Bloggers, Innovation, And China's Future

Rebecca MacKinnon, internet guru and former CNN Beijing Bureau Chief just did a long and enlightening post, entitled (and about), "Bloggers, Innovation, and China's Future."  Ms. MacKinnon concludes her post with this question:

Will the growing need for businesses to focus on playing politics with regulators - and scrambling to comply with constantly-shifting, vague regulations -  sap the innovative energies of China's entrepreneurs?

Asia Pundit answers this question, in a comment, much as I would have, by essentially saying government intervention cannot but have some negative impact on innovation:

Will the growing need for businesses to focus on playing politics with regulators ... sap the innovative energies of China's entrepreneurs?"

Simple answer: Yes.
The larger internet companies will play along with whatever regulations are put in place, the smaller ones will have more difficulty. Specialty services such as Toudou and Bokee will have more difficulty dealing with whatever ad hoc regulations are put in place than Sohu or Sina.

More complex answer: Yes, but not as much as some of the more Jurassic-era regulators would hope.

The more hopeful element is that China seems pretty incapable of following through on planned regulation. The proposed registering of video hosting sites by SARFT did not happen in September as they planned, I'm guessing that the 'real name' blog registration will also fail.

Bureaucratic infighting has stalled and will stall a lot of proposed regs (MII probably didn't care for SARFT's planned incursion into its territory, and you can be sure there were multiple interests opposed to Xinhua's planned tariff on Bloomberg and Reuters terminals).

And, of course, supply will emerge to meet demand. If there is a desire for lots of groovy webby stuff there is little the government can do to stop it. SARFT may control the airwaves and cinemas but it doesn't stop people from buying pirated DVDs, getting an illegal satellite hook-up, or getting material from P2P or streaming sites.
I've spoken with a couple of regulators who have been puzzled by western reports on various crackdowns. They don't understand the outrage because they are fully aware that their crackdowns are ineffective ("Who cares if Skype is being blocked? I just use Google talk! -- "Yes we ban satellite dishes, but we can't remove one from a private home unless it is poorly installed and looks like it will fall from its mounting. So what's the problem?")   

Entrepreneurs will be frustrated but they won't be stopped. (Getting vc [venture capital] funding will be difficult if they are forced into the grey market -- so, yes, China is shooting itself in the foot.).

It all makes for a terrific read.