European business group slams China's Internet controls

BEIJING (Reuters) - China's Internet curbs are isolating it from the world and having a "highly detrimental" impact on business, a European lobby said on Thursday, in an unusually strong statement by a foreign business chamber. With a population of 1.4 billion and 632 million people online, China offers a crucial market for multinational firms. But it also has the world's most sophisticated online censorship system, known abroad as the Great Firewall. The government has increased online restrictions since President Xi Jinping took office in 2013, and critics say a recent acceleration of the crackdown has further limited free speech in the one-party Communist state. The European Union Chamber of Commerce in China said 86 percent of respondents in a survey of its members reported a "negative effect on their business as a result of certain websites and online tools being blocked". This is an increase of 15 percentage points since June 2014. The Chamber said 13 percent of respondents had deferred R&D investment or were unwilling to set up such operations in China since Internet curbs were tightened at the beginning of 2015. "These worrying trends illustrate how excessive tightening of Internet controls can choke business growth and stifle investment in technology and research and development," said Chamber President Joerg Wuttke. "It is therefore hugely dispiriting to see numerous member companies actively scaling back investment and expansion, and diverting their spending to other markets." The controls were discouraging foreign talent from moving to China and frustrating Chinese public and private sector companies, Wuttke added. The Chamber's findings mirror those of the American Chamber of Commerce in China, which said on Wednesday that 83 percent of its members were hampered by Internet censorship or delayed Internet speeds. China welcomes foreign companies and would not be so successful at attracting foreign investment if it did not have a good investment environment, said Hua Chunying, a Foreign Ministry spokeswoman. "As long as foreign companies operating in China respect Chinese law, don't harm its national security or the interests of consumers, then China will protect their legitimate rights," she told a regular news briefing. The top Internet regulator, the Cyberspace Administration of China, did not respond to a request for comment. China blocks many foreign websites, such as Google, Twitter, Facebook, YouTube, Instagram and Snapchat, besides some human rights groups and foreign media agencies. Chinese officials say strict controls help maintain social stability, but have also suggested they provide a good framework to nurture domestic Internet firms. (Reporting by Michael Martina and Ben Blanchard; Editing by Clarence Fernandez)