China may Allow Foreign Investment in VPN Services

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As part of China’s ongoing efforts to attract foreign investment, the city of Beijing has unveiled its plans to allow overseas firms to invest in VPN services within a trial zone by the end of the year.

Foreign investors will soon be allowed to invest in VPN services though foreign ownership in VPN providers will be capped at 50 percent according to the Beijing Municipal Bureau of Commerce.

The State Council approved the relaxation of its restrictions back in January in an effort “to attract foreign telecom operators to come and provided VPN services for foreign-invested companies in Beijing” according to Beijing Municipal Bureau of Commerce.

Senior emerging Asia economist at AXA Investment Managers, Aidan Yao provided further insight on the new policy to the South China Morning Post, saying:

The long-term implications are China is open for business, and continuing to embrace globalisation and the multipolar world order by further integrating itself into the global system. These latest measures are also significant as they are targeting the services and consumption related industries, which are the engines of future growth.

VPN services

The new policy is part of a three-year plan by the Beijing Municipal Government to open up the service sector after the city’s economy slowed to 6.3 percent during the first half of 2019.

China’s Great Firewall currently blocks access to 135 of the world’s top 1,000 websites and foreign firms must rely on VPN services to get around the country’s restrictions in order to do business.

According to the municipal government, online games as well as video and audio programs will also welcome foreign investment but they will be required to meet Chinese data security standards. However, foreign investment in online news, publishing, audio and video is still technically banned in China.

By opening up investment in VPN services to foreign firms, China may finally be softening its historically hard stance on VPN usage within its borders.