Propaganda vs. profit

China opens up one of its last closed markets as newspapers multiply -- piquing the interest of media tycoons like Rupert Murdoch.

By Jonathan Watts
Published August 17, 2004 1:32PM (EDT)

The founders of the Beijing Youth Daily would not have believed it, but their paper -- the mouthpiece of the Communist youth league -- is about to be the first Chinese newspaper to be listed on an international stock market.

As part of a government plan to reconcile domestic propaganda with global capitalist profit, China's second biggest daily says it will issue shares on the Hong Kong bourse to finance a modernization and expansion program. Reflecting the political sensitivities of this latest step toward opening up one of China's last closed markets, the newspaper has declined to reveal when the offering will be made or how much it will be worth.

The flotation is being planned to ensure that management and editorial control remain with the authorities, who are struggling to accept that the media can be an independent public watchdog rather than a public relations tool.

According to local reports, investors will be offered only a quarter of the company, putting the float's value at about #200 million. Other restrictions are likely to ensure that the government maintains control.

It has been 25 years since Deng Xiaoping's opening-up policy began to transform other sectors of the economy, but party and government organs still own and -- at least nominally -- control every one of the country's 2,137 newspapers. When the propaganda ministry issues a list of stories that should not appear in print, editors stifle their instincts to inform. But this political grip is being weakened as the media market expands, becomes more profit-oriented and is obliged to open up to foreign competition in advertising and distribution as part of China's commitment to the World Trade Organization.

Reformers inside the Communist Party and academia are also pushing for change. They argue that a stronger media sector is necessary to counter the growing problem of corruption, and to ensure the healthy development of a rapidly transforming nation.

"A major change is necessary," said Yu Guoming, deputy director of the school of journalism at Beijing People's University. "In the past, the public were often kept in the dark, but as society changes it is essential that information is provided in a timely and objective manner so that people feel secure."

In many areas, change is already apparent. The media market has expanded rapidly since 1978, when China had 186 registered newspapers. According to a survey by the Interfax news agency, there are now 12 times as many titles, generating 76 times more income. While competition is still limited -- no newspaper is allowed to go bankrupt -- rivalry for circulation and advertising has increased after reforms to make publications more financially self-sufficient.

Last year, the government banned the practice of work units and other bodies being forced to subscribe to party and administrative organs such as Taxation News. It also targeted 2,000 heavily subsidized papers and journals for closure and barred public officials from joining the management of media bodies.

"Changes in the media reflect changes in society," said He Li, editor in chief of the Economic Observer. "Competition gets fiercer every year. But, compared to the car or mobile phone market, it is still not enough."

His is one of a handful of publications to have bent the rules to secure a degree of financial and editorial independence that would have been unimaginable five years ago. Although most of its staff and offices are in Beijing, the magazine is privately funded and registered as an organ of a provincial office sufficiently distant -- politically and geographically -- to allow the paper leeway in its coverage of businesses in the capital, Shanghai and Guangdong.

A similarly managed publication that has won plaudits for brave journalism and sound management is Caijing. Its editor, Hu Shuli, won the World Press Review's Editor of the Year award last year for stories on the SARS crisis and corruption.

Hu said the outside world's view of Chinese journalism was 30 years out of date. "Media supervision is not as tight as it was. We are treated as businesses."

"Our values are increasingly close to those of the global media," she noted. "Ethics are related to money. Without financial independence, there can be no ethics."

The media are still far more closed to foreigners than other areas of society, but in politically nonsensitive areas, such as fashion and information technology, overseas publishers have hooked up with local partners. To get around restrictions, some set themselves up as advisors but play an influential role in design, editorial policy and business management. According to Global China Media Consulting, eight of the 10 most popular magazines have some foreign content.

With annual growth of 12 to 25 percent forecast, China's media market is attracting the attention of global tycoons. Rupert Murdoch, whose Star TV is accessible in China by satellite, has given a lecture to the Communist Party school in Beijing.

So far, the only outsiders who have been allowed to invest in Chinese media groups are from Hong Kong. Last month,, a Hong Kong-based Internet publisher, caused waves by buying a 49 percent stake in Popular Computer Weekly, the mainland's most popular I.T. publication. But this HK $196.9 million (#13.7 million) investment brought control of advertising and distribution -- not editorial content.

Further openings are likely to come gradually. The Communist Party is expected to announce reforms this autumn that will designate media organizations as private companies rather than public bodies.

Such reforms are partly motivated by a desire to strengthen China's mainly small, regional news groups to meet competition from overseas. Liu Binjie, deputy director of the state administration of press and publications, predicts that China will have its own national media groups within a few years. But officials have made clear that the primary principle will be to leave the media under the control of the party. Editors who forget are ruthlessly put in their place. This year, three senior journalists of the Southern Metropolitan Daily were arrested. The charge was embezzling state funds, but few doubt that they were punished for unauthorized revelations about SARS, police brutality and corruption.

Jonathan Watts

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