China Bans Unauthorized Proxy Services Strictly | Generated by AI

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Question: Is selling proxy services illegal in China, and why don’t Chinese cloud providers like Tencent Cloud and Alibaba Cloud offer them?

Answer:

Is Selling Proxy Services Illegal in China?

Short Answer: Yes, in most meaningful forms — especially selling unauthorized proxy/VPN services is clearly illegal and prosecutable.

China controls internet access through a combination of laws, regulations, and the technological system known as the Great Firewall (officially the “Golden Shield Project”). The key legal instruments are:

1. The 1996 Interim Regulations on International Internet Connections The law states that it is illegal to establish an international communication channel without a permission. It is also illegal to establish or rent an international communication channel (including VPN) for business activities.

2. The 2017 MIIT VPN Regulations In 2017, the Chinese Ministry of Industry and Information Technology (MIIT) implemented regulations requiring all VPN services operating in China to obtain government approval.

3. Criminal Law Act §225(d) — Unlawful Business Operations Providing a type of VPN in a way that severely disrupts the telecommunications market constitutes the offense of unlawful business operations. If a VPN is used to commit illegal activities and is provided to aid and abet the criminal activity, then the VPN provision can fall under aiding and abetting a crime.

What Exactly Is Illegal?

The law distinguishes between selling/providing proxy services versus personally using them:

Unregistered proxy services are prohibited — only government-approved VPNs and proxy services are allowed. Circumventing the Great Firewall is a punishable offense — while individual users are rarely prosecuted, businesses and organizations can face fines or be shut down for providing unauthorized access.

Real Criminal Penalties for Sellers

The government has been more stringent in targeting individuals who provide or sell unauthorized VPN services. Wu Xiangyang was sentenced to five and a half years in prison and fined 500,000 yuan (approximately $76,000) for illegally operating a VPN service. He was found guilty of providing software and hardware to help users bypass internet restrictions without obtaining the necessary licenses.

Another notable case: A programmer named Ma was ordered to pay over 1,058,000 CNY in confiscated unlawful income plus a 200 CNY fine for using an unapproved international connection to provide internet consulting services to a company.

Why Don’t Tencent Cloud, Alibaba Cloud, etc. Offer Proxy Services?

There are several strong reasons why major Chinese cloud providers stay away from this:

1. Legal Prohibition and Licensing The Chinese government has authorized several official licensed VPN providers who comply with Chinese censorship and backdoor access laws. Those who develop or sell their own VPNs potentially face years in prison. Tencent and Alibaba have no incentive to risk their entire businesses for an unauthorized proxy offering.

2. Mandatory Compliance with Cybersecurity Law Tencent Cloud separates its Chinese infrastructure from its international platform, in compliance with China’s cybersecurity regulations. Both Alibaba Cloud and Tencent Cloud operate fully within the boundaries of Chinese law, which means they cannot offer services that bypass the Great Firewall.

3. Logging and Oversight Requirements Companies using legal VPN services must comply with regulations like the Cybersecurity Law, Data Security Law, and Personal Information Protection Law. The Chinese government can inspect data and operations at any time, and network traffic is logged for at least six months. Even the legal, state-approved services come with heavy surveillance obligations — this is by design.

4. Heavy Financial and Operational Risk Organizations which contravene China’s Cybersecurity Law face fines of up to RMB 1 million (around USD $150,000), and individuals can also be issued fines. Companies also face having income confiscated if such income is deemed to have been illegally obtained. In addition, the violator’s website can be shut down or its entire business operation suspended.

5. Only State-Approved Telecom Companies Can Legally Offer VPNs Only government-approved VPNs obtained from state-owned telecommunications companies are legal in China, and these are typically for corporate use only. Private cloud providers like Tencent and Alibaba are not licensed telecom operators in this context, so they simply cannot legally offer such services.

Summary Table

Actor Legal Status Risk
Selling unauthorized proxy/VPN service Illegal Prison + fines
Offering state-approved enterprise VPN Legal (with license) Heavy oversight
Individuals using personal VPN Gray area Rarely prosecuted
Chinese cloud providers offering proxies Prohibited License revocation + fines

In short, selling proxy services in China is a serious legal risk — not just a regulatory gray area. Tencent Cloud, Alibaba Cloud, and similar providers comply with Chinese law precisely because their entire business existence depends on maintaining their operating licenses and government relationships.

References:

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