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UNCLAS SECTION 01 OF 03 SHENYANG 000010 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EAP/CM, INR 
 
E.O. 12958: N/A 
TAGS: CH EINT PGOV PHUM SOCI TINT
SUBJECT: INTERNET FREEDOM IN CHINA:BIG BROTHER HAS RETURNED 
TO LIAONING 
 
REF: A. 03 SHENYANG 00626 
     ¶B. BEIJING 183 
 
 ¶1. (SBU) SUMMARY.  New regulations have been put in place 
requiring strict identification of internet users and the 
installation of software allowing real-time monitoring of 
internet users and remote control of computers in all 
internet cafes in Liaoning Province. In order to implement 
these regulations, Liaoning has become the first province to 
successfully bring nearly all net cafes into a franchise 
system in which four state-owned companies now control 80 
percent of the total number of cafes. The increased 
monitoring and lack of a legal framework to protect personal 
information means that cafe patrons -- generally younger men, 
rural residents, and less wealthy netizens -- have less 
privacy than ever. No details are available, but punishment 
of the cafe owners and any users who violate the regulations 
is to be carried out by the Public Security Bureau.  Local 
site visits suggest that cafe workers are largely unaware of 
the franchising trend but that the new identification and 
software systems are strictly in use. PolOff and local Amcits 
were refused access because they have no national ID card. 
Officials in Guangdong have reportedly expressed interest in 
the Liaoning model, which the central government has praised. 
END SUMMARY 
 
How it works 
------------ 
¶2. (SBU) According to regulations implemented over the past 
year or so, internet cafes in Liaoning are now required to 
install systems to allow: 1) rigorous verification of 
personal identities; 2) real-time monitoring  ("Farsighted 
Eyes" software) of internet activity; 3) remote control of 
computers (the "Liaoning Web Culture Monitoring Platform"); 
and the blocking of pornography and gambling websites. The 
system is set up so that when a user enters a cafe, their ID 
card is placed in a card-reader and a picture of the ID and 
information about the individual appears on a cafe worker's 
computer screen, allowing easy verification of the user's 
identity. Internet usage is monitored at near real-time by 
the local Cultural Administration Department. According to a 
report on China Central Television (CCTV), the local Cultural 
Administration authorities also monitor images from cameras 
that are placed around the cafe.  The images are refreshed 
every ten to fifteen minutes, so if the authorities see 
anyone suspicious, they can activate a camera embedded in 
that person's computer screen to further verify the user's 
identity. The authorities can also cut the internet 
connection. Users who log onto illegal websites are flagged 
and can be monitored real-time. Violations can also be 
reported via a new "12318" hotline. If the Cultural 
Administration authorities become aware of a violation, the 
cafe is ordered to take action. If no action is taken or 
further action is necessary, the Public Security Bureau (PSB) 
is called. Local PSB contacts verified they are responsible 
for punishing both cafe staff and individual users but did 
not elaborate as to the nature of the punishment or the 
frequency of violations. 
 
If at First You Don't Succeed... 
-------------------------------- 
¶3. (SBU) With these new rules in place, the provincial 
government has sought to bring uniformity to internet cafes 
to ensure better policy implementation. In late 2009, the 
Liaoning Bureau of Cultural Affairs, the Propaganda 
Department of the Liaoning Party Committee, and the Liaoning 
Business Administration Bureau called for independent 
internet cafes to join franchises and banned the issuance of 
new licenses to independent internet cafes. As an incentive, 
internet-service providers were required to reduce internet 
usage costs for all such chains by 30 percent; China Unicom, 
China Net, and China Mobile were required to provide chains 
with value-added services; and all chained cafes were given 
licenses to sell audio and video products as well as food and 
beverages. According to press reports, the call for internet 
franchising has been a success. The number of internet cafes 
fell from 8,094 at the end of 2008 to 7,413 cafes at the end 
of 2009. At the same time, the percent of cafes under a 
franchise agreement grew from less than 10 percent to more 
than 99 percent. There are now eight franchising companies, 
of which four state-owned companies control 80 percent of the 
province's internet cafes. Although our efforts to meet with 
the Liaoning Bureau of Cultural Affairs have so far been 
unsuccessful, the press reported that the central 
government's opinion that "Liaoning's experience in 
 
SHENYANG 00000010  002 OF 003 
 
 
franchising of Internet cafes is worth summarizing and 
promoting."  Wang Yequn, Vice Inspector of Guangdong Bureau 
of Culture, has also said he is interested in replicating 
Liaoning's model. 
 
¶4. (SBU) Liaoning's apparent success at franchising its 
internet cafes follows repeated attempts at national and 
provincial levels to implement franchising policies. The 
Ministry of Culture's first attempt to link internet cafes 
in 2003, with its "Notice to Enhance Administration of Chains 
of Internet Services," failed to have any real effect. In 
2006, however, the ministry issued its "Plan to Upgrade 
Digital Content Amongst Internet Cafes."  The 2006 plan bears 
a strong resemblance to Liaoning's current plan. Initially 
implemented in Beijing and aimed at making franchises more 
competitive with independent internet cafes, it gave chains 
access to lower prices from hardware and software producers 
and hardware wholesalers. It too failed, however, and in 
2006, China Unicom and Tie Tong, two state-owned enterprises, 
were forced to close thousands of cafes they had franchised. 
Independent cafes remained more profitable than chains due to 
their greater ability to ignore rules regulating internet 
cafes originally set forth by the Ministry of Culture in 
"Regulations on the Administration of Business Sites of 
Internet Access Services" in 2002 (REF A). 
 
