US says China's Internet censorship a burden for businesses: Report

BEIJING (Reuters) - The United States has labelled China's Internet censorship a trade barrier in a report for the first time since 2013, saying worsening online restrictions are damaging the business of US companies.

Since Mr Xi Jinping became China's president that year, the US had not listed China's so-called Great Firewall as a trade impediment despite widespread outcry that the online blocks limit access to crucial information, e-mail and search services such as those found on Google's platform.

"Outright blocking of websites appears to have worsened over the past year, with eight of the top 25 most trafficked global sites now blocked in China," the US Trade Representative (USTR) wrote in its annual report on foreign trader barriers.

"Over the past decade, China's filtering of cross-border internet traffic has posed a significant burden to foreign suppliers, hurting both internet sites themselves, and users who often depend on them for their business," the USTR said in the report, released last week.

The move could push the issue beyond a sticking point in bilateral ties over human rights and security, though with a litany of trade disputes already on the table, the degree to which it will feature in talks remains to be seen.

China has long operated the world's most sophisticated online censorship mechanism known as the Great Firewall.

The websites for Google's services, Facebook and Twitter are all inaccessible in China. Officials say web controls help maintain social stability and national security in the face of threats such as terrorism.

Under Mr Xi, the government has implemented an unprecedented tightening of internet controls, and sought to codify the policy within the law.

According to data from the anti-censorship group GreatFire.org, almost a quarter of the hundreds of thousands of web pages, domains, encrypted sites, online searches and IP addresses that it monitors in China were blocked as of early April.

That was up from 14 per cent at the time Mr Xi assumed the presidency.

Chinese Foreign Ministry spokesman Hong Lei told a regular briefing on Friday that a country's independent choice for internet governance should be respected. "China's internet is vigorously expanding and providing vast space for companies from other countries to grow," Mr Hong said."China's policy to attract foreign investment will not change."

The Cyberspace Administration of China did not immediately respond to faxed questions, while the Ministry of Commerce declined to comment.

Foreign business lobbies have long complained that Chinese internet restrictions go beyond inconvenience and actually limit business competitiveness.

The American Chamber of Commerce in China said in its most recent report on China's business environment that its members faced "severe challenges competing in China's telecommunications and Internet sectors due to investment restrictions, security controls and a range of protectionist measures".

The lobby's 2016 business climate survey showed 79 per cent of its members reported a negative impact on business due to internet censorship.

The USTR report said much of what China blocked online did not seem to fall within the realm of what was necessary to maintain social stability and national security.

"Much of the blocking appears arbitrary. For example, a major home improvement site in the United States, which would appear wholly innocuous, is typical of sites likely swept up by the Great Firewall," it said.