Shulou(Shulou.com)06/01 Report--

This article is reproduced from the official account "IPv6 Toutiao" (ID:IPv6TT) on Wechat, by Zhao Subo.

Lao Zhao and next door Lao Wang (Wang Haitao) co-wrote an article, which was published in the supplement of Electrical & Intelligent Building magazine. The article was written in a hurry, and there have been some new thoughts and gains in the past few days, so I have added a little bit of content and re-posted it on the official account.

Recently, some articles have talked nonsense about the abolition of Internet neutrality in the United States, especially the speech made by a professor, dean of the School of Economics of a university in Jilin Province, which has been forwarded by many official accounts. Among them, the argument about the impact of the abolition of net neutrality by the United States on China is complete nonsense. An expert can only be an expert in his own field, but he may become an expert in another field. As the saying goes, it is better to hide your foolishness than to show your cleverness.

I. FCC of the United States abolishes the rule of net neutrality

On December 14, 2017, the Federal Communications Commission (FCC) voted 3:2 to repeal the rule on net neutrality in the Open Internet Act (Open Internet Order) passed in 2015. The abolition of the principle of net neutrality (Net Neutrality) by the Federal Communications Commission (FCC) came into effect on June 11th, 2018. This means that the principle of cyber neutrality established during the tenure of former US President Barack Obama has completely come to an end.

Network neutrality (Netneutrality), also known as Internet neutrality (Internet neutrality), was proposed by Tim Wu, a professor of media law at Columbia University, in 2003 as an extension of the concept of a long-standing public transport operator. Network neutrality is a principle that requires that all Internet traffic should be treated equally, and that ISPs should treat all data on the Internet equally, indiscriminately or charge differently according to different users, content, websites, platforms, applications, access device types or communication modes.

Internet services are mainly provided by two kinds of enterprises, the first is Internet service providers (ISP), mainly telecommunications companies and broadband network companies, mainly through the laying of communication transmission networks, mobile 4G networks, public WIFI networks, etc., to provide Internet broadband access services for government, enterprises and household users. The second is the Internet content and Application Service provider (ICP), which provides Internet content information services and application technical services for users by building websites, providing APP applications, providing cloud computing service platforms and so on. Before the passage of the Open Internet Act in 2015, there were many conflicts between US Internet content service companies and telecom operators. For example, in order to solve the problem of slower and slower video transmission over Comcast, Netflix and Comcast reached an agreement to improve the quality of Netflix video-on-demand service in the first quarter of 2014. After the agreement, the rate of Netflix video-on-demand increased by 66%.

FCC abolishes the principle of network neutrality, which means that American telecom operators can treat different Internet content service providers ICP differently in the future. ICP may be forced to pay more for bandwidth and speed, and telecom operators will have the right to give priority to bandwidth and speed for their own ICP content, squeezing competitors in disguise. Proponents of network neutrality argue that allowing telecom operators to charge extra to ensure network quality or speed up transmission will create an exploitative business model in which ISP could block competitors' websites and services. After the abolition of "net neutrality" by FCC, Netflix, a US company, is seen as the biggest loser because Netflix and Youtube account for about 70 per cent of total US network traffic.

From an international perspective, since the United States is the global science and technology center and the Internet control center (the global domain name management and IP address allocation management agencies are located in the United States), the United States abolishes the principle of network neutrality. If unfair unilateral Internet regulation measures are implemented, it is true that other countries will bring great risks. However, abolishing the principle of network neutrality is not shutting down the Internet, and these two points should not be confused, let alone random causal grafting.

II. Sino-US Trade encounters the US principle of reciprocal Trade

China's GDP has maintained sustained and rapid growth over the past 30 years and has become the second largest economy in the world. Communist Party of China put forward the strategic goal of "building a powerful socialist country and realizing the great rejuvenation of the Chinese nation" and the "made in China 2025" development plan, which made the United States realize that China's great-leap-forward development will greatly change the world industrial structure and bring direct challenges to the global leadership of the United States. as a result, the United States strategically repositioned China as a world-class competitor and began to contain China's development in an all-round way. The sanctions against ZTE in 2018 and the outbreak of the Sino-US trade war are the specific means for the United States to contain China.

The Trump administration has always stressed the principle of "reciprocity" for the future development of Sino-US trade relations. During the first round of the China-US Economic Dialogue on July 19, 2017, "equivalent reciprocity" became a high-frequency word for US representatives. At the opening of the dialogue meeting, U.S. Treasury Secretary Mnuchin said that a reciprocal relationship means "the same access for American companies in China as we provide Chinese companies in the United States."

