China’s Ministry of Industry and Information Technology (MIIT) just sent a chill through the C Suites of major multinational companies, and a shiver up the spines of innovative Chinese startups, as well as an array of China-based expats and advocates for the open web. On July 10th Bloomberg reported that MIIT had told China’s telecom providers to block access to virtual private networks (VPNs) by February 2018. VPNs are the software that allow users to circumvent China’s “Great Firewall,” granting access to sites like Google, Facebook, and the New York Times that are blocked by the Chinese state.
Industry groups and analysts are aghast at the idea that VPNs—the last thread connecting China to much of the global web—could be cut. Businesses, they argue, will be hobbled and researchers isolated. One Beijing-based advisor to local startups has said that the move would “demolish the entire stack of the startup ecosystem here.”
Hearing the outrage, MIIT rushed to dispute the Bloomberg report. Officials denied a blanket crackdown, insisting that all “authorized” VPN providers would remain in service and there would be no interruption in connectivity. Business, they claimed, would go on as usual.
But the flap has left many puzzled. Is the disconnect between Chinese officialdom and both global and Chinese businesses a misunderstanding? Was the VPN idea merely a bureaucratic boast with no teeth? Or is MIIT’s flat denial merely a public relations ploy meant to buy time while authorities prepare for the final crackdown?
Many VPN operators and industry insiders have called for calm, saying the cat-and-mouse game with authorities will continue as usual, notwithstanding the latest order. There’s nothing new about such bureaucratic fist-shaking at VPNs, they say.
But I have another theory about what’s just happened: MIIT’s recent pronouncements do signal a real change—the Chinese authorities intend to tighten control over VPNs by co–opting them.
To understand what I mean by that, it’s necessary to try and view internet controls through the eyes of a Chinese Communist Party (CCP) cadre. From an ethical and normative perspective, most Americans (myself included) find CCP restrictions on the internet both highly objectionable and extremely frustrating. But the cadres pulling the levers in Beijing have different priorities, and to predict or respond to their choices, we must first try to reconstruct their conceptual framework.
Let me give it a try.
The Great Firewall, a.k.a., the World’s Biggest “Nudge”
The very term “Great Firewall” suggests an impermeable barrier, something that was constructed to be impenetrable by design. But what if we were to think of China’s myriad controls on the internet less as a hard “wall” and more as a forceful “nudge”?
The concept of a “nudge” developed in behavioral psychology and went mainstream via the 2008 book by legal scholar Cass Sunstein and economist Richard Thaler. Nudges are changes made to “choice architecture” that point the chooser (“the nudged”) toward making a certain decision. Nudges don’t entirely take away choices or make them prohibitively expensive, but rather rely on people taking the path of least resistance. Classic nudges include setting the default choices on forms such that people make better choices about retirement savings. Everyone can opt out by selecting a choice other than the default, but most don’t.
In the best of times—when VPNs are cheap or free, easy to access, and reliable—the Chinese Firewall can be compared to a very strong nudge. Users who take the path of least resistance (that is, the vast majority of people) will stick to the domestic Chinese internet: reading Chinese news, using Chinese social media, and absorbing content that the Chinese government deems appropriate. Those with the desire and knowledge to opt out of this default setting will acquire a VPN. With the investment of a few minutes’ time and maybe a few dozen yuan, these people gain access to the “un-walled” web for a year or longer.
There are, of course, clear differences between a benevolent nudge and the rather more pernicious Great Firewall. Many Chinese internet users don’t even know they’re being nudged, and opting out is never as simple as changing the default preference on a form. Also, while classic “nudge theory” seeks to improve wellbeing for the nudged, the Firewall’s version of it is there to protect the nudger—in other words, the Chinese Party-state. From an ethical standpoint, these are completely different things.
