Why China’s Economy Will Continue to Suffer the Damage of the VPN Ban

For a long time, China has used the Great Firewall (GFW)—a highly sophisticated set of tools for filtering content—to censor what users within its borders can access online. Recently, the Peoples’ Republic of China made a move to shut down the last bastion of uninhibited online access, but chances are that the move is going to backfire.

China's economy will suffer from the ban on VPN

In January 2017, authorities in China embarked on a 14-month-long campaign to mop up the country’s large number of unauthorized websites. Among the top targets of the campaign were virtual private network (VPN) providers, who enable users to circumvent the GFW by tunneling users’ online activities to servers located in other countries, effectively altering the IP address and cloaking the identities of users. These VPN services, used by many to navigate to blocked websites such as Google, popular social media websites, and established online publications, are immensely popular among citizens who are interested in accessing foreign websites. However, VPN providers have been a nuisance to the Chinese government for a long time.

Fresh Restrictions

The Chinese authorities have attempted to upgrade the capabilities of the GFW to block a variety of VPNs for years. However, the 2017 clampdown demonstrated repression at a whole new level. In that time, a number of popular VPNs were not able to load following reports that Beijing instructed its top three telecommunication companies to completely restrict users from accessing these services before the year came to a close. Thereafter, Apple began removing some VPN apps from the China app store. The move, which was aimed at complying with the directive of the Chinese authorities, was condemned by critics as Apple throwing in the towel to censorship. By the end of July 2017, more than 400 VPN apps had been disconnected, according to estimates by the Beijing-based web analytics company Aso100.com.

Apple CEO Tim Cook said during the company’s 2017 third-quarter earnings call that it would “obviously rather not remove the apps” but, as is the case in other countries, Apple has to adhere to the laws of the republic in order to do business.

The restrictions were part of the Chinese government’s concerted effort to censor online content. Considering the fact that the much-touted 19th Party Congress was set for the following autumn, the time when China was expected to announce policy objectives and reshuffles in leadership, it was of the utmost importance that the online environment surrounding the event be conducive.

Taking VPNs out of the picture was a sure-fire way of eliminating political rumors, making sure that citizens of China do not circumvent content blocks to view western reports of events in the republic, or monitoring Twitter banned Chinese nationals like Guo Wengui, the exiled business magnate who took to social media to routinely share sensitive information regarding officials in the Chinese government. According to Qiao Mu, an independent media expert based in Beijing, Chinese authorities did not want any dissenting political voice prior to the Congress gathering.

In addition to that, the implications of the 2017 VPN clampdown in China also had to do with concerns regarding national security. As part of the county’s new laws on cybersecurity, it is a requirement for online companies to store the majority of data on Chinese citizens within the country’s borders. There remains a lot of debate regarding the precise scope of this directive, but many expect that it will include energy, education, public infrastructure, and transportation. With VPNs operating in the country, it becomes a challenge to put these rules into effect and monitor the flow of data.

According to data policy experts in China, the regulations on VPNs will become increasingly strict, especially after the details of cybersecurity laws fully emerge.

Clamping down on VPN services will, however, come at a cost to China.

The Facts about Online Censorship in China

Accessing banned apps and websites in China is only one of the numerous important roles that VPNs play in the country. Chinese students in the diaspora use VPN services to gain access to their school emails, which are provided by Google. Furthermore, academics in the country use these services to access Google Scholar, which they prefer to China’s Baidu because it does not do a good job indexing papers written in English. Also, multinationals communicate with their offices in China and gain crucial business information using VPN services.

The Chinese government has defended the war it appears to be waging on VPNs. In a conference held in July 2017, Chief Engineer of the Ministry of Industry and Information Technology, Zhang Feng, said that authorities have no problem with legitimate VPN service providers, but many don’t see that as a surety.

Online Censorship Hurts More Than It Helps

To begin with, the citizens of China are already stifled by the domineering Internet censorship which Beijing has exacted on them. The country blocks as many as 3000 websites, which in turn affects businesses such as news, networking, and communications to the tune of billions of dollars. More than 20 percent of online firms blame online restrictions in China for losses of at least one-tenth of the company’s revenue in the country.

As far as cross-border data communication is concerned, a lot of uncertainty has emerged as recently as the 2017 regulatory developments, especially restrictions and blocks placed on VPNs. Open communication, among other aspects of global cooperation, stimulates the success of US firms in China and the innovation that is essential to the economic development of China.

Additionally, a number of Chinese startups were and continue to be hurt by the clampdown. While Beijing encourages firms to locally plow through the limits of innovation, startups use VPNs as tools to maintain up-to-date knowledge on cutting edge technology from abroad. Many tech companies based in Shanghai, for example, are not able to match the best minds overseas because of frequent VPNs outages. The inability to use VPNs to access Google is distressing and frustrating for many.

That is not to say that Chinese authorities have made all VPNs inaccessible in China. There are still a plethora of VPNs on the Android Play Store. Further, some of the apps which Apple removed from its App Store still send users secret download links that enable them to get into the App Store. It has now become commonplace for a user to have up to three backup VPNs.

Although Chinese Authorities can make free online browsing through VPNs extremely difficult for citizens, it is impossible to completely stop these services from operating.