Access to the Internet

The two major China regulations governing access to the Internet are the Provisional Regulations on International Linkups of Computer Information networks effective 20 May 1997 and the Implementing Measures of the Provisional Regulations on International Linkups for Computer Information Networks effective 6 March 1998. In accordance with these two regulations, all connections to overseas websites are required to go through international gateway channels controlled by the Ministry of Information Industry ("MII"), and only "backbone" operators are allowed to connect directly to the international Internet, and then, only by going through gateway channels. Accordingly, the ISPs and their customers have to connect through one of these three commercial networks.

Currently, with the one exception for Hong Kong and Macau referred to below, no foreign investment is allowed in the operation of any ISP in China and, if any such foreign investment is made without disclosure to the authorities, the ISP concerned is liable to be closed down. Under CEPA, investors from Hong Kong and Macau are allowed to set up joint ventures to provide Internet access services, provided the shares owned by Hong Kong and/or Macau investors do not exceed 50 percent.

Collection and use of data

The Measures for the Administration of Internet Information Services stipulate that Internet ISPs are required by law to collect information relating to the subscribers' logging on activities including log on time, account numbers and the callers' telephone numbers. Such information will be kept for a period of 60 days.