The act of rendering a nontrivial share of non-domestic IP traffic exchange destinations unreachable by all domestic Internet users, except perhaps through illegal methods (i.e., “packet smuggling”) has the general effect of reducing the absolute volume of inbound IP traffic, and by implication the overall ratio—or “balance of trade”—of inbound to outbound traffic flows (note: esp. when the foreign content sources to be blocked are chosen in part precisely because they are “in demand”). Inasmuch as both the absolute volume and the inbound/outbound ratio of traffic exchanged between independently managed IP networks can have major implications for network resource utilization—and more important still, for the direction and level of inter-provider (which in this specific case is synonymous with inter-national)  financial settlements, the unique structure of China’s quite explicitly national network economy, all the way down to the most basic architectural level, renders all arguments about the significance of particular network-centric FDI transactions largely moot. Regardless of whether they succeed and take root or are subsequently yanked to be replanted in a more congenial climate, individual market entry attempts by foreign Internet content and web-based service providers—even high profile ones like Google—will continue to be little more than trees obscuring the much older, and vastly more important (and seemingly impenetrable—few go in, but no one ever comes out intact) forest beyond.

“Protectionism” is just one of several tools that may be employed to the broader end of enhancing state wealth—and hardly the most effective one at that. Regardless, the tactics are less troubling in general than the overall strategic orientation—which has been known (and often associated with other kinds disruptive interstate behavior) for more than two centuries, as “mercantilism.”

China’s recent changes this year regarding who can acquire .cn domain names is all about protectionsim.

Previously, any company or individual could obtain a .cn domain name.  Over 13 million domain names were registered as a result, making .cn the second largest domain namespace after .com.

For any company interested in selling to markets in China, a .cn domain name is a smart first step.  You can market and verify the exisatence of a market before large-scale investments required for a physical presence.

But in january, all that changed.  China now requires companies interested in acquiring a .cn domain name to have a business license from China and a chinese citizen to submit the application.  This has nothing to do with censorship or privacy.  it is simply a way to prevent non-Chinese companies from gaining a foothold in China.  For now, existing registrants are not effected:  time will tell if this will change.

This also means that trademark owners cannot prevent cybersquatting in the .cn domain name.  I talk more about this here: http://www.encirca.com/domain-news/2010/encirca-urges-cnnic-to-allow-trademark-protection-in-china/

In short:  it is an attempt to keep out foreign companies until local companies appear to serve the local market.

I would call this protectionism.

Tom Barrett
President
EnCirca, Inc
http://www.encirca.com

If one starts from the premise that any restriction or impediment that affects commercial activities within any jurisdiction and has asymmetrical impacts on foreign vs. on commercial entities is, ipso facto, protectionism, then of course you are correct. Likewise, if direct involvement or indirect influence of governments on border-traversing commercial affairs is sufficient to declare protectionism, then CNNIC’s status would seem to imply that nothing much has actually changed; a “protected” market which just happened to be marginally less protected for the last few years has simply reverted to its original state.

The problem of course is that such expansive views could probably be used with equal validity to implicate almost any broad market or regulatory change that comes into effect for any/every product or service market in any economy in the world—not very useful if the point of raising the charge is to alert people to an irregularity that merits special attention. In fact, if I remember correctly, in this particular case the relaxation of licensing, commercial presence et al. restrictions that have just been reversed only came into effect in Q1 2003.

Actually, that would date the timing of the original opening back (roughly) to the same broad but brief pro-competitive turn in China’s overall commercial-regulatory strategy for the communications and information industries that produced a wide variety of tragic tales, from the rise (and first/hardest fall) of CNC as a plausible competing long-haul network facilities operator, to the emergence and subsequent disappearance of China’s (small) universe of “neutral” Internet data centers, to the the inauguration of APIX and the establishment of a short-lived domestic Internet access joint-venture between AOLTW and Legend (now Lenovo), etc. etc….

Most/all of these and other artifacts of that brief period had already entered the history books by about 2006 or thereabouts—so in a way the DNS industry has been unusually fortunate to have enjoyed such an extended reprieve…