"We're politically safe," Zhou, managing director of IDG Technology Venture Investment, told Reuters in an interview.

China has declared repeatedly since September that the rules bar foreign investment in Internet service and content providers.

It has vowed to clarify those rules before the end of the year to wipe out grey areas, putting scores of Internet start-ups at risk.

The way China defines content providers will be crucial in determining which companies are affected, investors say.

Zhou said IDG would remain sheltered from the flap because it channels most investments into Chinese web sites focusing on e-commerce, a service he said fell outside official definitions of "content providers".

IDG has poured risk capital into about 25 web sites in China, most of which emphasise e-commerce, he said.

The sites include 8848.net, which sells consumer electronics and other goods, and Dangdang.com, an online bookstore. Both sites are eyeing overseas listings next year, he said.

"Those sites are not involved with providing content or Internet service," he said. "They're providing a business service."

Foreign investors plod ahead.

While it remains unclear how Beijing will define content provision, IDG illustrates how many foreign investors are plodding ahead, confident that the elastic nature of the Internet will allow them to adapt to new rules."You should look at the big picture," Zhou said. "China needs money and management knowledge."

As the government devises new regulations for the sector," companies will adjust to the new rules accordingly", he said, weaving his hand through imaginary obstacles.

If web sites fail, "it's on the business model, not because of politics", he said.

Many investors and Internet companies are trying to distance themselves from the threat of new regulations, playing up e-commerce and other functions on their web sites rather than just news and information.

The industry has even coined a new term for such businesses, calling them "application service providers", or ASPs.

Zhou said IDG's reason for favouring e-commerce over news and information sites was commercial, not political.

At $43 million in sales, e-commerce had already surpassed online advertising revenues in China, according to IDG's research wing, International Data Corporation (IDC). IDC forecasts Chinese e-commerce will reach $11.7 billion in 2004.

Boston-based IDG has solid government backing in China. In 1980, it launched a Chinese-language computer magazine, one of the earliest foreign joint ventures in China. It has invested heavily in several sectors.

Still, Zhou said IDG could have trouble with a few of its content-oriented Internet investments when new regulations are released.

He declined to say which sites might be affected, but IDG maintains a minority stake in popular web portal Sohu.com.