialism. State-owned enterprise has reformed and privatization has transformed in the Chinese economy to create an indigenous technological capabilities. The slogan, “Four Modernizations: agriculture, industry, defense,
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