China sets up agency to tighten grip on Internet

BEIJING Wed May 4, 2011 3:08pm EDT

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BEIJING (Reuters) - China announced a new State Internet Information Office on Wednesday to unify the squabbling agencies that oversee the Chinese Internet, which Beijing views as both a potential gold mine and a political threat.

The State Internet Information Office appears intended to help improve coordination and rivalry among the dozen or more Chinese government ministries and agencies with a stake in the Internet. It will be based in the State Council Information Office, the government's propaganda and information arm.

Chinese authorities have long been worried that the Internet could become a threatening channel for politically unacceptable ideas and images. The government intensified censorship in recent months, fearing online calls for protests inspired by uprisings in the Middle East and North Africa.

China's Internet, with the world's largest number of users -- more than 450 million -- is also a booming industry, attracting investors and government agencies hoping for a stake in online revenues through licensing and regulation. That has bred poor coordination and even open feuding among regulators.

In February, Chinese President Hu Jintao called for stricter government management of the Internet, telling officials they needed to come to grips with the "virtual society" online.

The new Internet office will "guide, coordinate and supervise the relevant agencies in strengthening management of Internet content, taking on responsibility for Internet news tasks and vetting and approval and day-to-day supervision of associated activities," said a notice on the government's website (www.gov.cn).

It will also "help coordinate the agencies in planning and implementation for cultural development on the Internet," said the notice. The new office will have a hand in controlling web games, television and publishing.

The announcement left unclear how much formal authority the new office would exercise over other ministries and agencies, including the Ministry of Industry and Information Technology.

Senior staff who will work concurrently at the office while keeping other posts will include its boss Wang Chen, also the director of the State Council Information Office, and Zhang Xinfeng, a Vice Minister of Public Security.

The new office will also have a role in registering domain names and websites and distributing IP addresses.

Chinese Internet companies such as Baidu Inc and Youku have seen their stocks climb more than 50 percent this year as U.S. investors bet on Chinese Internet growth.

Renren Inc, one of China's largest social networks, priced at the top of the expected range for an initial public offering, an underwriter said on Wednesday.

(Reporting by Chris Buckley)

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