We Hear the Cries of the Parents 
-------------------------------- 
¶5. (SBU) According to an announcement from the Liaoning 
Bureau of Cultural Affairs in September, the leading factor 
in driving efforts to exert greater control over internet 
cafes was the demand by parents seeking to improve the moral 
values of their children.  The announcement said it had four 
primary objectives to improve the moral standing of Chinese 
youth. First, the remote control of computers ensures that 
cafes can be closed at midnight and that internet connections 
can be cut if anyone flouts the regulation.  Second, the 
standardized identification systems ensure that the 
authorities know the person using the internet and that the 
given identity is real. Third, the anti-pornography and 
anti-gambling software ensures that users are not being 
corrupted.  Finally, the real-time monitoring ensures that if 
a user is looking for or at something that is "unhealthy," 
officials can be made aware of this and appropriate action 
can be taken. 
 
Propaganda vs. Reality 
----------------------------- 
¶6. (SBU) In a report released by the Liaoning Bureau of 
Cultural Affairs from "Liaoning Province Convenes the 
Internet Cafe Special Administration and Promotion of 
Franchising Integration Meeting," Bureau of Cultural Affairs 
chief Guo Xingwen stressed the need for increased publicity 
and propaganda to create positive public opinion towards the 
new regulations.  As a result, reports on both Xinhua News 
and CCTV have hailed the program a success. Our visits to 
local internet cafes and discussions with contacts suggest 
that while the reality is not quite as reported, anonymous 
and unmonitored web usage in Shenyang's internet cafes is 
disappearing.  PolOff and two locally employed staff (LES) 
visited several internet cafes and were required to show 
identification at each cafe visited.  Because PolOff's 
Foreign Affairs Office (FAO) ID card did not register with 
the scanners, however, he was unable to use a terminal. In 
response to a query from PolOff, one clerk said she was 
unaware of the move towards franchising. When asked about 
closing times, the same clerk stated her cafe was open 24 
hours a day, suggesting it was an independent cafe and that 
strict enforcement had not yet taken root. (NOTE: In a sneak 
preview of what may be a better test of policy implementation 
over the next year, the clerk smoked a cigarette despite a 
large no-smoking sign facing her desk and a recent 
announcement that Liaoning is one of five selected trial 
provinces to implement bans on smoking in public places. END 
NOTE) An Amcit guest at ConGen Shenyang's "watch party" for 
the Secretary's Speech on Internet Freedom reported being 
turned away from three cafes but paying a small bribe to get 
into a fourth (REF B). A few days later, the same Amcit 
reported being turned away again from multiple other cafes 
and being told at one cafe that it was for "Chinese only." 
 
¶7. (SBU) Consulate LES reported they had to show ID cards in 
every cafe they approached, even those where they were 
previously not required to do so. Our staff also confirmed 
that the "Farsighted Eyes" real-time monitoring software and 
 
SHENYANG 00000010  003 OF 003 
 
 
"Liaoning Web Culture Monitoring Platform" were in place at 
all the cafes visited.  However, none of the cafe staff could 
tell us the origin or the cost of the software. A 
representative of Liaoning Green Cloud, Ltd., one of the 
eight franchise companies, responding to queries from our 
LES, said it costs RMB 80,000 for an individual cafe to 
purchase the ID-verification system, the monitoring software, 
and the anti-pornography and anti-gambling software.  For an 
additional fee, his company could also arrange business and 
fire-department licenses.  Alternatively, licenses could be 
purchased directly from the local Cultural Administration 
Department. One of our LES investigators reported that the 
cafe staff members were noticeably uncomfortable when asked 
about the new software.  Efforts to access the properties of 
"Liaoning Web Culture Monitoring Platform" were 
unsuccessful, as access requires authorization and a password. 
 
¶8. (SBU) One LES contact who owns an independent internet 
cafe said his good personal relationship ('guanxi') with the 
Bureau of Cultural Affairs and internet service providers has 
resulted in prices that are competitive with those of the 
dominant franchisees, thus enabling him to remain 
independent. With the ban on licenses to new independent 
cafes, difficulties in transferring existing licenses, and 
dissolution of licenses upon the owner's death, our contact 
said the independents will soon disappear.  While refusing to 
divulge the cost of the software, the contact said it must be 
installed in all cafes and that it is already in use in his 
cafe. He concluded that, with these systems in place, the 
Bureau of Cultural Affairs now has the ability to monitor the 
activity of every internet cafe user in Liaoning Province. 
 
Who's Affected? 
--------- 
¶9. (SBU) Estimates of how many Liaoning residents rely on 
internet cafes for their primary access to the web remain 
difficult to pinpoint. However, the number likely surpasses two million 
The director of the state-owned Northeast Network, once the 
home page of all provincial internet cafe computers, 
suggested that there were now 7.1 million internet users in 
Liaoning, with perhaps a third of those relying on cafes. 
(If one applies the national average for internet usage -- 
about 28 percent of the population or 360 million people -- 
the actual count could be closer to 12 million users in 
Liaoning and proportionally higher number relying on cafes.) 
The director suggested the majority of those using cafes were 
younger, less affluent males in urban centers and smaller 
cities or rural residents lacking home access. The cafes 
visted by Congenoffs were all one-half to three-quarters full 
late in the morning.  The users were primarily males in their 
late teens to mid-twenties.  Primary activities included 
gaming, chatting, and surfing.  Some student guests at the 
"watch party" said they occasionally use cafes even though they 
have internet access at home and at school.  They did not 
appear to be aware of the new monitoring capabilities, though 
many were aware of new identification systems and said that 
it was no longer possible to be anonymous in internet cafes 
(REF B). 
 
WICKMAN