China’s Media Revenue In All Sectors Grows By Leaps And Bounds, But The Story The Government Has The Most Trouble Handling Is Press Freedom

Philip Stone February 27, 2007

There are two “leads” to the China media story. On the commercial side advertising revenue jumped 18 - 22% last year depending on the source, and huge investments are planned for a new 3G mobile network. But when it comes to press freedom, while authorities have made it easy now, because of next year’s Olympic Games, for foreign correspondents to move around China, they seem to be clamping down ever harder on their domestic journalists.

And the shame of that culture clash is that when the world’s media does descend on Beijing in August, 2008, it will be the censorship story that many will concentrate on, and not how China has become a real commercial powerhouse.

The media’s commercial numbers would be but a dream in the West. Nielsen Media Research and CTR Marketing Research differ considerably in just how much growth there was and where last year, but their common theme is that it was a lot.  Nielsen had magazine advertising growth up 27% (CTR, 10%), television up 26% (CTR 18%), newspapers up 8% (CTR, 4%) and CTR had radio up 24%. Nielsen had overall growth at 22% while CTR had it at 18%. CTR forecast a 20% gain for this year, but when compared to 22% in 2004 and 39% in 2003 it would indicate that advertising growth might be tapering off. Television rules the roost, taking in 81% of the total advertising spend.

And take a look at the kind of capital investment being talked about for launching a 3G network. According to Hu Jianbo, a Ministry of Information Industry official, China will spend $14.7 billion (€11.3 billion) in its first year of constructing a 3G network. Officials expect it will take at least two years before 3G “takes-off” but the success of instant messaging and mobile TV will then allow officials to phase out 2G. China is still perfecting its own TD-SCDMA standard, led by China Mobile, but with the necessary testing it is unlikely that licenses will be granted until Q1, 2008, making it a tight race to be up and running in Beijing by August for the Olympic Games.

Then compare that commercial story with the other side of the coin. Take, for instance, the annual report of the Paris-based Reporters Without Borders decrying Chinese censorship.  “The press is being forced into self-censorship, the Internet is filtered and the foreign media very closely watched. Faced with burgeoning social unrest and journalists who are becoming much less compliant, the authorities, directed by President Hu Jintao, have been bringing the media to heel in the name of a ‘harmonious society,” it said.

The propaganda department of the Communist Party has announced it is establishing a penalty point system to rate the domestic media.  All outlets start with 12 points, their performance will be judged by the government’s media watchdog, points will be deducted based on the severity of any infraction, and if/when all 12 points are gone, so is that media outlet.

"The new system is a clear message that the top leadership wants a peaceful social environment ahead of the 17th party congress (later this year) and next year's Olympics Games," a senior state media executive said. Its main goal is probably to ensure criticism is kept to a minimum ahead of the Party Congress expected somewhere between September and November that will see a reshuffle of the top political leadership and set the development agenda for the next five years.

But there are little signs that things might just be changing. A Chinese editor who had been sentenced in 2004 to an eight-year prison term for corruption, embezzlement and bribery has had his sentence reduced by a year. Another editor who had been sentenced for six years had that cut in half and he was released. Their real crime, according to journalists outside China, was that their newspaper, the Southern Metropolitan Daily, had written about a case of SARS before the government had reported it to the World Health Organization. The Chinese government does not like to be embarrassed and that warning went out to the country’s media via those arrests.

As part of its promise to impose few reporting restrictions on the expected 30,000 journalists thought to be coming to Beijing for the 2008 Olympic Games, the government since January has eased travel restrictions on foreign correspondents. They now can travel anywhere and interview anyone without getting government permission beforehand. A Chinese vice minister said it was an example of how the government was going through a transitional change from “managing the media” to “serving the media.”

But after the Olympics “serving” is scheduled to return to “managing” as foreign correspondents will again need to get permission to travel, but the hope is that the Chinese will see they didn’t fair too badly and it would be a good public face to let the travel freedom continue.

Because there are so many conflicting influential forces trying to direct China’s media policies in different directions it is difficult to tell exactly what is what. The independent Council on Foreign Relations, based in Washington, summed it up as well as any in a report last year, “As China becomes a major player in the global economy, authorities in Beijing are trying to balance the need for more information with their goal of controlling content as a means to maintain power.

“The Chinese government is in a state of ‘schizophrenia’ about media policy as it goes back and forth, testing the line, knowing they need press freedom – and the information it provides – but worried about opening the door to the type of freedoms that could lead to the regime’s downfall.”

For all of that, commercialization has brought with it increased competition between the various Chinese media. They may all be owned by state agencies, but when you have more than 2,000 newspapers, more than 8,000 magazines, 374 television stations and 133.5 million Internet users (and that’s just a 10.2% penetration) the diversification of content and competition becomes overwhelming.

Trying to understand China’s complex media rules has just been made much  easier with the publication of the new 1400-page (Chinese and English so think 700 page)  China’s Media & Entertainment Law Volume II published by TransAsia Publishing. It is independent but somewhat semi-official in nature because many Chinese officials contributed, but their views are said to be their own rather than government policy.

On the commercial side the general theme is that the government is imposing ever-stricter rules on foreign investment in the media and entertainment fields. On the democracy side the main concern of Party leaders is political stability.

As Asia Media summed it up, “Probably the only thing that can be said with certainty is that the battle will go on between the forces of media change (and it is hard to say how strong those forces are with people preoccupied with making money) and the forces of resistance to media change. Sustainable media liberalization will only occur when the Chinese government realizes that media change is in its own best interests or when current policies become unsupportable.“

The US State department estimates that China has some 30,000 to 50,000 Internet monitors to watch over 135 million Internet users. But since that 135 million is just the 10% tip of the possible iceberg, how many more monitors will China need to keep its media control in place?

And that’s the reality that Chinese censors are having to face. It’s the likes of ferocious Internet traffic growth and SMS messaging on mobile phones more than anything else that stand the best chance of really opening China up.  China's two biggest telecommunications operators, China Mobile and China Unicom, estimated, for instance, there would be more than 14 billion greeting text messages during the week-long Spring Festival holiday – how do you control what is written with such volume?

As China’s media volume continues to grow press freedom will burst through that censorship dam, no matter how many sand bags the government adds.

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