China opens VPN services to foreign investment in Beijing

The municipal government of Beijing has won the green light from China’s cabinet to allow up to 50 per cent of foreign ownership in virtual private network (VPN) services, widely used by multinational corporations operating in the country to skirt the Great Firewall and connect to overseas servers.

The policy update, announced by the State Council on Monday, also lifted the foreign investment caps on information services for app stores at the Zhongguancun Science Park, known as Beijing’s Silicon Valley, as well as internet connection services in designated pilot zones. Overseas investors were previously barred from owning more than half of any joint ventures in these sectors.

China plans to open up VPN services in Beijing to foreign investment

The relaxations come at a time when China has been tightening control over various industries, including data, education and content.

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LinkedIn, the last major US social media network in China, announced last week that it is shutting down its operations in the country and replacing it with a China-only service without a social feed or the ability to share posts or articles.

While the Chinese government permits companies to seek special approvals to use VPNs to access foreign websites blocked in China, such as Google, Facebook and most major international news platforms, authorities have also been stepping up efforts to clamp down on providers offering VPN services without permission.

Individuals have been punished for using unauthorised VPN apps to surpass the country’s strict internet censorship.

Monday’s policy amendment includes eight directives aimed at boosting Beijing’s various service industries, including technology, entertainment and education.

In the Beijing district of Tongzhou, where the recently opened Universal Studios theme park is located, foreign investors are now permitted to participate in joint ownership of performing arts groups, although Chinese investors must own a majority stake.

Foreign businesses are encouraged to invest in adult education and vocational training in Beijing, with specific policies to be enacted by the municipal government. Foreign investors are also authorised to set up travel agencies to organise tours overseas, except to Taiwan, and can make donations to non-profit nursing homes in Beijing.

The amendment, with immediate effect, may be adjusted in due course according to how the pilot scheme proceeds, said the State Council.

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