By PAUL MOZUR
BEIJINGâ€"China is proposing a law that puts more pressure on Internet companies to control and monitor the flow of information online, a sign the government will continue to put a tighter grip on social networks and Web discussions it views as destabilizing.
The new law, a draft of which was released for comment by the government Thursday, requires all the users of blogs, microblogs and Internet forums to use real identification when registering accounts, and allows the government to punish intermediaries for the spread of information it deems illegal. The previous law only forbade the direct spread or creation of illegal content, and was more ambiguous about user identification.
Although the new steps give the government greater legal reach to crack down on Internet users and companies if it is deemed necessary by China's leaders, the law primarily puts the burden of Internet supervision on the Internet companies themselves.
In language added to the law, the government encourages companies to "self-regulate" and "monitor" users and content. Forcing Internet users to use real identification is designed to tone down online discussion that can often veer into the political by making users identifiable byâ€"and accountable toâ€"the government.
In December, the government launched a pilot policy to require users in five cities, including Beijing and Shanghai, to use the real-identity registration. Operators of both major microblogs, Sina Corp. and Tencent Holdings Ltd., have said those restrictions slowed the growth of user numbers on their highly popular Twitter-like services, known as Weibo in Chinese.
The approach is in keeping with moves taken in recent months to regulate more heavily the Internet industry without reverting to more draconian steps, such as closing down popular websites, according to analysts, who said there are gaps between what the law mandates and what may be immediately enforceable.
"It will be difficult to implement [these changes] and it will take time," said David Wolf, chief executive of Wolf Group Asia. "The government is saying this is a long-term goal; you will be expected to comply as an individual and as a company. If you don't comply, you leave the government the opportunity to punish you in the future."
Baidu Inc., Tencent Holding Ltd., Sina Corp., Google Inc. and Alibaba Group declined to comment.
Mr. Wolf added that Beijing is likely to continue to tighten its grip on the media as China moves closer to its leadership transition, which starts later this year.
In recent months, as the country has gone through its biggest political upheaval in years over the downfall of former Chongqing Party Secretary Bo Xilai, the government has moved several times to censure users and websites. But it has stopped short of more heavy-handed measures, like it took in Xinjiang in 2009 when it completely shut down Internet service in the province for six months after ethnic riots.
In March, following Mr. Bo's removal, online rumors of a coup spread globally after reports of military vehicles and plainclothes police in the center of Beijing. In the wake of the rumorsâ€"which were unfoundedâ€"the government announced the arrest of more than 1,000 people for what they called Internet crimes. It also disabled a function for several days that allows users to comment on microblog posts on the country's two most popular Weibo's, run by Sina and Tencent.
Requesting comment on a new draft law doesn't mean it will pass. But analysts say that because the new draft is a revision of a previous law, it will likely become law, though they added that the government takes seriously comment from industry leaders, and language in the current draft could change.
The new law also broadens the government's ability to audit Internet service and access providers and extends the length of time that Internet companies must store records of content created by the company and its users for six months.
Write to Paul Mozur at paul.mozur@dowjones.com
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