Two Big Risks for Facebook in China

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Internationally, China wants not only a voice in how the Internet is shaped and regulated, but symbolically to redefine the default cultural norm that the Internet should be free and uncensored.
By Joe Foudy
Chinese Internet Czar Lu Wei's high profile visit to Facebook founder Mark Zuckerberg's office this week is just the latest signal that China is engaging Western tech firms, but on its own terms.

Despite — and perhaps in part due to — criticism that the Chinese business environment has become more hostile to foreign firms, the visit hints Facebook may soon achieve its goal of re-entering the 1.3 billion person market. Along with the successful IPO of Alibaba and China's recent World Internet Conference in Wuzhen, a Facebook venture in China would signal to the World that China's internet is open for foreign business. But a closer examination suggests China is carefully defining and controlling its engagement in the world.

The World Internet Conference was a chance to invite many of the leading global tech firms to be a future part of China's Internet market. But its motivation was to legitimize policing over the Chinese Internet while seeking the right to shape global Internet rules. On the domestic front, control of the Internet is broadening and deepening. Foreigners are welcome to try to partake in the commercial spoils of the market in return for deference to the government in China (and informal lobbying support in their home countries). At the conference, Lu argued "We cannot allow those who capture a share of the Chinese market and make a lot of money, but hurt the interests of China."

Read full article as published by CNBC

Joe Foudy is a Clinical Associate Professor of Economics.