During the second Sino-US trade negotiations on May 2, 2018, the US delegation put forward a total of seven demands, the second of which required China to stop 2025 subsidies and government support for made in China. Stop government-funded theft of intellectual property rights and other confidential information. In the end, no agreement was reached between the two sides in the trade negotiations.

No settlement agreement was reached in the third round of Sino-US trade negotiations on June 2, 2018. On June 15, 2018, US President Donald Trump announced a 25 per cent tariff on Chinese products worth 50 billion US dollars. The Office of the United States Trade Representative (USTR) released a tax list on June 15, totaling 1102 goods, mainly products that could benefit from the "made in China 2025" industrial policy, including aerospace, information technology, industrial equipment, robotics, new materials and automobiles. The tariff Commission of the State Council of China announced on June 16th that it would impose 25 per cent tariffs on 659 imports of about US $50 billion originating in the United States. On June 18, US President Donald Trump again announced that he would impose a 10 per cent tariff on $200 billion worth of Chinese imports, adding: "if China imposes tariffs on US exports again, the US will expand the tax range by another $200 billion."

At the 2018 World Economic Forum in Davos, Trump expressed support for free trade, but proposed the need for "fairness" and "but it needs to be FAIR and RECIPROCAL" (We support free trade, but it needs to be FAIR and RECIPROCAL). Countries are required to provide the same competitive environment, adopt the same tariff level, and implement the same market opening.

III. The great attraction of China's Internet market

In the field of the Internet, the United States dominates the world, but China is catching up fast.

In May 2018, "Internet Queen" Mary Mikel publicly released the 2018 "Internet Trends" report, pointing out that the top 20 companies in the world's Internet are from China and the United States, among which there are 11 companies in the United States, including Apple, Amazon, Microsoft, Google, Facebook, Netflix, eBay, Uber and Airbnb. There are nine companies in China, including Alibaba, Tencent, Ant Financial Services Group, Baidu, Xiaomi, Didi, JD.com, Meituan Dianping and Jinri Toutiao. The total market capitalization of 11 US companies is $4.32 trillion, while that of nine Chinese companies is $1.47 trillion, a heavyweight comparison of close to 3:1. The average market capitalization of US companies on the list is 390 billion US dollars, while that of Chinese companies is 160 billion US dollars. The comparison between the two is close to 5:2.

Mary Meeker reported that there are only two players in the world Internet situation: China and the United States. In the next five to 10 years, global Internet leadership will change dramatically.

Mary Meeker reported that the number of mobile Internet users in China is growing rapidly, with more than 600 million people. China's online entertainment and shared travel have entered a golden era, mobile payment is booming, and application scenarios are becoming more and more widespread. The innovation and growth of e-commerce and online advertising is remarkable. China has become the world's largest online game market, and Chinese netizens are increasingly willing to pay for online games, live streaming, online video and other content services.

The rapid growth of China's Internet market has given birth to a number of innovative Internet companies, such as Ali, Tencent, Baidu, JD.com, Xiaomi and so on. With the growth of the scale of Chinese Internet users, the growth of users' spending power, and the increasing maturity of Internet payment business, China's Internet market has become large enough and has become more and more attractive to international Internet giants.

On April 22, 2018, at the first Digital China Construction Summit held in Fuzhou, the State Internet Information Office released the Digital China Construction Development report (2017). According to the report, China's digital economy is booming. In 2017, the scale of China's digital economy reached 27.2 trillion yuan, an increase of 20.3 percent over the same period last year, accounting for 32.9 percent of GDP. In 2017, China's information consumption increased to 4.5 trillion yuan, an increase of 15.4% over the same period last year, which is about twice the growth rate of final consumption in the same period and accounts for 10% of final consumption. Mobile payment gradually realizes the consumption of the whole scene, and the transaction scale of mobile payment exceeds 200 trillion yuan, ranking first in the world.

In the face of such an exciting set of figures, how can the Internet giant enterprises not be moved?

