China has introduced a tougher regulation to take a firmer grip on the country's internet advertising industry following the death of a college student, who sought treatment for his disease on online search giant Baidu Inc.

The State Administration for Industry and Commerce on Friday released a new internet advertising regulation on its website. The regulation, which takes effect on Sept 1, has made it clear for the first time that China now considers all pay-for-performance searches as advertising.

Zhang Guohua, head of the advertisement department at the administration, said on Friday that search results displayed on online search engines and e-commerce platforms were considered as advertisements as long as their rankings were influenced by financial factors rather than appearing in their order of relevance to search terms.

The new regulation means that pay-for-performance searches, which are some of the high-earning businesses for China's internet groups like Baidu Inc, Alibaba Group Holding Ltd and Sohu.com Inc and others, will be under tighter control.

Zhang said that all paid online listings needed to be labeled as "advertisements" as of Sept 1.

"Some of them are labeled as 'promotions' right now, which are not in line with the new rule," he said.

Baidu, which was investigated by the government in May after the death of the student, said in a statement on Friday that the Beijing-based company was a strong advocate of the new rule.

It said it would continue to crack down on fake and illegal information online.

Lyu Ronghui, an analyst with internet consultancy iResearch Consulting Group, said the new rule may not further dampen Baidu's business.

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