Hong Kong and China have always shared a common interest in the Internet but since Hong Kong was returned to the Chinese in 1997, the two have been subject to a "one country, two systems" policy, designed by the late Deng Xiaoping. Under this system, Hong Kong and China have taken very different routes in terms of regulating the Internet. Hong Kong's progress has been remarkable and it has even overtaken the US legislation-wise with the passing of an Electronic Transactions Ordinance, which recognized the validity of contracts formed online and which has at its core principles such as freedom of contract and economic liberty.

Meanwhile China has been slow to bring in e-commerce laws, instead choosing to place a multitude of restrictions on the Internet, much as one would expect from a communist regime. China forbids foreign ownership of Chinese Internet content providers, and China-based Internet firms such as Nasdaq-listed Sina.com have had to resort to complex ownership structures such as registration offshore, in order to go public.

The vote over China's accession to the WTO has brought to the fore once more the obvious divisions between the Internet in China and in Hong Kong.

Those in the Internet business do view it as a positive step but naturally they wonder just how far China will go.

David Kim, managing director with techpacific.com, a Hong-Kong based Internet investment bank and incubator with a stake in Chinese Internet portal Netease.com said 'Overall, it's certainly a positive thing. How positive it is remains to be seen, depending on how it is executed throughout the country. With the Chinese government, actions speak louder than words'. Confirming that Internet rules in China will be clarified through WTO accession, he added 'but what's actually in writing and what's actually in practice are separate issues'.

It is hoped that Hong Kong and China will bring their regulations into line with one another, but if they continue to adopt different e-commerce laws, the lack of harmonisation is likely to hamper the effective conduct of e-commerce between the two, and even with other countries, given the cross-border nature of the Internet.

The situation will not be an easy one to resolve, as harmonisation would entail choosing either Hong Kong's standards and laws over China's or vice versa. Taking the Hong Kong approach might be seen by China as at threat to its national security whilst a move towards the Chinese standpoint could and almost certainly would curtail the economic freedom that Hong Kong has been enjoying.