ANALYSIS: Television - China's balancing act with media - Media will be a secondary beneficiary of WTO even as membership promises to prise open the economy

What a ride China has had in the past few months. The World Cup finals, the Beijing Olympics win, the surprising rapprochement with the US, the hosting of the APEC conference (with George W. Bush attending despite waging war on terrorism) and last and most significantly, accession to the World Trade Organisation. China has gotten what it wished for, which begs the subtle doubled-edged meaning this statement implies: is it for the better or worse? Particularly, how will it affect the "opening" of media in China? Media will only be a secondary beneficiary of WTO as the principal sectors addressed were naturally export and import-related, such as agriculture, manufacturing and textiles. Given the social and political combustible potential of media, it was and is just too sensitive to tinker with right now. A recently-reported example underscores this hypersensitivity. Supposedly, the Ministry of Foreign Trade and Economic Cooperation has had the terms of the WTO agreement that affect insurance under 24-hour top secret guard because it is fearful that the public's reaction to disclosure of its contents would be rage. But isn't this action - prospective damage control regarding the flow of content over media - media sector-related? This is but one indication of how nervous the central Government must be in trying to propel the country forward without sinking the Chinese Communist Party's superstructure in the process. Part of the ballast required to successfully navigate the troubled waters ahead was to postpone media issues. Aside from any ideological or political considerations, this solution seems compellingly practical. Timing in life is everything; however, the timing of WTO accession, while arguably the best possible in the last five decades, is still far from ideal. China has followed the enlightened direction blessed by Deng Xiaoping and implemented by the policies of Jiang Zemin, Zhu Rongji and other reformers. And it has been rewarded with unprecedented economic growth. Attendant upon this is one of history's greatest high-wire walks. Notwithstanding great strides in GDP, in many ways the WTO step is zero-sum; many will have to lose before all can benefit. The Government is all too aware of the dark side of the huge population base, still the largest on this planet, and its demographic characteristics. From a media perspective, most of China's 1.3 billion people are no longer in the dark. With 94 per cent TV penetration every night, some 350 million or more TV screens light up. About a billion are farmer-peasants, employees of state-owned enterprises or among the already unemployed, and their families. These segments are the ones that are expected to suffer the most pain, at least in the short term, as a result of WTO. Even the middle class stratum will not escape the competitive stress of many new foreign companies, more sophisticated, capitalised and with long familiarity complying with international standards, breaking into their previously-protected markets. Under what cloud of optimistic delusion should anyone think that Beijing would consider intranational augmentation of media dissemination to the unemployed and the hungry, let alone its opening to the international media community?At least intermittently, the media will be tightly-managed to prevent the masses from experiencing any more of the side effects of the bitter medicine WTO causes than is absolutely necessary. Zhou Enlai once characterised "China (as) an attractive piece of meat coveted by ..." The coming sea change will be rough enough given the backdrop of hundreds of millions of unhappy, and perhaps at times unruly, people; and that economy must be kept at full throttle just to keep the social dislocations from metastasising into revolutions; and, hordes of carnivorous foreign firms eager to tear off a piece of China. Assuming this is the perception, should we reasonably expect that the grip on information flow through media would be loosened short-term? "WTO accession" are not magical words which will immediately transform China's bureaucracy into a well-oiled machine capable of dealing with the myriad legal, technical and procedural adjustments required. For a long time to come the interface will be like "ducks talking to geese" - a lot of conversation but no one understanding what the other is saying. Millions of bureaucrats will have to first learn a new mindset. They must acquaint themselves, then understand, then modify, then implement, then enforce thousands of laws, rules, regulations, customs and practices. A gargantuan task described by one mainland savant as a blind man riding a blind horse. Each of the above undertakings would in any other national context be separately considered a daunting task, but China has to do all of them at once. That is not all. The incumbent leadership will officially be turning the Government over to a new regime by 2003. It is gainsaid that President Jiang wants history's adulatory review to be assured by no misstep occurring during the closing time of his rule. Obviously, he wants to step down as a winner. Perhaps this is what Zhu Rongji is also doing by retiring. One thing is for sure, neither he, his heir apparent Hu Jintao, or Zhu want to see the boat rocked any more than it has to be. Media must be their friend, not a potentially disruptive threat. In light of the above scenario, it is exceedingly rational, reasonable and arguably imperative that the central Government will brace itself in a defensive posture by maintaining the status quo regarding the destabilising potentiality of media. This should be expected at least until the new Government is well on its feet and the principal trading changes, SOE restructuring and the unpleasant impositions of WTO membership have lost their traumatic effect. Media won't be liberalised or opened until it has to be. The last thing the leadership wants during the coming period of adjustment is to have tens or even hundreds of millions of desperate, disgruntled and displaced citizens watching western TV programmes, showing high standards of living, political freedoms and products they not only cannot enjoy, but may never even dreamed existed. The same fears cover print, radio, and of course, the internet. Last month some 17,000 internet cafes were closed for failing to install software to block objectionable content. Yet all is not gloom and doom. While recent months have seen what some industry observers conclude is a reactionary retrenchment, such as the ultimatum to impose a unified satellite platform for foreign TV channels into China, there have also been truly landmark steps taken toward substantive progress. Almost simultaneously China granted broadcast rights to CETV (AOL/Time Warner) and Phoenix Satellite TV. These are the first true legal licenses providing real and direct access to a domestic PRC audience. Admittedly the licences are limited geographically and thereby demographically to an attractive area of one of the most progressive parts of China - the Pearl River Delta in Guangdong. Another positive sign, which should not be occurring if the central Government was really reactionary, is forming a super- committee to reconcile friction between the Ministry of Information Technology and the State Administration of Radio, Film and Television. The importance of this is apparent because Zhu Rongji will head it. Neither would it be a surprise to see a push at the State Council level to exhort all ministries and branches, even media-related, to find ways to commercially exploit, but not privatise, the asset bases of their operating branches. Into this unfamiliar exploration and restructuring to generate revenues are opportunities for media players to become involved, or more involved. And the time is now. To the victor belongs the spoils; but to the long-term strategic participants belongs the victory. Further, the correlation of advertising expenditures to GDP growth is a valid principle, and applicable to China. Adspend, currently in decline in China, has lots of room to grow to catch up with developed countries. So, as the world's economy recovers, and if China can hit its targeted annual growth of seven per cent GDP, the total ad pie between now and the Beijing Olympics could grow significantly. This will nourish media as a whole, and, when coupled with the global significance and impetus of the 2008 Olympics to media, one should expect that media would see meaningful "opening" reach China a few years ahead of the Olympic torch. The encouraging news is that it is the ideal time for media companies to position themselves for the future. At a Beijing investor conference on November 17, an investment banker was asked what three areas he thought would be the best for investment in China. The first, he said, was media; nothing to dispute there. But the uphill ride of the past few months has been just the mechanical pull up on the proverbial roller coaster. China knows some hair-raising dips have yet to come and it is steeling itself for them. So it won't embrace opening the media sector during the ride; only when it is successfully over. And while the ride will take several years, longer than many might like, there are reasons to remain confident that the tracks will hold and bring the cars safely to their planned destination. The opposite is unthinkable.

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