The paper starts with an overview of the landscape of the Chinese Internet industry, followed by a review of the developmental trajectories of three important search companies in China - Baidu, Google, and Jike (the national search engine), whose stories are illustrative of the experiences of domestic, foreign and state Internet firms operating in China. The paper then outlines the Chinese government's regulatory policies towards the Internet industry, which it is argued have undergone three stages: liberalization, regulation, and state capitalism.

It is recognized that the great prospect of the Chinese Internet is shadowed by, and often overshadowed by, the government's insistence on weaving a China Wide Web. Domestic and foreign Internet companies are invariably used, or restricted, for social control as the government painstakingly transplants its ideology into cyberspace. Such practice is not only morally degrading but also unsustainable in the long run. An assessment of Chinese government policy toward Internet firms operating in China is not merely an academic exercise; it raises ethical and policy concerns for foreign governments, international organizations, and investor communities in China's expanding Internet market.