China to Allow Foreign Investment in VPN Services

The City of Beijing plans to allow foreign investors to invest in VPN services within a trial zone by the end of 2019. China’s Great Firewall has strict controls over the country’s Internet service providers, causing wide-scale Internet censorship.

China’s softening on VPN services is an attempt to lure in foreign investment. The Beijing Municipal Bureau of Commerce will cap foreign ownership in VPN providers at 50 percent. 

Beijing’s plan to open up the service sector comes after the city’s economy further slowed to 6.3% in the first half of 2019. Similarly, it’s fiscal revenue fell 2.5% to 317 billion Yuan over the same period.

The State Council approved the measure of relaxing restrictions in January to attract foreign telecommunication providers to come and offer VPN services for Beijing’s foreign-invested companies. As of now, China has blocked 135 of the world’s top 1,000 websites, including YouTube, Facebook, and Google.

The municipal government will also start welcoming foreign investment in audio and video programs as well as online games. However, they will have to meet Chinese data security standards and be subject to content oversight. Technically, foreign investment in audio, video, publishing, and online news is still banned in China. 

Authorities, in the past, have taken action against individuals and companies that offered VPN services in China. Many economists view the relaxation of VPN policies as a welcomed measure and change that demonstrates China’s commitment to globalization.

On the other hand, critics suggest that China’s attempt to soften VPN restrictions is a farce and will normalize state-controlled VPN services.

Alex Hamilton