Co-authored by Matt Johnson, Kurt Pritz and Simon Cousins.

• A recent clarification to draft domain name regulations by China’s Ministry of Industry and Information Technology (MIIT) indicates greater engagement and openness with the domain name market, not a contraction as some had feared.

• The new rules include safeguards against unnecessary interruption or interference by government inspectors for domain name registries and registrars in China.

* * *

New drafts of carefully worded internet regulations in China often raise questions by out-of-country analysts as to the meaning and intent of the law. This is for good reason. Chinese Internet regulations affect broad swathes of businesses with domestic and foreign operations—especially domain name registrars, registry operators, and website owners. Wording from China’s government tends towards purposeful ambiguity, and often translates unclearly.

This is why alarm bells were sounded by various non-Chinese commentators over the March 25th announcement of MIIT’s proposed revision of its 2004 “Chinese Measures for the Administration of Domain Names.” Analysts and industry insiders parsed each sentence of the MIIT rules over subsequent days. Some concluded that this might mean the complete shutdown of websites hosted outside of China from resolving in China or even opined that China’s internet would become an intranet closed off to other regions.

The recently released MIIT clarification indicates these concerns were exaggerated. On Wednesday March 30th, the MIIT responded to outside media concerns with a statement that the new rules are not intended to affect foreign industries or foreign websites from resolving in China. The clarification notes that the previous release had caused consternation among out-of-country businesses and then states that the March 25th release would not affect foreign companies in the normal conduct of business in China.

The new rules (that are currently out for comment) state that if you want to host a website in China, the domain name must be registered with a registrar in China. But this new draft in no way prohibits the ownership of domains by Chinese registered outside the country.

In addition, the rules outline the process for governmental approval of new domain name extensions (such as .vip and .club) in China so that websites can resolve there. I.e., MIIT will consider each new foreign-owned extension that is properly submitted for approval in a serial, “first come, first serve” basis, with Chinese-owned new gTLDs being reviewed before foreign new gTLDs. This is exactly the process that Allegravita (recognizing these regulations were in process) has been taking its clients through for the past few years: licensing new domain name businesses in China as a Wholly Foreign Owned Enterprise and then submitting that license to MIIT.

The only significant new rule states that a resolving website that is registered in China must be registered through a registrar that operates its services in China. The specification of fines of 30,000 CNY ($4,638 USD) for violators was actually in the original wording of the 2004 rules.

This publication of rules for comment is not a new trend. The latest draft of MIIT regulations is in line with previous trends (a process begun in 2004) and primarily clarifies domestic domain business law for registrars. A full briefing paper by Allegravita on last year’s inspection process for registrars in China can be found here.

Allegravita works closely with key Chinese regulators and channel partners to monitor for new changes and guide foreign-owned registry operators and registrars through all necessary processes.

Any interested parties can contact the MIIT on their website here to comment on the drafted changes.

Conclusion

There is no indication that a blocking or shutdown will occur of non-.CN and non-.?? domain names or websites hosted outside China. Many of China’s largest firms and government bureaus use websites with .COMs extensions. This is simply a routine re-drafting and re-purposing proposal of outdated laws.

While publications like the New York Times and Wall Street Journal are right to point out changes in the domain name system in China, their analyses are missing the context of more than 10 years of regulatory development and discussion in China’s domain name regulatory environment.

* * *

Case Study: China is in the Business of New Domains

In the past three years, more than a thousand new domain extensions have entered the market worldwide or are in the process of entering the market, and many of them have an interest in registering and resolving their domains in China.

China itself is the home of many tech firms applying for their own “new gTLD” domain extensions, and many Chinese-controlled new gTLDs recently received the new MIIT approvals to use their domain extensions. A recent example from China’s private sector is Sina (China’s largest online social media and Internet portal) which was approved by MIIT to use their domain extensions “.Weibo”, “.Sina” and “.??” only last week. Their NIC.Sina website now has a Chinese ICP (Internet Content Provider) license, indicating that these new gTLDs have received MIIT registration approval.

ICP’s are real-name linked registrations that are required to host websites in China and can only be issued to approved domain registries in China for registrants that own websites.

With Chinese domain name registries now recently receiving MIIT approval, it is anticipated that foreign-owned registry operators will now receive approval in accordance with the MIIT first-come, first served scheme.

* * *

About the authors:

Matt Johnson is Allegravita’s Head of Research, and is a graduate of the London School of Economics, a fluent Mandarin speaker/reader and accomplished China analyst.

Kurt Pritz is Allegravita’s Director of Strategic Planning and Policy. Prior to joining Allegravita as a full partner, he was the Domain Name Association’s founding Executive Director; ICANN’s Chief Strategy Officer, SVP Stakeholder Relations, and VP Business Operations; and Walt Disney Imagineering’s VP Engineering and Production. Kurt is a juris doctorate, an MBA, and a masters of physics. He is admitted to the California bar.

Simon Cousins is Allegravita’s co-founder and CEO, having established the global consultancy in Beijing in 2003. Simon has acted as China strategic lead for 15 domain name registry and numerous domain aftermarket clients since 2013.