Rumors that Google may pull out of China has thrown the state of the Chinese Internet into sharp focus. It says much about the disconnect between the idealism of the Internet pioneers and the reality of how the Internet is utilized in undemocratic states.

During the 1990s, we were told that the Internet was going to single-handedly topple totalitarianism throughout the globe. Regimes would no longer be able to control the free global flow of information to repressed citizens, and knowledge would be power enough to squeeze the dictators out. Everything the optimists said about the Internet is true: unfettered access does have the power to liberalize less than undemocratic public spheres. But it's getting to that free and unfettered version of the Internet that's the problem these days. And the authoritarians -- most notably China and Iran, but others too, like Vietnam -- have been amazingly adept at filtering out what they don't want people to hear. Normally we don't think of business interests in China overlapping with human rights, but in the case of American technology companies, the two camps are, and will continue to be, more closely aligned than we might think. (Read more after the jump)

There was a great op-ed in the Wall Street Journal yesterday arguing that China's Internet censorship amounts to protectionism. That China has been censorsing and even blocking Western media entirely seems unfair from a free trade standpoint (and even makes their attempts to infiltrate the global news media market seem a bit hypocritical). This WSJ editorial notes that when China joined the WTO China agreed to "give unlimited access and equal treatment to foreign-based or foreign owned business in ... online services." And there is even precedent: China recently lost an appeal to the WTO and is now being forced to allow foreign books, movies, and music to be distributed freely (although China has not yet complied with the ruling).

Perhaps China could, depending on interpretation, block media services that receive funding from foreign governments, like the BBC or NPR. But when it comes to for-profit sites such as Facebook, Youtube, and Twitter, all of which have been totally blocked in China for months now, there is no good economic argument to allow for the blocked access. China has the largest population of Internet users in the world, and these companies are being denied access by the Chinese government to what should be one of their greatest opportunities. This drives home the point that the choice between economic and political freedom that China has tried to make is simply impossible in a global economy that is based more and more on information rather than physical goods. China's restrictions on speech, particularly online, is directly causing companies based outside of China to lose money (i.e. protectionism).  (Read more after the jump)

...in China, that is.  According to Facebook's latest statistics as reported by the China Realtime Report (h/t China Digital Times), the website only has 14,000 active users in China - out of China's over 298 million users total.

Facebook's dismal outlook in China is perhaps more of a testiment to the Communist Party's distate for free forums and uncensored status updates than Facebook's inability to capture the imagination of Chinese users -- afterall, in July of this year, Facebook had a million active users in China.  Unlike other notable corporations who willingly impede freedom of speech (Google), or worse, cooperate with the CCP to track and turn over political dissidents (Cisco and Yahoo, respectively), Facebook has apparently taken a higher road.

The price Facebook will pay for not censoring users (at least to the extent the Chinese government would require), is joining the ranks of other popular websites which encourage users to express themselves - politically, personally, or otherwise. That list, compiled by Lost Laowai, follows after the jump: