With China's rulers believing the online industry is sprouting out of control, Shanghai officials have closed 127 Internet cafes and seized computers, according to a local newspaper report.
The Shanghai News says the Net cafes failed to obtain licenses, and unlicensed Net cafes "avoid paying taxes and disseminate pornographic CDs which corrupt the minds of young people," according to a city government official it quoted.
The city government's most recent sweep of "unlicensed" cafes involved authorities checking 226 sites, seizing 192 computers and 110 CD-ROMs, the News says.
The Internet is spreading rapidly across China. Reuters says Net cafes are popping up in cities, towns, even remote villages, serving nine million users with that number growing "fast".
The Net cafes are popular because home PC ownership is still low in China, while getting a fixed-line telephone in many areas is slow and expensive. The Shanghai News tells Reuters the city had 777 legal Net cafes in 1999.
Licensed Net cafes in Shanghai welcomed the crackdown, Reuters says. One owner, Hu Weiping, tells Reuters she was losing business to illegal competitors. "They normally operate at dodgy places with cheap rents and computers and charge about half of our price," she said.
The Shanghai News says illegal Net cafes earn over twice the profits (and on half the startup costs) Weiping says she earns. She says her 20-computer café earned $US120-240 on an $18,400 investment.
"It's good that the authorities are nabbing the illegal outlets," Shen Wenjun, assistant manager of another licensed Internet outlet, tells the News. "Once they're gone, people will come to us."
The Shanghai crackdown comes in the wake of China slapping new regulations on the Internet aimed at plugging the leak of "state secrets". These regulations, Reuters says, make Internet bulletin board, chat room, and newsgroup operators responsible for any security breach. China's definition of state secrets, of course, is broad enough to cover any information the government does not approve officially for publication.
And charging a leak of state secrets is often used to jail Communist Party opponents.
Reuters also says Chinese authorities are demanding all companies and individuals register officially for approval to use encryption technology.