But bracketing those differences and setting aside the ethics, the Firewall-as-Nudge must surely seem like a win-win to the CCP. The Party’s twin goals of ensuring social stability while also promoting economic growth are often in tension, but the VPN status quo seems to accommodate both of their goals. It restricts information flows to the vast majority of users (your “average Zhou”), thus curbing the possibility of Arab Spring-style mass uprisings. But it also leaves the door open for the researchers, businesses, and a small cohort of extra curious citizens who are willing to shoulder a modest cost to have access to the global internet. In this worldview, restricting information for 90% of the Chinese population achieves nearly 100% of the Party’s goals.
And the argument for the status quo hasn’t just made sense in theory. It has also appeared—again, from the Party’s standpoint—to be yielding real results. In the last seven years, China simultaneously fostered one of the most heavily censored internets on the planet while also becoming an innovation juggernaut, leading contributor to scientific research, and engine for global economic growth. Whether we like it or not, from the perspective of the CCP the status quo of internet controls has been a smashing success.
Fudging the Nudge
And that brings us to the puzzle. If the Firewall-as-Nudge has been working so well for the Party, then why would MIIT rock the boat now? Why trade an effective nudge for an outright ban, one that will inflict greater economic and reputational damage without corresponding gains to political stability?
The answer, I believe, is that MIIT won’t be doing that. But that doesn’t mean its recent pronouncements have been meaningless or that China will maintain the longstanding status quo.
Chinese President Xi Jinping’s track record, combined with recent official statements around VPNs, indicate that the CCP isn’t making a haphazard attempt at blocking all VPNs. Instead, it is seeking to gain leverage over VPN providers by eventually granting legitimacy to just some of them. Put differently, it will control them by co-opting them.
In denying the Bloomberg report of a blanket shutdown of VPNs, MIIT stated that the regulations “will not affect normal operations” for multinational companies because they can “turn to authorized telecommunications entities.” (In other statements, the ministry has included “the vast number of users” alongside “companies.”)
The key word here is “authorized.” VPNs have long operated in a legal gray area, not exactly illegal but also not formally recognized or regulated like normal businesses. That gray area was further muddied by Chinese authorities’ hesitance in the past to even publicly acknowledge their controls on the internet.
Legitimacy and Leverage
But Xi’s administration has been far bolder about publicly owning its internet censorship regime. By choosing to acknowledge and regulate VPNs, the Party can separate “authorized” VPN providers (who will be tolerated and maybe even supported) from “unauthorized” providers (who the Party can cripple with never-ending crackdowns).
Imagine an extreme scenario in which there was one authorized VPN that, with a little help from the government, worked faster than all others, and was accessible almost 100% of the time. All other VPNs would operate at their current levels, hit or miss, with lots of misses during particularly sensitive periods. With the help of that very forceful “nudge” from the government, VPN users would flock to the Chinese Party-state’s preferred and authorized provider.
In that world, the CCP would simultaneously make certain VPNs function better while also strengthening its leverage over them should the need arise. That need could come during periods of dramatic domestic instability, when the Party entirely shuts off the few remaining VPNs. Or it could be put into play more nimbly, punishing specific sites or monitoring certain users.
Every time the Party exercises this leverage it would undermine the argument for using authorized providers and increase demand for unauthorized providers outside of Party control. But if shuttered only as a fail-safe in moments of crisis, the authorized VPNs would still likely be the most practical option for the vast majority of users in China.
With two nudges, the CCP will have corralled Chinese internet users onto domestic sites, and then pushed the remaining outliers onto CCP-sanctioned and -controlled VPNs—double happiness for the Party.
Walls, Tunnels, and Irony
Spending billions of dollars to build a wall and then embracing technology to tunnel under it is deeply ironic. But irony has never been a barrier to policymaking in China. I believe the authorities will embrace the irony and look to seize the commanding heights of the VPN industry.
Many questions remain: would users—many of whom are wary of government surveillance—embrace “authorized” VPN providers? Is the Party capable of suppressing unauthorized providers on a sustained basis? And even if the Party can push users onto a handful of authorized VPNs, could the Party resist the temptation to constantly meddle with access?
This week, CCP authorities are holding their cards close to their chest, stating that their plans for VPN regulation are still in the works. So all that VPN users in China can do for now is to hope the authorities don’t turn that nudge into a more aggressive shove.