China's Internet branch is booming. Meanwhile, though, online censorship is increasing, and foreign chat apps are being blocked. Critics say that poses risks for China's economy as a whole.
According to the quarterly report issued by Chinese Internet company Tencent this month, the app WeChat - the Chinese answer to WhatsApp, a favorite among young people in the West - has reached the 200 million user mark outside of China. That's double the same figure from last year. The company reports that 438 million smart phone users use the Chinese chat service. By comparison, the current market leader, WhatsApp, has approximately 500 million active users.
While China's Internet branch is exploding beyond the domestic market, Beijing is tightening the rules for online communication. In early August, the State Internet Information Office issued new regulations for chat services. It stipulated that only media organizations registered in China are allowed to disseminate instant messages. Additionally, private users are required to register their accounts using their real names and will be subject to a verification process.
Chinese state-run news agency Xinhua reported that a number of WeChat users have already been arrested on charges of "spreading rumors from foreign media." The Xinhua report makes explicit reference to the new regulations for chat services and claims that they protect "an appropriate level of freedom of speech."
Following the announcement of the new rules, Tencent's stock price fell somewhat, reflecting experts' fears that stronger regulations might put the brakes on WeChat's business, leading smart phone users toward other services.
Rejecting foreign chat apps
What are the alternatives for Chinese chatters? Like WeChat, similar app providers are affected by the government's decree. On the other hand, there are big obstacles to using foreign services. Apps such as Line from South Korea and KakaoTalk from Japan stopped working several months ago. Officials claimed terrorists were using Line and KakaoTalk, among other apps. The South Korean news agency Yonhap reports that Beijing and Seoul are now in diplomatic talks about Line and that the ban on the service may soon be lifted.
"The government wants to push users toward domestic web services," according to software developer Hao Peiqiang from Shanghai. Hao tells DW that Chinese IT companies are operating their services in Chinese computing centers that have been under strict government control for years.
Chat apps are far from the only foreign web products that China severely limits or blocks entirely. For example, Google's email service is unavailable in China at irregular intervals. Many users thus view Gmail as unstable and switch to Chinese providers. YouTube, owned by Google, offers another example. Many Chinese users don't know the blocked video platform at all, instead using Chinese video portals like Youku and Tudou daily, where contents are subject to severe controls.
Foreign cloud storage sites have also been under pressure recently - with Dropbox and Microsoft OneDrive repeatedly being made unavailable. Hao Peiqiang is aware that such measures can drive the country's users toward Chinese websites, but he also says they damage the IT industry.
"The government used to have concerns that putting too severe of controls in place could ruin the young Internet branch," he said . "But now, most users' needs can be met by domestic sites. The officials think the Chinese IT branch is already so strong that it's no longer dependent on foreign services."
Precisely that way of thinking is dangerous, the Shanghai IT expert added, saying, "There's a certain euphoria in China right now - as though the economy is independent from the wider world. That could lead us into isolation."
Given the current push for innovation in the IT world, Hao said this sort of isolation could be a problem for the Chinese economy well beyond the tech branch.