09/12/06

China's news controls may shut out foreign media and give Xinhua a boost


SHANGHAI, China (AP) -- Xinhua News Agency, the official mouthpiece for China's Communist Party, is getting a boost from the Beijing government in its quest to become an international media power.

New rules that Xinhua issued Sept. 10 in the name of China's Cabinet appear designed to shut out foreign news agencies such as The Associated Press and Reuters Group PLC that have been seeking wider access to the fast-growing Chinese market in the run-up to the Beijing 2008 Olympics.

The regulations give Xinhua a virtual monopoly over the distribution inside China of news, information and other services from foreign agencies. All information will be funneled through the state-run agency, which will censor reports.

The rules' release comes as the communist leadership has clamped down on mainstream media and the Internet, firing and even arresting aggressive reporters and editors.

European Union spokesman Johannes Laitenberger said Sept. 11 that the issue of freedom of expression was discussed during the Sept. 9 EU-China summit in Helsinki, Finland, and that the EU made clear that "we oppose strongly this sort of restrictive practice."

European Commission President Jose Manuel Barroso, attending a 38-nation Asia-Europe leaders summit in Helsinki, Finland, called any kind of press restrictions "a very negative development." Laitenberger said the issue would be discussed further at human rights talks between the EU and China in Beijing in October.

But business, not politics, is driving the new rules, industry executives said.

"The problem is Xinhua needs money. The big media groups, the big TV stations are rolling in money," said James McGregor, chairman of JL McGregor & Co., a boutique investment and consultancy company. "Xinhua, which is a government propaganda arm, is not rolling in money and they're looking for ways to get rich, to make Xinhua a player."

Xinhua said the new rules were intended to promote the distribution of news and information in a "sound and orderly manner." It said that reports that damage China's social stability, national unity or that violate numerous other taboos are banned.

Xinhua "has the right to select the news and information released by foreign news agencies in China and shall delete any materials mentioned in the items above," it said.

Such restrictions could make it difficult for foreign news agencies to ensure the integrity of their reporting, said He Qinglian, a prominent writer who left China after her work as an investigative journalist drew official ire.

"It's not hard to conclude that China's policies of opening toward the outside world are at a turning point, and that the 'open door' is growing ever narrow," He said.

Founded 75 years ago as the Red China News Agency, Xinhua already has a near lock on the domestic distribution of general and political news to the mainstream media, all of which is state-controlled in China. But it has been struggling to remake itself into a modern, profitable news organization and has set its sights on financial news as key to its ambitions.

In a recent speech printed in a Xinhua-owned magazine, the news agency's president, Tian Congming, described economic information as "a new growth engine" for Xinhua. Tian said Xinhua took the idea to the Chinese leadership, who approved the plan.

"This is an opportunity for development that is hard to come by and we must cling to it," Tian said.

Foreign news agencies were assessing the likely impact.

"Xinhua's new rules will have no effect on the way we cover and provide the news globally," said Clayton Haswell, AP's director for Asia and the Pacific. "But this raises serious concerns for AP regarding fair trade and the free flow of information within China."

The market for financial information has grown apace over the past decade with China's trade and integration into the world economy. Under a decade-old set of regulations, foreign news agencies were allowed limited distribution of financial data and other information.

Reuters and Bloomberg L.P. have built up client bases catering to Chinese banks, government agencies and other institutions, providing specialized financial information services.

"We are studying these rules closely to see how they differ from the current guidelines and will be discussing the details of the new regulations with Xinhua," Reuters spokeswoman Samantha Topping said in an e-mailed statement.

Representatives of Dow Jones & Co., the owner of Dow Jones Newswires, and Bloomberg declined to comment.

The AP reports on China for an international audience and is trying to market photos and other products to a burgeoning media industry.

The new regulations would change the landscape for these businesses, requiring foreign news agencies to distribute information through Xinhua or entities authorized by Xinhua.

"They're basically telling the world's information companies that they have to go through a monopoly in order to distribute their products in China," said McGregor, the investment adviser, who as chief China representative for Dow Jones Newswires helped fend off a similar onslaught by Xinhua in the mid-1990s.

Back then, he and others persuaded higher officials that the plan would hurt China by shutting off free access to information.

One of the agents Xinhua may use to handle distribution of foreign agencies' news is its subsidiary China Economic Information Service. Little information is available about the company. Staff who answered the phone at its headquarters said its director was busy with meetings and not available to talk.

A description of the Economic Information Service on Xinhua's Web site says it releases about 45 items of information daily, five days a week -- a far cry from the round-the-clock reporting of financial data and news offered by most international news groups.