How far can the Chinese firewall stretch?
1. Media tug of war in China:
Last week, my daughter sent me this amazing Bloomberg.com story, accompanied by graphics and clickable family trees, that unraveled how the “princeling” ancestors of China’s “Eight Immortals” – the generals and party leaders who built the communist superpower – now control the country’s leading industrial and financial conglomerates. The New York Times has also been on the case, detailing in articles like this one and this one how those controlling China’s national and regional governments have showered favors on their entrepreneurial relatives.
Then, last Friday the Times added a report describing heightened Internet blocking measures that Chinese authorities are taking to keep these kinds of stories about Chinese crony capitalism and other scandals from being seen online in China. The new efforts to firewall information that would embarrass the ruling class even include trying to block offending content from reaching the virtual private networks (VPNs) used by corporations to ensure the privacy and security of the information their employees transmit around the world.
It’s all fascinating, important stuff. But it’s only the opening rumble of what could be one of the major business and political stories of 2013. After all, this is the kind of information that threatens to overturn the implicit deal with the citizenry that the Communist Party rulers have depended on for the last two decades: let us rule and we won’t act like Communists when it comes to giving you economic opportunity.
Yet maintaining a digital firewall seems fruitless – and trying to is hardly going to go unnoticed.
So, this confrontation is going to be worth constant coverage. News organizations ought to set the scene now for the fight that’s coming by giving us the scoops on:
- What are corporations doing to protect their VPNs? And what do they know about what the Chinese are doing to penetrate or block them? Let’s see a story on this cat and mouse game.
- What are the potential consequences for China’s economy and for international trade of creating that kind of hostile communications environment? And will Western countries hoping to send their talent to work in China find recruiting more difficult if, once they get there, these Westerners are cut off from knowing what’s going on in the world? Will a visiting executive’s smart phone be blocked, too? Will major universities cut back on foreign exchange programs if their students studying in China will also be cut off from the world if the universities’ VPNs are blocked?
- We know that access to the Bloomberg and Times websites have been cut off in China. But has its reporting on the Chinese rulers affected Bloomberg’s more important business in China? Are its market data terminals – the company’s core revenue producers – also being blocked? What about Bloomberg’s access to data related to Chinese markets? And might any of this be helping Bloomberg’s competitors, such as Dow Jones or Reuters?
- Of course, there are leaks in the great Internet firewall. So hasn’t what the Chinese have read so far about all of the scandals and cronyism simply whetted their appetites for more? What are people doing to get around the wall? To what extent are these stepped up efforts to block the flow of embarrassing news not only making people more eager to read it and gossip about it but also generating more ingenious and aggressive efforts to get around the wall? With that in mind, I’d love to see a (probably impossible) story in which a news organization uses pollsters to find out what the average Chinese citizen actually knows about all the scandals – and about all the efforts to block them from knowing.
- And then there’s the question I raised last May about how difficult it must be for a Western reporter in China. That has to be a special problem now for the Times or Bloomberg reporters, or others chasing stories like the ones they’ve broken. How do they communicate with their editors back home in any kind of secure way? How can they keep sources protected if, as might be expected, they’re being followed and their calls monitored?
2. Opera profits
My wife and I went online last week to buy two tickets to the Metropolitan Opera at Lincoln Center as a Christmas present for two of her relatives. The price for two orchestra seats in Row U, off to the side: $470. It’s the opera, we thought – clearly a worthy charity.
But, it turns out, quite a flush charity, too. According to its latest publicly available tax return, the non-profit, tax-exempt opera took in $362 million in ticket sales and contributions in the fiscal year ending July 31, 2011 but spent just $321 million. That’s a $41 million (11%) profit. To be sure, $194 million of the $362 million that came in was from contributions, and, of course, there’s nothing wrong with an important cultural institution building up its endowment for a rainy day. It’s also true that the Opera has lots of far less expensive seats from which the sound is great even if the view isn’t. But the combination of this profit margin, the high ticket prices and the high salaries reported in the IRS filing – the director made $1,379,000 – suggests someone ought to survey major non-profit cultural institutions in New York and other major cities and do a report on profits, expenses, prices, and accommodations made to those who can’t pay full price to go to the show.