The government routinely blocks most Western news sites, and even Sina's Hong Kong and Taiwan sites can't be opened from mainland China. Stanford University's Web site is also often blocked because it includes links to works of an exiled Chinese poet. Last month the government shut down the first dissident Web site and stepped-up efforts to control Web activity, creating an agency to monitor online news. Police in nearly every province are forming special units to patrol the Web. Such announcements have sent a chill through investment and academic communities.
Companies operating Web sites maintain they can make money in spite of political restraints.
Then there are legal hurdles. Since no Internet category exists for required advertising licenses, Web companies have long operated without them, said Howard Chao, a partner in the Shanghai office of law firm O'Melveny and Myers. This gives the government a reason to shut them down, or to block a company's initial public offering. Still, it's doubtful whether such rules would ever be invoked, Chao said. Chinese entry into the World Trade Organization would potentially open the Internet and other markets even more to foreign firms.