Reports: Beijing Cracks Down on Net

Chinese Internet companies and foreign investors who own stakes in the industry have been operating in an uncertain regulatory environment, with different regulations being proposed and imposed by various government agencies. If the broad new rules are the final word on Internet regulation, Chinese and foreign companies may face a hard road ahead in developing the country's Internet industry.

All Internet service and content providers will need a license from the Ministry of Information Industry (MII) to seek a listing on domestic or foreign stock exchanges or to form joint ventures with foreign companies, according to news reports on Tuesday, most of which cited Xinhua, China's official news agency, as the source.

All companies with existing stock listings or foreign ownership will have to provide extensive records to MII in the next 60 days for approval of their arrangements, the reports said.

The rules reportedly also forbid content and service providers from presenting or disseminating information that could harm the state or threaten reunification with Taiwan. This could include state-classified information, pornography, gambling and advocacy of cults such as Falun Gong, a group that was banned last year and has come under a government crackdown.

Moreover, the Internet companies must be able to hand over to the government records of all users who have used their sites and all information posted there for a 60-day period.

Content providers in areas defined as strategic, including news, education and health care, also will need to seek approvals from relevant agencies in these areas, the reports said.

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