IV. The impact of the abolition of net neutrality and reciprocal trade principles by the United States on China's Internet

1. The openness of China's Internet market is not high.

In the research report "Progress Evaluation and change Prospect of China's opening up to the outside World-- A Series of Studies on Sino-US Trade War", Ren Zeping, dean of Evergrande Research Institute, pointed out that the current openness of China's sub-industries can be divided into four categories: first, foreign investment is prohibited, such as Internet information, news broadcasting, military industry and other industries; second, foreign investment is restricted and the proportion of foreign equity is restricted, such as automobile, finance, telecommunications, energy, power industry. Third, there are fewer restrictions on foreign investment, such as the medical and steel industries; fourth, the degree of opening up to the outside world is high, the market is fully competitive, and the main participants are diversified, such as the tourism industry.

The Foreign Investment Industry guidance Catalog stipulates that foreign investors are prohibited from investing in Internet news and information services, network publishing services, network audio-visual program services, Internet cultural operations (except music), Internet public information services, and other industries. In addition, there are hidden barriers to foreign investment in the direct Internet industry. The new Cyber Security Law, which came into force in June 2017, stipulates that personal information and "important data" collected and generated during operations in China should be stored in China, and if they need to be transmitted abroad, security assessment shall be conducted in accordance with the measures formulated by the competent authorities.

2. The United States may use the principle of reciprocal trade to require China to open up its Internet market.

For the future trend of Sino-US trade relations, it can be predicted that the United States will continue to demand the implementation of the principle of reciprocal trade and require China to revise its trade and industrial policies. China may be required to expand the opening up of the Internet service market and allow American Internet content service providers, cloud computing service providers and big data enterprises to enter the Chinese market to provide services.

China's huge group of mobile Internet users, mature mobile payment technology, and consumers' habit of paying for content have gradually formed a mature and rapidly growing mobile Internet market. American Internet game, music and entertainment service companies look at China's massive consumers and huge market demand but cannot make money through the glass door, which is a huge loss from a commercial point of view. Getting on the fast train of the development of China's digital economy and sharing the dividend of China's mobile Internet development may become one of the core demands of the United States for the next step of China's trade negotiations.

3. Abolishing cyber neutrality may become a card for the United States to curb made in China 2025.

The Federal Communications Commission (FCC) formally abolished the network neutrality rules and loosened the shackles on telecom operators. Telecom operators can adopt differentiated services without limitation, but they are not responsible.

For ICP websites outside the United States, American telecom operators can also take technical measures to selectively restrict or close some websites, especially those involving politics, religion, culture, finance, ideology and so on, resulting in network congestion, high delay and high packet loss. In fact, they can not visit normally, thus achieving the effect of blocking access to some specific websites. Because net neutrality is abolished, ISP in the United States can be exempted from liability. In the future, some Chinese websites may be quietly subject to such restrictions, but some negative websites may be visited normally, or even paid for acceleration and optimization.

Since curbing made in China 2025 is a key goal of the United States, after abolishing the net neutrality rules, the United States can use various network technology means to degrade Chinese IP addresses to access American science and technology websites, university websites, academic journal databases and other science and technology information websites, so as to prevent Chinese scientists and technicians from querying the world's latest scientific and technological information and scientific research achievements from the Internet. From another point of view, we quietly intercept the world's advanced scientific and technological information needed for 2025 made in China. This is the real biggest risk to China from abolishing net neutrality rules.

American scholar Huntington once predicted today's trade conflict between China and the United States. In the preface to the Chinese version of the clash of Civilizations, it is written: "if China's economy continues to develop at its current rate in the next 10 or 20 years, then China will be able to rebuild its hegemonic position in East Asia before 1842. Future world peace depends to a large extent on the ability of the leaders of China and the United States to coordinate the respective interests of the two countries and to prevent tensions from escalating into more violent conflicts or even violent conflicts, and these tensions and confrontations will inevitably exist.

Made in China 2025, the great rejuvenation of the Chinese nation and the vision of building a socialist power are in serious conflict with Trump's national strategy of "making America great again". The boss will never sit by and watch the second overtake him as the new boss, so China and the United States will inevitably enter the struggle for leadership change in the world, and the Thucydides trap cannot be avoided.

The strength of a country does not depend on GDP water injection, but on its own sustainable scientific research and innovation ability and industrial manufacturing capacity. Although abolishing the net neutrality rule is an internal affair of the United States, it may become a means for the United States to defend global leadership and obstruct China's access to advanced scientific and technological information of the United States and the world from the Internet. With regard to the abolition of the principle of network neutrality by the Federal Communications Commission (FCC), it is more accurate to interpret it from the perspective of interest analysis based on the macro background, rather than pretending to understand and misleading students and ordinary people.

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