Is Facebook blocked in China? The South China Morning Post announced on Tuesday, that the Chinese government will seek to lift the ban on Internet access within the Shanghai free-trade zone. This would allow citizens to visit websites such as Facebook Inc (NASDAQ:FB) and Twitter for the first time since their ban in 2009. Since the nature of the views expressed in these websites could prove damaging for the government, many are anxious to see officials actually go through with the milestone proposal.
The Chinese government has been very strict with regards to Internet regulation, blocking and restricting its citizens’ from accessing websites social networks. Deleting posts across the Web has also been a common practice in China, where 560 million people have access to the Internet. Facebook has been held back from penetrating the Chinese market due to the ban imposed in 2009. The lift of the ban, while only allowing the company to operate in the Shanghai free-trade zone, signals the first true entry into the market.
Should Facebook be granted permission to be accessed by the entire population of China, the firm could expand its user base drastically. The Chinese market could allow the company to continue growing, something which is proving increasingly hard for Facebook in current times.
Although the announcement comes as a surprise, and is welcomed by the Internet community, Facebook did not comment on the news. And shareholders should not feel too optimistic about a general change in policy, as the lifted ban only applies to an 18-square-mile area of the Free-trade District. This zone was only established in July 2013, and is one of several special economic areas, where export and international trade are eased by cutting certain restrictions.
According to the report presented in the Morning Post, the lifted ban could apply to the entire Pudong district over the next few years, adding an area of 750 square miles. However, even if Facebook were allowed to operate in this larger area, the social networking giant would have to face competition from already popular Chinese social networks. In the absence of Facebook, websites such as Weibo, Weixin, and Renren.com have grown immensely, to fill the vacuum the government created by installing the ban. Citi analysts were optimistic about the plans, and responded in kind by upgrading Facebook’s rating to “Buy” and pricing it at $55 on Tuesday morning.
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Disclosure: Pablo Erbar holds no position in any stocks mentioned.