The Chinese government's censorship of the internet and text messaging is starting to hurt the development of its own internet businesses, according to the CEO of Tencent, China's most successful internet company.
Reporting record earnings for 2009, Tencent president Martin Lau warned that the regulatory environment might have a negative impact on future earnings, the Financial Times reported.
Tencent also complained about the Chinese government's surprise decision to stop mobile operators from letting customers buy goods on their mobile accounts. This had and would continue to hurt sales, it said.
"The operating environment is getting more challenging," Lau said.
Lau's warning came as the Chinese government increased pressure on Google to conform to its rules on censorship.
Google is believed to be weighing a decision to quit the country and close its Chinese language search engine. This follows the discovery earlier this year of hacking attacks from Chinese sources against Google Mail accounts.
Lau called for the government, mobile network operator China Mobile, and the rest of the industry to work together to set up a way to weed out "bad content" without harming the development of the internet in China.
Shenzhen-based Tencent has a market capitalisation of $40bn, making it the world's third-largest internet company, behind Google and Amazon.
Tencent, which has more than 500 million customers, runs an instant messaging service, social networks and online games. Its mobile services business contributes 17% of sales.