China Plans to Push out Foreign Owners From Its Internet

Chinese authorities have never liked dissenting voices. Now, they want to solve that problem by removing foreign players from their internet. This would be a major blow for international news producers.
 
The Chinese government traditionally doesn’t cope well with critical voices and has done all they can to fence opinionated people off of its internet. But as of next month Chinese authorities seem poised to purge their online space of all foreign players, according to a new set of rules adopted by the country’s industry and IT ministry, which are to take effect on 10 March 2016.
 
 
The move has triggered anxiety amongst some of the larger international media groups that operate in China, as they have pumped hefty investments into building their businesses there. Essentially, if these rules are implemented verbatim, foreign-owned companies with operations on the Chinese internet have to pack up and go. These include news media outlets, entertainment companies, gaming sites and publishers.
 

“This is really serious and we’re talking to lawyers to try to understand all the risks of these new rules,” said a representative of a global financial news group working in Shanghai. “It looks like foreigners won’t be able to publish anything in China, to put it simply.”
 
Dissenting Maps and Games: Forbidden
The new regulations forbid both foreign companies and Chinese-foreign joint-ventures to offer publishing services on the internet. The rules apply to a hodgepodge of online products including text, videos, audio content, games, photos and even maps.
 
For some foreign publishing companies present in China today, some of the new directions are somewhat confusing. They hope that they can find loopholes to protect their operations there. “Some of these rules are contradictory. We have a hard time to really understand them,” said a Shanghai-based representative of another major financial news outlet. For example, a provision in the rulebook states that foreign entities wanting to operate online in China must seek approval from China’s State Administration of Press, Publication, Radio, Film and Television (SARFT), an executive branch controlling China’s state-owned broadcasters tasked also with censoring critical takes on the country’s government. How does that match with the rule outlawing all foreign publications on China’s internet?
 
Hard to say. And local lawyers are keeping mum about the new rules as they want to hear the official interpretation first.
 
Journalists and representatives of news companies based in China didn’t want us to mention the name of their companies in this story as this could badly imperil their talks to authorities on this matter. They say that they have knowledge of several foreign news companies that are now ensnared in negotiations with the regime on the implementation of the new directive.
 
Money Down the Drain
Some of the legal lingo is still unclear, but generally the new regime for online operations in China, if implemented, is likely to cripple foreign-owned online players. None of them will be comfortable with storing all their technical equipment, servers and storage machines in China, as one of the new provisions requires.
 
For the foreign media conglomerates, this would be an investment disaster. Leading global news wires such as Thomson Reuters, Bloomberg and Dow Jones as well as mainstream financial publications like Financial Times have made walloping investments in China to date.
 
Back in 2011, Bloomberg expanded its Shanghai office to meet growing demand for its services. In late 2011, the group relaunched its business bi-monthly Bloomberg Businessweek/China targeted to the business elite in 30 major Chinese cities. In late 2013, Thomson Reuters added Practical Law China, a legal consultancy for those interested in doing business in China, to its portfolio of services. LinkedIn, the sole global social media site not (yet) blocked in China, announced plans last year to grow its network from some five million members to over 100 million accounts.
 
Your Opinion: Not Wanted
The recently unveiled internet publishing provisions are part of a bigger effort of the Chinese Xi Jinping administration to efface dissent in the country. All kinds of methods are used.
 
The Committee to Protect Journalists (CPJ), a New York-based press freedom NGO counted last year a total of 199 journalists thrown in prison by China. That was a quarter of all journalists jailed worldwide. A year earlier, 221 Chinese journalists had the same fate.
 
As China’s economic growth is slowing down, financial reporting is becoming increasingly sensitive. This could be another explanation of the newly adopted online rules. Wang Xiaolu, writing for the business magazine Caijing witnessed that directly last August when he was arrested for “fabricating” false information about securities.
 
Also worrying is the spread of the regime’s tentacles to Hong Kong. Western media has reported at length about the disappearance of five booksellers from Hong Kong’s Causeway Bay bookstore who were planning to publish a book about president Jinping’s love life.
 
China’s sweat to control communications comes with a massive budget. The country’s power has been investing massively in its media to become by far the largest media owner in the world.
 
Largest media owners worldwide by value of media holdings (US$), 2013

Largest government owners

Largest owners or asset managers of media holdings

Gov. media owners

Value (US$ bn)

Owner or Asset Manager

Value (US$bn)

Gov. of China

317.2

Gov. of China

317.2

Gov. of Japan

67.2

Gov. of Japan

67.2

Gov. of Germany

29.9

State Street (US)

64.8

Gov. of France

26.4

Vanguard (US)

63.8

Gov. of Russia

25.4

Fidelity (US)

46.5

Gov. of India

19.8

Capital Group (US)

35.2

Gov. of Norway*

16.2

Gov. of Germany

29.9

Gov. of the UK

13.9

Carlos Slim (America Movil, Mexico)

29.2

Gov. of Taiwan

12.1

Larry Page (Google, US)

26.7

Gov. of South Africa

11.6

Gov. of France

26.4

*it includes the Government Pension Fund of Norway, which invests worldwide, with media assets of US$15.2bn.

Source: The International Media Concentration Collaboration, 2016

 

In 2013, the government of China had media holdings worth US$ 317.2bn, which was some US$ 250bn more than the next largest player, the Japanese government, according to calculations from The International Media Concentration Collaboration, a global group of experts led by Columbia University’s professor Eli Noam. The UK government’s media holdings value, US$ 13.9bn, is dwarfed by the Chinese.
 
State Street, a financial services corporation, which is the largest non-government media holdings owner worldwide, boasted a value of US$64.8bn, which is only a fifth of China’s media wealth.
 
All these are serious numbers and serious actions.
 
China has always been serious about media regulation on its home turf. Its newest plans show that the country’s leadership has become more drastic than ever about who’s making their voice public.