Facebook, the world's biggest social media network, has long sought to return to the world's largest market of internet users since it was banned on the mainland after the deadly Uygur riots in Xinjiang in 2009.
William Nee, China researcher at Amnesty International, said the idea of handling off the authority to a Chinese partner company to monitor stories across the network and suppress certain news was "incredibly worrying".
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"This would not only blatantly violate the right to freedom of expression, but it should also be seen in the context of a country in which people are being given heavy prison terms for expressing their political views on social media and in which the government has openly expressed interest in using big data to control the actions of its own citizens," Nee said.
Beijing Foreign Studies University communications professor Qiao Mu said that even with the censorship tool Facebook might still find it hard to get back into the mainland because the software might not live up to the government's standard.
"There is a limit to how much censorship you can do and the effectiveness varies. All Chinese social media and websites have censorship, but users can often find ways around it, and the government is already having a hard time dealing with that," Qiao said.
"There is so much to censor that it is not something software alone can solve – it needs a massive amount of manpower."
With Facebook eager to expand its user base beyond its existing markets, chief executive Mark Zuckerberg has launched a series of charm offensives to try to win over Chinese authorities, including learning Putonghua and meeting the country's internet tycoons, and regulators.